We are
on the verge of a technological revolution that will radically change the way
we live, work, and relate to each other. In its scale, breadth, and complexity,
transformation will not be like anything humanity has ever experienced. We do
not yet know how it will develop, but one thing is clear: the answer to this
must be integrated and comprehensive, involving all stakeholders in global
politics, from the public and private sectors to academia and civil society.
The speed of today’s discoveries is unprecedented. Compared to previous
industrial revolutions, the 4th industrial revolution is evolving at an
exponential rather than a linear pace. In addition, it disrupts almost every
industry in every country around the globe. Both the breadth and depth of these
changes announce the transformation of entire systems of production,
management, and governance. Indeed, it is a time of sweeping technological
changes, and the majority of them are developed by engineers. The
primary aspect of the 4th Industrial Revolution is that machine power will
replace human power. Furthermore, the 4th Industrial Revolution is a way of
describing the blurring of boundaries between the physical, digital, and
biological worlds. It is a fusion of advances in Artificial Intelligence (AI),
Robotics, the Internet of Things (IoT), 3D Printing, Genetic engineering,
Quantum computing, and other technologies. The 4th Industrial Revolution is
largely driven by four specific technological developments: (1) High-speed
mobile Internet; (2) AI and automation; (3) The use of big data analytics; and
(4) Cloud technology.
With
the ubiquity of “smart” products in our daily lives, it is not surprising that
the ways in which products are developed and delivered to the market are also
increasingly interconnected and intelligent. A broad label for this concept is
smart industry and my favorite description of it is that it unites data,
technology, environmentally conscious perspectives, the foresight of economic
growth, and political input to set the industry on the path toward
never-before-seen innovation. Smart industry aims to bring companies into the
future with improved worker safety, quicker production, and fewer emissions
while driving more competition in the global marketplace. Quite simply, smart industry
warrants our attention because it can help organizations more rapidly,
sustainably, and effectively create solutions for our increasingly complex
world, and world problems.
The
Smart Industry or Industry 4.0 movement, which emerged in 2011 as part of
Germany’s effort to introduce next-generation technologies to industry, has
recently gained popularity among industry and thought leaders. A May 2015
article by Wired magazine points to governments in Germany, China, the United
States, Japan, and South Korea leading the way in setting global standards and
systems for smarter factories. Indeed, emerging trends such as big data
and cloud computing seem to be helping GE and General Mills, companies that
have been using smart building tactics for over a decade, gain more rewards and
improve their game over the past two years.
All
this talk about the Internet of Things, Big Data and Cyber-Physical Systems is
garnering mixed reactions, ranging from excited and curious to fearful and
resilient. If this is truly an unstoppable movement, then industry leaders and
staff must consider the implications. How will the workforce keep up and
evolve? What will a regular workday be like in 2, 5, or 10 years? And will the
factory of the future even need people in it? There are conflicting views on
whether more or less staff will be needed to operate numerous new systems and
technology tools. Interestingly, there seems to be consensus that new or
different capabilities will be expected of existing and new workers – including
fundamental competencies that go far beyond obvious technical skills like data
management, analytics, and technology know-how. Below I share ideas on four
skills that will help engineers compete and deliver in an age of smart
manufacturing:
·
Systems Thinking: Systems thinking is “the process of understanding how
those things which may be regarded as systems influence one another within a
complete entity or larger system.”
·
Data Savviness: Regarding the use of instinct, it appears that it is
inevitable that pure “gut’” decisions will become a thing of the past when
smart manufacturing becomes widely adopted. During the 4th Industrial
Revolution, all workers would essentially become “knowledge workers,” making
decisions and finding and characterizing problems based on data. That being
said, analyzing data without taking the practical context into account is quite
the myopic approach. The best decision-makers and problem-solvers are those who
leverage data alongside practical experience and an in-depth understanding of
how a system works.
·
Collaboration and Communication: With staff freed up from routine
mechanical tasks, there will be more room for creative thinking and
intensifying competition in product innovation. For example, China’s “Made in
2025” plan, which draws much inspiration from Germany’s Industry 4.0, aims to
shift the country’s manufacturing industry towards producing more innovative,
proprietary products. To reap the rewards of the smart industry, companies must
more than ever facilitate peer interactions that fuel innovation. The shift
away from “hands-on” physical tasks likely also means that remote working
scenarios will become even more ubiquitous, requiring workers to have more and
different collaboration and communication skills.
