The revolutions that preceded the fourth industrial revolution brought us machination, rail travel, the light bulb, radio, automobiles, mass production and the modern personal computer[1]. By any standard, all have made telling contributions to human existence. The so-called fourth industrial revolution certainly has a lot to live up to.
The good news is that it might just surpass everything that has gone before. Whereas possibilities for advancement in previous industrial revolutions were linear, this one, in some ways at least, allows exponential possibilities. What’s more, it will surely be a cleaner form of revolution, without many of the enormous externalities (the environmental damage of fuel consumption and inevitable waste of mass production) of its predecessors.
When the World Economic Forum held its Annual Meeting in 2016, its theme was ‘Mastering the Fourth Industrial Revolution,’[2] a theme well worth addressing. If time shows that we are in fact living in a form of industrial revolution, our actions now will dictate whether future generations look back with admiration or instead look back and wonder how we failed to grasp the size of the opportunity in front of us.
Grasping the opportunity
In 1843, the Scottish writer and historian, Thomas Carlyle wrote ‘Past and Present,’ a critique of 18th century British industrial society[3]. One of the chapters therein coined a phrase for business leaders at the time which we have used ever since: “Captains of Industry.” Carlyle’s praise for them was at least in part because he believed that their success would in turn drive the success of others.
Thomas Carlyle, captain of philosophy
The fourth industrial revolution makes everyone a potential captain of industry. One recent article[4] captured this quite accurately: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
If it all sounds a little vacuous, the central point is not that Mark Zuckerburg’s innovation has contributed anything like what James Watt’s did, but rather how empowering digitalization is. And it’s not just digitization. The advent of 3D printing (“additive manufacturing”), turns mass production on its head. The capital that was once a factory floor or industrial plant now sits on your desktop awaiting your instructions.
Quantifying Progress
It’s somewhat ironic that in a time where we’ve gained an obsession with quantifying everything, tracking progress in this revolution isn’t always easy. Worse, it’s not always visible. The rapidly falling cost of technology is really only useful if that technology is causing an upturn in productivity. The Solow Paradox states that technological progress, if anything, has led to a slowdown in productivity growth across the board.[5]
This is not yet cause for alarm. In the 1980s, a noted British economist, Nicholas Craft, found that the first industrial revolution wasn’t accompanied by the high levels of productivity growth that had always been widely assumed[6]. As of yet, nobody has pinned down why modern-day technological changes aren’t leading to huge productivity gains. I would suggest, among other reasons for this, is a dash for short-term, faddish-yet-profitable ideas yielding negligible gains in productivity.
Peter Thiel describes this as: “because people are making such vast fortunes in software, we infer that this is the most valuable thing in the world being done full stop. So, if people at Twitter make billions of dollars, it must be that Twitter is worth far more than anything Einstein did.”[7] It’s critical if we are to master the Fourth Industrial Revolution that we aim for Einstein and not Twitter.
The Revolution will not be in 140 characters
There’s a real danger that the world is missing opportunities for real innovation by focusing on frivolities. One website[8] parodies this fascination we have of applying the potential of the Fourth Industrial Revolution to everyday items (broadly termed “the internet of things”), to make nothing of any real value-added. One of the better examples exhibited is cutlery that regulates your eating speed (naturally, using “big data”).
The example provides a salutary lesson: the Fourth Industrial Revolution can be a phenomenal success story in the history of mankind with advances everywhere from energy to medicine. But we’re not there yet, and the time that a talented engineer takes to develop something useless is time that could have been spent building the phenomenal success story. Perhaps we’ve been brought up in a time of incremental changes and as a result, we’re unaccustomed to going for the “moon shots.” As Carlyle stated in his chapter on Captains of Industry: “God knows it will be hard but no noble task was ever easy.”[9]
[1] The Economist (2014), “The third great wave.” Special Report: The World Economy, October 4, 2014.
[2] WEF (2016) “What is the theme of Davos 2016.” WEF. Available online at:
Showing posts with label WEF. Show all posts
Showing posts with label WEF. Show all posts
Monday, March 7, 2016
Mastering the Fourth Industrial Revolution
The revolutions that preceded the fourth industrial revolution brought us machination, rail travel, the light bulb, radio, automobiles, mass production and the modern personal computer[1]. By any standard, all have made telling contributions to human existence. The so-called fourth industrial revolution certainly has a lot to live up to.
The good news is that it might just surpass everything that has gone before. Whereas possibilities for advancement in previous industrial revolutions were linear, this one, in some ways at least, allows exponential possibilities. What’s more, it will surely be a cleaner form of revolution, without many of the enormous externalities (the environmental damage of fuel consumption and inevitable waste of mass production) of its predecessors.
