Facing the fourth industrial revolution

Boards should ensure their organisation is preparing for the fourth industrial revolution as emerging technologies reshape the global economy. Tony Featherstone reports.

Four key change gaps that boards must prepare for as the fourth industrial revolution unfolds were discussed this week at an AICD Governance Leadership Centre briefing. Tony Featherstone reports.

Boards should ensure their organisation is preparing for the fourth industrial revolution as emerging technologies reshape the global economy, a leading innovation expert says.

Nicholas Davis, head of society and innovation at the World Economic Forum, says industry is on the cusp of its next revolution as artificial intelligence, 3D printing, precision genome editing (using super-computing), new materials and neurotechnology develop at a faster pace.

Davis leads the Swiss-based forum’s work on the fourth industrial revolution and is a member of its executive committee. He gave insights from the 2016 World Economic Forum annual meeting in Davos in January for an AICD Governance Leadership Centre briefing this week in Sydney.

Davis says the fourth industrial revolution will build on the unfolding digital revolution that began in the 1970s. “The development of a new set of technological capabilities will fundamentally change how we create, store and distribute value, and relate to each other.”

He says the development of machines that think, in areas such as self-driving cars, will transform transport systems; 3D printing will become a new form of manufacturing; genome editing will drive medical breakthroughs; new materials, such as graphene, could revolutionise the computer-chip industry; and advances in our understanding of the brain could alter decision-making systems and information processing.

“A lot of these technologies are still sitting in university labs or being discussed in the media, but have not yet been commercialised in any meaningful way,” Davis says. “But these changes are coming and their impact is now a bigger part of CEO agendas.”

What boards need to consider

In understanding the potential impact of these technologies, boards should consider four key gaps between business today and that of the fourth industrial revolution.

1. The gap between the digital and fourth industrial revolutions - “History shows that industrial revolutions are not distributed evenly,” Davis says. “Organisations that do not get their digital infrastructure right will find it very hard to play in the Fourth Industrial Revolution.”
   
2. Hype and fear - “People seem to be either huge technology optimists or very concerned about the impact of technology on global inequality,” he says. For boards, that means understanding the opportunities and threats from the fourth industrial revolution and developing different scenarios of what could emerge.
   
3. Technology and values - Boards must consider how the development of new technologies, particularly in areas such as neurotechnology and genome sequencing, relate to the organisation’s values and ethics. “The link between values and technology and the purpose of new information systems is hugely important, but we don’t have a clear narrative yet for that discussion,” Davis says.
   
4. Partnerships - The implications of these technologies are potentially so profound that no company on its own can have the answers. Ensuring the organisation collaborates with government, academia and start-up enterprises, as part of a broader innovation ecosystem, is critical, Davis says. “Building partnerships that align with the different strategies of organisations in different sectors is a huge challenge. In my experience, Australia is further behind in this regard compared to the US and UK or the Netherlands.”
   

Davis’s view on the four key gaps between the digital revolution and fourth industrial revolution provides a useful framework for boardroom discussions. Company directors who can consider the long-term impacts of technology, and how their organisation can bridge the digital and fourth industrial revolution gaps, will have a valuable knowledge advantage.

Tony Featherstone is Consulting Editor of the AICD Governance Leadership Centre and a former Managing Editor of BRW magazine.