·
Adaptability: With evolving technologies constantly impacting the way
people work (or have to work), continuous training and a willingness to learn
and change will be required of all workers. Not surprisingly, getting staff to
accept change seems to be the first and most important hurdle to overcome when
rolling out smart industry efforts.
Although,
change is both exciting and intimidating. I do wonder, with the 4th Industrial
Revolution coming, how ready is the engineering workforce?
I
believe that fundamentally, the role of the engineers will remain the same,
which is to provide technological solutions to issues and problems faced in
society. On top of mastering essential knowledge and skills in their chosen
disciplines, they should be creative and critical thinkers. They must also be
able to evolve and change to fit the needs and demands of industry
trends. In the future, it will no longer just be about solving problems
for components; instead, the focus will be on intersectionality, by way of
overviewing and connecting systems. Engineering will be about connecting
machines and assembly lines together through cloud technology. Engineers will
thus need to master the knowledge, ensuring that their skills remain current.
Thus, being literate in computing and coding, in particular, improves future
career prospects drastically. The academic community feels that mastering the
key enabling technologies is becoming an essential skill today for future
engineers, who will be able to apply them and create solutions for complex
problems in their disciplines. It is becoming as important as mathematics,
design, and communication skills.
A
report by McKinsey & Company has revealed that more than half of the
existing work activities would be changed and automated thereby replacing
currently existing technologies while saving huge volumes of money and creating
new jobs (Manyika et al., 2017). Most production processes that require human
hands will be replaced by automation which will result in job losses and
unemployment for people. With this knowledge, having the necessary skills that
are pivotal for thriving in the 4th IR is necessary so as not to become
irrelevant as time goes by. There are now autonomous vehicles and driverless
cars which will in time cause an overhaul in the transportation sector. This is
in line with WEF (2017) which revealed that the 4th IR will definitely impact
jobs and employment by creating new and fewer jobs which will require advanced
skills. Other challenges that will come with the 4th IR will include
cybersecurity, breach of protocols, hacking, risk assessment, and others.
(Lambert 2017). This will be made possible as a result of the
interconnectedness of systems which makes them prone to cybersecurity issues.
There is now more risk than ever as a result of connecting systems that require
adequate measures to limit them. It is therefore vital to ensure strict cyber
security measures on personal and industrial systems while also protecting
networks, and assessing accessibility to systems from internal sources,
employees, human error, and external sources such as cybercriminals. One of the
greatest knowing at this time is the knowledge that with the connectivity
between systems now, it cannot be undone and there is no going back (Goode,
2018). It can only be developed further to prevent intrusion and access by
external parties. As our lives are becoming connected and human relationships
are getting shaped as a result of various devices such as cell phones, cars,
electrical appliances, home security cameras, and electrical appliances at
home, effort must be placed on guaranteeing the integrity of these connected
systems. This has necessitated various attempts by individuals and
organizations to ensure that efforts are intensified to protect their digital space
from compromise which if it happens can have damaging consequences for people.
Given
the current challenges, there is a need to have engineers with the necessary
skills crucial to overcoming social challenges. The development of skills of
the 4th IR is the key to ensure excellence and relevance. Times are changing
and the overall learning experience may not be applicable now to meet the
prevailing challenges, hence the need to produce engineers with
fourth-industrial skills is imminent. There is a need for a review of the
engineering to ensure that the elements of the 4th IR are taken into account
for excellence and relevance. Also, engineering teaching must be adapted to the
current era to take into account the changes that are taking place in the
economy, the environment, and the socio-cultural clean, technical, and
ecological spheres. Having engineers who are excellent and who have shown that
they are loaded with the skills of the fourth industrial age, will ensure
excellence in the industry. Thus, the emphasis should be on the development of
2nd-century skills in humans, and according to WEF (2015), 21st-century skills
include non-routine interpersonal and non-routine analytical skills. Today’s
challenges are numerous and require new technologies to meet them, in order to
ensure excellence in engineering development.