When the World Economic Forum held its Annual Meeting in 2016, its theme was ‘Mastering the Fourth Industrial Revolution,’[2] a theme well worth addressing. If time shows that we are in fact living in a form of industrial revolution, our actions now will dictate whether future generations look back with admiration or instead look back and wonder how we failed to grasp the size of the opportunity in front of us.
Grasping the opportunity
In 1843, the Scottish writer and historian, Thomas Carlyle wrote ‘Past and Present,’ a critique of 18th century British industrial society[3]. One of the chapters therein coined a phrase for business leaders at the time which we have used ever since: “Captains of Industry.” Carlyle’s praise for them was at least in part because he believed that their success would in turn drive the success of others.
Thomas Carlyle, captain of philosophy
The fourth industrial revolution makes everyone a potential captain of industry. One recent article[4] captured this quite accurately: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
If it all sounds a little vacuous, the central point is not that Mark Zuckerburg’s innovation has contributed anything like what James Watt’s did, but rather how empowering digitalization is. And it’s not just digitization. The advent of 3D printing (“additive manufacturing”), turns mass production on its head. The capital that was once a factory floor or industrial plant now sits on your desktop awaiting your instructions.
Quantifying Progress
It’s somewhat ironic that in a time where we’ve gained an obsession with quantifying everything, tracking progress in this revolution isn’t always easy. Worse, it’s not always visible. The rapidly falling cost of technology is really only useful if that technology is causing an upturn in productivity. The Solow Paradox states that technological progress, if anything, has led to a slowdown in productivity growth across the board.[5]
This is not yet cause for alarm. In the 1980s, a noted British economist, Nicholas Craft, found that the first industrial revolution wasn’t accompanied by the high levels of productivity growth that had always been widely assumed[6]. As of yet, nobody has pinned down why modern-day technological changes aren’t leading to huge productivity gains. I would suggest, among other reasons for this, is a dash for short-term, faddish-yet-profitable ideas yielding negligible gains in productivity.
Peter Thiel describes this as: “because people are making such vast fortunes in software, we infer that this is the most valuable thing in the world being done full stop. So, if people at Twitter make billions of dollars, it must be that Twitter is worth far more than anything Einstein did.”[7] It’s critical if we are to master the Fourth Industrial Revolution that we aim for Einstein and not Twitter.
The Revolution will not be in 140 characters
There’s a real danger that the world is missing opportunities for real innovation by focusing on frivolities. One website[8] parodies this fascination we have of applying the potential of the Fourth Industrial Revolution to everyday items (broadly termed “the internet of things”), to make nothing of any real value-added. One of the better examples exhibited is cutlery that regulates your eating speed (naturally, using “big data”).
The example provides a salutary lesson: the Fourth Industrial Revolution can be a phenomenal success story in the history of mankind with advances everywhere from energy to medicine. But we’re not there yet, and the time that a talented engineer takes to develop something useless is time that could have been spent building the phenomenal success story. Perhaps we’ve been brought up in a time of incremental changes and as a result, we’re unaccustomed to going for the “moon shots.” As Carlyle stated in his chapter on Captains of Industry: “God knows it will be hard but no noble task was ever easy.”[9]
[1] The Economist (2014), “The third great wave.” Special Report: The World Economy, October 4, 2014.
[2] WEF (2016) “What is the theme of Davos 2016.” WEF. Available online at: Friday, February 21, 2014
The (Ir)relevance of Davos
Credit: APSanchez
“I
think he said, ‘blessed are the cheese-makers.’”
The Life of Brian, 1979
Looking in from the
outside at a movement, it’s easy to draw the wrong conclusions. Davos, the
annual leaders’ conference draws an inordinate amount of incorrect conclusions
and negative sentiment. The idea that
the elite of business, academia and politics meet in an exclusive
holiday-resort in Switzerland doesn’t sit well with many people: When
organizations and individuals are paying huge amounts of money to attend a
conference, the thinking goes, the only thing on the agenda could be
self-interest at the expense of the masses.
There is undoubtedly
much self-interest at play at Davos but that in itself is not always a bad
thing: Those of us on the outside may have the chance to play the role of
ultimate economic free-rider from Davos insights. Likewise, hopefully the
calibre of guests attending the forum creates a kind of intellectual
one-upmanship, where speakers and audience members - in an effort to be taken
seriously among an impressive array of fellow attendees and the gathered world
media - unload their most creative ideas and their most convincing arguments.
