There seems to be agreement in society that the world is currently experiencing a fourth Industrial Revolution. If you think back to your school days, you might remember that in the 18th century we experienced our first, when water and steam power were harnessed to mechanize production. Then in the 19th century, we experienced the second, when we figured out how to use electricity for mass production. In the 20th century, we developed electronics and information technology that enabled true automation in our production processes. This was the third Industrial Revolution, and unlike the previous, this marked the transition from the physical to the digital age. Many are describing the fourth Industrial Revolution as the cyber-physical age, which means that our physical world is now being sensed, measured, analyzed, controlled and automated through various digital technologies.
Many factors make the fourth Industrial Revolution very different from those we have seen in the past. The first is the fact that multiple technological advances are driving it. These advances include 3D printing, the Internet-of-Things, mobile devices, ubiquitous connectivity, and the list goes on. Second among these factors is simply the speed at which the change is occurring. The first Industrial Revolution took place over a period of about 60 years. The rate of change in the cyber-physical age would have astounded those who lived through the 18th and 19th centuries. Another factor is the impact on our personal lives. Clearly, the first three industrial revolutions affected the personal lives of society and certainly raised the standard of living by making goods more accessible and affordable to the middle class. However, the cyber-physical union we are seeing today affects our personal lives in a much more pervasive way than previous revolutions. Technology is present in everything we do. It is affecting how we interact with family, friends and co-workers, how we arrange taxi service and even how we change the thermostat setting on our home heating systems.
Although technology is clearly affecting our personal lives, for the most part it is still our choice as to how much of it we incorporate into our lives. We are still free to decide whether we create a Facebook page or download the app on our iPhone that allows us to remotely monitor and operate our home heating system. In business, I would argue that we do not have the same choice. Business cannot afford to sit on the sidelines of this new revolution. The change brought about by the cyber-physical movement is not only affecting how things are produced, it is creating entirely new business models across almost every industry.
My company recently held its annual gathering of our Aerospace and Defense industry customers and partners. We get together every year to network and share innovations with our industry colleagues. One presentation from UPS really stood out from all the others this year. When I sat down to listen to this presentation, I expected a discussion on some supply chain topic like warehousing or transportation planning. I was surprised when the speaker from UPS started talking about 3D printing. We all know UPS or “Brown”. Their business depends on the fact that people need to move packages from point A to point B. The shipping industry has seen huge growth in the past decade as the use of e-commerce has grown with consumers. So what does this have to do with 3D printing? UPS is very aware of what 3D printing means for the shipping industry. These printers not only offer the possibility to eliminate the need for large stockpiles of inventory, but they also offer the possibility to produce goods at the point of demand, eliminating the need to ship parts over long distances. UPS seems intent to stay one-step ahead of this innovation. They are not allowing this new technology to render them obsolete in the same way that Netflix and digital entertainment content made Blockbuster obsolete. Instead of sitting back and watching their business diminish because of 3D printing, they are working to capitalize on this technology by investing in a new 3D printing business. There are many other examples where long-standing business models have been disrupted through the technologies of the fourth Industrial Revolution. The Pirelli tire company offers another great example. Once purely focused on the manufacturing and distribution of their tires, Pirelli is now offering fleet management services to their customers. They have embedded sensors in their tires, and as a result, are now able to monitor pressure, temperature, rotation and the location of the tires out on the road. This enables them to offer fleet management services to trucking companies. These services allow their customers to optimize tire wear and fuel costs. I wonder if the incumbents in the fleet management industry saw this one coming. The point is that the technologies of the fourth Industrial Revolution are changing the competitive landscape whether we like it or not. If the opportunities offered by these new technologies do not interest you as a means to grow your business, surely the risk of inactivity should get your attention. The cyber-physical age offers huge opportunities but also an equal number of threats to the status quo. No business can afford to sit on the sidelines of this new revolution and wait for new competitors to enter the market and render their competitive advantages obsolete overnight. The new cyber-physical age requires every business to be more agile and forward thinking in their use of technology to grow and defend their place in the market.
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