Technologies
that existed in the past may no longer be applicable to solve current
challenges, and people need a new system to address these challenges that
require excellence and relevance. With engineering being crucial to global
productivity and sustainable development worldwide, the young generation of
engineers must develop the skills needed in the 4th IR to be able to provide
technologies that will positively impact systems, structures, and processes,
thus encouraging excellence and relevance in the discipline of the 4th IR. With
the fourth industrial age being an era of massive technological advances, there
are pervasive technologies that can influence the behavior and practice of
mechanical education worldwide. It is vital to understand that the world has
moved from the Fordist era to an era where there is a fusion between digital,
cyberspace, and the physical realm with vast emerging technologies capable of
influencing engineering education. The challenges of the past are not the
challenges of the present, as there are wide-ranging changes in the social,
physical, cultural, technological, environmental, and ecological sectors that
require an excellent and appropriate solution that can be applied to this
matter, hence the need to have a workforce that will utilize these technologies
to ensure excellence. With the old production process characterized by low
specialized routine standards, in the 4th IR, most of these processes will be
automated (Frey et al, 2016), so new skills are required that can ensure
excellence and relevance. With the start of a new era in technology that has
the impetus to affect engineering education as an industry, it is important to
consider the existing set of skills and those required to bring excellence and
relevance to this new era. Some of the skills that are vital to engineering
include communication, teamwork, problem-solving, ethics and professionalism,
lifelong learning, critical thinking, leadership, creativity, technology, and
management. As times change and with the need to ensure excellence, there are
now new skills that need to be developed in engineering education and some of
the skills include analytical thinking and innovation, active learning and
teaching strategies, creativity, originality and initiative, technology
programming and programming, critical thinking and analysis, complex problem
solving, leadership and social influence, emotional intelligence, reasoning,
problem-solving and ideology, system analysis and evaluation (WEF, 2016). The
4th IR is a period marked by a massive breakdown of technologies that will
affect the world of work and work processes. It offers a huge application in
the training of engineers that must be used properly to enjoy the possibilities
it offers.
Increasing
investment in technical and basic education will ensure excellence and
relevance in engineering education in the 4th IR. The world is at a stage where
appropriate investment in technical and basic education is needed to enhance
the capacity of new entrants with the skills needed in the 4th IR. The nature
of jobs has changed and there are new and emerging jobs called jobs of the
future that include robotics and automation engineers, industrial engineers,
data analysts, cloud architects, security analysts, etc. (Frey et al, 2016).
Possession of technical and basic skills will be vital to ensure excellence in
engineering education in the 4th IR. Relevance is also imminent, as it
highlights the relationship to the matter at hand or social application. There
are various issues that need to be addressed worldwide and one of the most
important of them is the Covid pandemic that has devastated most countries and
ended up affecting economies, massive business closures and unemployment,
widespread poverty especially in developing countries, and massive environmental
changes manifested as climate change. change, insecurity, and unrest reduced
human well-being as a result of poor economic conditions. All of this must be
addressed with the appropriate solutions, to which engineering education during
the 4th IR has already managed to respond, at least in the case of the COVID-19
pandemic.
With
the advent of the 4th IR, some of these changes have been taken into account in
certain systems, structures, and processes have been affected. For example,
production has been shaped by technologies such as additional production and
the gap between producers and consumers is now closing. Also, in response to
the pandemic, the mass technologies that came with the 4th IR where they were
developed to reduce the risk of COVID-19, and elements of these technologies
were used to produce devices that helped patients recover, such as respirators.
Work patterns have also changed as people embraced remote work and remote
project monitoring as a result of the pandemic, which became possible only as a
result of the widespread technological collapse that affected the work
environment. Big data offers huge benefits in tackling environmental
challenges, and the volume, speed, variety, and accuracy of big data offer huge
opportunities to influence environmental decision-making. With big data
applications, trends, and patterns can be studied by simulating and modeling
events so that we have predictive information about future events. With the
technologies that emerged from the 4th IR it was made possible with the
training of the new generation of engineers. I can assure you that the industry
is socially relevant and applied to some of the issues raised, hence its
relevance. Engineering education in the era of the 4th IR came with new
technologies that make discipline excellent. Some of these technologies include
3D and 5D printing, big data, artificial intelligence, new materials, smart
systems, robotics, and automation. These were also a defining character that
made the discipline stand out among many others. Possessing new technologies is
important in these times and we must make an effort to take advantage of these
new technologies. The distinction in engineering education in the era of the
4th IR can be likened to the various technologies that have emerged, while the
relevance is also manifested in the ways and means by which engineering
education has managed to solve various human and societal challenges.