This may well be self-interest, but it is not always at the expense of the
masses.
Davos has also played
the role of catalyst in bringing leaders from countries involved in disputes
together –most notably the example of Turkey and Greece in 1988 and the leaders
of North and South Korea in 1989. It could well be argued that these leaders
didn’t require a Swiss holiday-resort to sit with their counterpart and discuss
their differences. Nevertheless, being surrounded by such a powerful array of
characters willing the meeting to happen must surely create a kind of positive
peer pressure that would be difficult to achieve elsewhere. And thankfully, the
trickle-down benefits are felt by those not present at the conference.
Deserving
of Criticism
Davos is not without
its negative aspects. Sometimes the self-interest has no trickle-down effect: the
environmental cost of transporting nearly 2,500 people across the world must be
enormous. Over 60% of the attendees are from outside Europe (i). Even if Davos
is committed to offsetting the resulting carbon omissions as it claims (and it
would be difficult to offset it all), the whole procedure is unnecessarily
burdensome.
Regrettably, for an event
attended by such a stellar cast of intellectuals, there’s often more hot air
than anything of substance to come from the conference. Management talk
flourishes where there is little tangible in the way of output. British Prime
Minister David Cameron said that the UK had become “the re-shore nation” (ii) in
his address. The overall theme given to the conference in 2014 was “resilient
dynamism.” (iii) Terms like these are meaningless and undermine efforts to
increase public support for the conference, as well as distracting from its worthwhile
output.
The final critique of
Davos is that its demographics are skewed towards rich, white men from Europe
and America. This is an inaccurate reflection of where the world currently is
and where it’s going. Those who counter that anyone that pays the entrance fee
can participate, ignore the fact that by charging extortionate amounts and
setting up a permanent base in Europe, the organizers have created a natural
bias towards this demographic. Women too could contribute much to an event like
Davos but are disappointingly scarce on the ground for a conference regarded in
such high esteem.
Small
Improvements
Realistically, the
drawbacks surrounding Davos mentioned above are complicated to eradicate. To
move the event from Davos every other year would be to take momentum from the
conference. Nor is it in the organizers’ own interests. Stopping politicians
from spouting jargon is a fool’s errand. And the lack of women at Davos each
year is probably just an unfortunate reflection of the upper tier of politics,
academia and business generally, rather than a sexist bent at Davos
specifically. Despite these hurdles, the organizers can and should make
improvements – however small – to the annual conference at Davos.
Each year, the leader of
the nation which has made the greatest strides in an area such as economic
policy, democracy and human rights should be given increased access to the
events at Davos. The conference can make itself a true force for good by
encouraging such leaders to implement reform in their countries and in doing
so, be welcomed to the top table of business and politics. By the same measure,
the corporation which has improved its corporate social responsibility most in
the previous twelve months should receive some recognition among their peer
group at Davos.
Davos benefits from a certain
level of secrecy – if all of its conferences were available online, it wouldn’t
manage to sell as many tickets for tens of thousands of dollars. A certain
amount of discretion also encourages participants to air their true opinions as
opposed to non-offensive PR-friendly versions. All of that said, it wouldn’t damage
the reputation of Davos to increase transparency at the conference. For
example, by encouraging participants to make their presentations and speeches
available online beforehand, the quality of debate at the conference may be
enhanced by attendees who have had more time for ideas to gestate. In turn, the
public gain access to insights that they are often paying for indirectly anyway.
Conclusions
Is Davos relevant?
Whether you think so or not, the reality is that Davos is here to stay. Thousands
of people believe it to be relevant enough to pay large sums of money to attend
every year. They travel long distances and pay inflated prices to stay in
nearby hotels. In short, if the WEF didn’t exist, somebody would invent it. In
its current guise, Davos certainly has faults – the hubris of its participants
being the one most often levelled at it – but it has benefits too.
It is worth noting too,
that Davos didn’t invent hubris and if it were cancelled next year, hubris
wouldn’t suddenly disappear with it. Therefore, instead of taking aim at Davos,
we should welcome its potential as a force for good and focus energy on gaining
accountability from politicians and business leaders. In most countries, we
have the advantage of being able to enforce this accountability as voters and
shareholders. We should exercise this ability more effectively – the best way
to make Davos truly relevant.
References
i)
The Economist, Jan 25th 2014
ii)
The Independent, Jan 24th
2014
iii)
http://www3.weforum.org/docs/AM13/WEF_AM13_ExecutiveSummary.pdf
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