Hence,
encouraging engineering education in the era of the 4th IR is now key to
ensuring global development and acquiring the skills that are important in this
era will help in the process. There is a need for a new policy impetus at
regional or local level to shape educational processes vital to the 4th IR.
There is a need for a comprehensive overhaul of educational processes,
especially in developing economies, in order to encourage the development of
skills crucial to the 4th IR and, therefore, to easily adopt the various
technologies that came with the 4th IR. structures, systems, and processes.
On that
note, governmental policy is critical to facilitate an eco-innovation system
and effective industrial clusters, while the following directions could be a
response to the 4th IR:
·
Upgrading industry integrations for research and development, design
thinking, services, marketing, and manufacturing for higher added value.
·
Strengthening links between academic industry and industrial development
partnerships.
·
Improving the smart industrial supply chain ecosystem.
·
Facilitating start-up businesses through various platforms.
·
Enhancing the development of self-sustainable products and services.
·
Enhancing the professional competency of critical technologies.
·
Establishment of government-led standards and common infrastructure for
technology development.
·
Technological and vocational training and talent development systems,
including design and business development competency.
·
Public policy, funding, incubation, accelerator, and tax benefit systems.
·
Structural policy initiatives and incentives to ensure appropriate
resources and employment can be supportive of talent development.
Educational
institutions should also establish mechanisms to review the teaching and learning
objectives planned in schools and to highlight technological changes and their
impact on industrial applications and life. Technology can help to facilitate
the effectiveness of teaching and learning in many ways, such as e-learning
systems, enabling sharing of knowledge, best practices, classroom experiences,
and cross-disciplinary learning between diverse geographies.
In
order to respond to the 4th IR in terms of technology, the following eleven
steps must be undertaken:
1.
Cyber-Physical Systems (CPS). The technical identity of the 4th IR is
basically cyber-physics. CPS, which are automated, enable the connection of the
operations of physical reality with computing and communication
infrastructures. The key features of cyber-physical systems are the following:
reactive computation, concurrency, feedback control of the physical world,
real-time computation, and safety-critical applications. The technical response
to the 4th IR is totally different from the specific technological catch-up of
the existing catch-up economy. In other words, on the premise of the high
technical standard of advanced nations, there is no technical project that
pursues the standard. The reason is that the technical domain of the 4th IR is
based on the creative combination between technology and the market, and
creative recombination projects between technology and the market are rapidly
emerging. It is urgent to nurture trained individuals for technical development
to respond to the 4th IR, improve educational programs to foster project
developers, and actively make R&D investments for the education of such
developers. Furthermore, a new conceptual investment in R&D to find the
requirements of the future fundamental technology base of the 4th IR in science
and technology, the market, and society is needed.
2.
Combinational Technologies. The existing complexity in the development of
new technologies will increase even more in the 4th IR. The so-called
combinatorial technologies require knowledge transfer and mutual learning in
innovation networks. As these innovation networks are continuously changing in
the intensity of interactions as well as in their overall architecture, network
governance becomes extremely difficult.
Complex
systems are characterized by their unpredictability and require adaptive
management. Because of the threat of climate change with devastating
consequences for the earth, new technologies need to be evaluated according to
their impact on the transformation process toward sustainability. Responsible innovation,
which increases the participation and transparency of all involved
stakeholders, is a promising mechanism to improve the efficacy of innovation
policies.
3.
Adopting a Design Thinking Methodology. The 4th IR is already here, but we
are really at the beginning of a radical transformation. We are in an emergent
stage where we can start to see the development and application of new
technologies. The best approach to respond to the revolution in technology is
to adopt a design thinking methodology, focusing in particular on developing
and exploiting technologies that are people-centered. Indeed, the key issue for
those companies that are already technology masters is to understand what may
come next (to look beyond actual technologies and their linear development
trajectories) and what areas to explore. The key challenge to govern and
respond to the revolution in technology, in our opinion, is related to making
technology more human. In other words, the distance between machines and people
must be reduced by embedding features that make technologies function as human
beings and interact with or support people’s activities, so they are more
attuned to human-based characteristics.
According
to the above interpretation of the 4th IR, we see three fundamental roles of
technology that helps to explain how to respond to the technology
transformation. In the 4th IR a technology can fulfil the following roles: (a)
Substitute – in which the technology can fully replace people by performing
their activities in a more efficient and productive way without compromising
the quality or characteristics of the activities’ outputs; (b) Integrator – in
which the technology is part of people’s working activities by extending human
capacity and enhancing the precision and quality of human action, but without
substituting the human presence; (c) Mediator – in which technology is platform
to mediate human life from personal issues to social relationships, i.e., it is
the medium through which people interface with other people or with machines
and physical objects.
4.
Practical Knowledge. A company’s capacity for accumulation is its most
important technological asset. Therefore, the following virtuous cycle should
be established: (1) Practical knowledge is accumulated systematically in the
workplace; (2) The knowledge should be scientifically codified; (3) The
documentation of this codified knowledge should be conducted so that good
textbooks can be produced; (4) Training and teaching methods should be
developed and tested in terms of their effectiveness and validity; (5) The new
practices established on the foundation of the newly codified knowledge should
be tried, and the performance of these trials should be carefully evaluated in
an objective way. Then, this cycle should be repeated, starting with the first
phase
5.
Artificial Intelligence and Robotics. While billions of people are
connected by mobile devices and platforms with abundant access to information
and knowledge, technological development and applications will be multiplied by
emerging technologies, such as artificial intelligence, robotics, the IoT, big
data, cloud computing, autonomous vehicles, 3-D printing, nanotechnology,
biotechnology, materials science, energy storage, quantum computing and so
forth. Research policies in both the public and private sectors are important
to guide technological developments under limited resources. Patent
development, knowledge transfer, and the commercialization of technology
applications are also critical aspects of the development of technology.
6.
Not Losing Flexibility Technology. In R&D, flexibility is also a very
important factor. Flexibility can be based on a strategy of flexible focusing.
Flexible focusing means focusing without losing flexibility. Focusing is the
concentration of a company’s resources and efforts on some important needs,
such as new business and new product development. Focusing, of course, is
necessary for business success because competition is so severe. However, by
focusing, a firm can lose its ability to flexibly adapt to unexpected changes
and market developments triggered by the disruptive new combination between
technology and the market. Hence, the proper strategy in this context is
experimentation. A firm’s resources should not be invested in or concentrated
on only one or two expected R&D targets. Trial-and-error may be the best
strategy in the context of unexpected, uncontrollable rapid new combinations.
It is impossible to know with certainty what will be successful or what will
fail. The more trials a firm conducts, the more chances of success a firm will
have. Through trial-and-error, a firm can test the possibility of a new
business, and, if the test is successful, the firm can expand its investment
and concentration into the new business.
Also,
the strategy of open innovation by outside acquisition of necessary
capabilities is essential. Disruptive new combinations occur very fast and
unexpectedly. If a company only relies on its internal R&D, it may lose the
proper time period of entering a newly created market and fail to survive.
Flexibility is also necessary in acquiring external capabilities and resources
through necessary mergers and acquisitions or strategic alliances. The most
important factors here are the open thinking of the CEO and the cultural
openness of the organization.
7.
Most Technologies Become Commodity or Sharing Resource. Most technologies
become commodities or shared resources. The relationships between technologies
are more important than each technology itself. It is recommended to try to
understand the self-organization concept. We suggest the “AI + 12tech” model
for the 4th IR in technology. It consists of six digital transform and six
analog transform technologies together with AI.
8.
Diminishing the Boundaries among Technologies. The 4th IR means that the boundaries
among the digital, biological, and physics research fields, based on the 3rd
IR, will diminish, making convergence possible. The Davos Forum has announced
the selection of twelve hopeful technologies that need a better scientific
technology policy in the 2017 Global Risks Report. The two technologies with
the highest value are AI and robotics. Many experts predict that the IoT,
robotics, 3D printing, Big Data, and AI will be the top five technologies.
Usually, convergence technologies among ICT-related technologies, physics, and
biology create new demands through new products and services, such as smart
factories or driverless autonomous cars with smart guidance systems.
Professor
Jung Jae-Seung of the Korea Advanced Institute of Science and Technology in
Korea proposed two ways to manage the 4th IR. These have important implications
for us. On the one hand, we have to be experts who actively accept new
technology. On the other hand, we have to be experts in humanities which only
humans can do, as Artificial intelligence is not there yet.
9.
The Fusion of Virtual Space and Actual Space. In the traditional
information age, information technology acted as an adhesive between different
disciplines or technologies. However, with the introduction of AI technology,
the separation of intelligence and recognition and the fusion of virtual space
and actual space have been achieved. Because the size of the virtual space
determines the size of the market, it should make people feel the virtual
space. AI allows self-realization in virtual space through data patterns. This
actualized space is a kind of platform in the market category. The most
important feature of AI is the discovery of the characteristics of information
through the concept of information abstraction.
Therefore,
to realize this effectively, everything needs to be connected to enhance the
data collection, analysis, and processing, and the machine will learn by itself
with intelligence while creating a new value of trust. We need a propulsion
system that can create a platform. In this sense, open governance as a platform
provides the government with a participatory open platform for customers and
stakeholders, such as corporations and citizens to provide new services and
value-added services. Policies are induced to change the employment structure.
As business process changes caused by the 4th IR create new employment tools,
including middle-tech, labor migration policy is needed in the field of human
resource development and growth in response to shifts in employment structure
10.
Smart Factory, Autonomous Machines, 3-D Printing. It is very uncertain
whether we can identify new technologies that the 4th IR may generate. New
technological processes and products include AI, robotics, the IoT, 3-D printing,
and autonomous machines. Research papers on the 4th IR have been published in
various areas, including Cyber-Physical Systems (CPS), IoT), smart factories,
Internet of services, smart products, Machine-to-Machine (M2M), big data, and
cloud business.
11.
Adopting Open Innovation Actively. In South-East Asia, the Korean
government and companies need to adopt open innovation actively. Since the
expected changes are disruptive in nature, it will be difficult to adequately
prepare for the changes to come. To take a path in this uncharted territory, it
would be more effective to establish more networks domestically as well as
globally. Korean firms need to find a way to utilize global talents in addition
to domestic resources. The government needs to admit the limits of the national
government in preparing for the coming changes. Universities should make an
effort to attract global talent.
The
government needs to prepare for the social and economic impact the disruptive
changes will bring. Especially when the massive replacement of human labor
becomes evident, the government should be ready to address the problem. The
scale of the problem will be unprecedented
In
order to respond to the 4th IR in terms of company innovation and start-up
strategy, the following eleven steps should be considered.
1.
New Combination Business Model. The key to the 4th IR is to continuously
connect and combine technology, the market, and society in all industries based
on IT. Thus, the core of company innovation or a start-up business is a new
combination business model. However, IT itself is not the source of
competitiveness for innovation and company business models. How to creatively
combine technology and the market, and how well such a combination meets the
requirements and expectations of users or consumers are the keys to company
innovation. In the first and second industrial revolutions, the technologies
themselves were highly important to technical innovation, and business models,
including design, were not. However, in the IT-based 3rd IR, business models
were the key to the technical innovation of companies in the IT industry. As
the 4th IR has come, the technical innovation of companies based on business
models, including design, has become the dominant innovation paradigm in all
industries.
Second, the market innovation in which new combinations between technology
and the market are constantly formed requires the continuous occurrence of
creative new combinations between technology and society. Companies and entrepreneurs
should not ignore this fact. In other words, companies and entrepreneurs should
pay attention to the fact that social open innovation will actively be
developed to open innovation in the market and that such innovation will
actively transform the market into a new growth engine. That is, it is possible
for a business model that meets social demands to create social values and
market values through a rapid dynamic process.
2.
Established Companies and Start-Ups Need to Cooperate. Established companies
and start-ups need to cooperate. Start-ups are definitely in a better position
to develop disruptive technologies. Established firms might act too slowly
because they fear displacing their successful business models of the past and
with them, themselves. However, established companies do have strong advantages
in the exploitation of new technologies, in scaling-up of production processes
as well as in global distribution. A fast and effective implementation of the
4th IR therefore requires cooperation between mature and new actors.
3.
New Business Models Exploiting the Digital & Technology-Enabled
Platforms. The 4th IR is ubiquitous and will increasingly transform and reshape
operations/production, supply chain, management, and governance as well as
products and services. Whatever could be codified of the organizational life
will be put into codes and software and embedded into cybernetics systems that
will replace human work activities. At the same time, organizations will
produce and deliver high-tech-intensive products and services. The 4th IR will
bring waves of disruptive innovations, and the magnitude of their effects will
be amplified by the combinatorial effect of a wide variety of changes. In the
new business age characterized by digitization, mobilization, augmentation,
disintermediation, and automation, anything that cannot be digitized or
automated will become very relevant and valuable. On the one hand, cybernetic
systems will have increasing computational capacity and ability to simulate,
and on the other hand, specific and intrinsic human traits will become
extremely important to make organizations creative and resilient.
For companies and start-ups, there are opportunities on the supply side to
create entirely new ways of serving existing needs and significantly disrupting
existing industry value chains. Existing companies’ business models will be
challenged, and new business models exploiting digital and technology-enabled
platforms will emerge together with the development of new products and
services. Thus, companies and start-ups can focus on how innovations can
transform existing industries by increasing efficiency and productivity and
lowering the costs and barriers to entrance. At the same time, they can aim to
develop completely new products and services based on future technologies
capable of generating and eliciting new stakeholders’ wants and needs.
In this scenario, what kind of innovation strategies should companies and
start-ups embrace to prosper in the new business age? In the majority’s view,
to gain success, they will need to focus on what is labeled a techno-human
strategic approach. In other words, they will need to focus on technology
excellence as well as on humanism. First, technological excellence is aimed at
adopting, deploying, and developing cyber systems (i.e., advanced technological
machines that incorporate the power of digitization and the ability of both AI
and robotics). These systems will be able to increase the productivity of
organizations, and they will allow the development of new products and services
that will enhance the efficiency and pleasure of our personal lives. Already,
new technologies have changed how we order a cab, book a flight, buy a product,
make a payment, listen to music, watch a film, or play a game. Second, humanism
is aimed at ensuring that the distinguishing human characteristics – that are
intrinsic to human beings – are deployed and exploited to create and deliver
value, and most importantly to meet the deep human needs, wants, and
expectations. Human traits, such as intuition, imagination, hope, ethics, and
creativity, will play an important role as innovation value drivers. Humanism
in the 4th IR will affect the capacity of organizations to be creative and
resilient, and it will define the quality of the customer’s experiences
generated by organizations and their products.
The techno-human strategic approach has to be integrated with a
technology-based and creativity-based collaboration strategic approach. The new
business age is characterized by the open innovation paradigm, which calls for
collaborative innovation. To leverage future technologies, established firms
and start-ups need to create technology-based collaborations that enable
controlled combinations of the technologies underpinning innovations. Such
creative collaborations will enable businesses to tap into creativity and
knowledge domains that can spur the imaginations of researchers to look beyond
technologies toward the future of what might be a new solution.
4.
Business and Technology Strategy around Mergers and Acquisitions. Recent
investigations on the Japanese experience of IoT evolution, clearly indicate
that some kinds of mergers and acquisitions are necessary and effective for the
realization of the 4th IR, both at the level of system integrators and module
suppliers, respectively. However, the conventional wisdom on mergers and
acquisitions, in which the priority is placed on short-term profit making, such
as the elimination of unprofitable parts of a business, is irrelevant and
obsolete. Instead, business and technology strategies around mergers and
acquisitions should be studied to realize the effective integration and
consolidation of two different business and technology cultures that existed
before the mergers and acquisitions. In short, an intensive and broad-based
study is necessary about the best ways of conducting mergers and acquisitions
to realize the ideal of the 4th IR.
5.
Sensible Commercialization. Bottom-up organizational learning and innovation
could be important. Sense of commercialization and business development
strategy is at the essence of making real impacts, including the capacity for
entrepreneurial thinking, business model innovation, strategic business
scenario planning, leadership development, human capital development, financial
management, and funding strategy. Entrepreneurial education to facilitate
effective firm innovations and start-up strategies is essential and at a
leverage point. Firm innovation and start-ups would benefit from financial
support and nurturing from the public and private sectors working together. An
eco-innovation system is important to sustainably facilitate innovations and
start-ups through the phases of innovation. Such a system would include grants
to support R&D for opportunity and idea generation, angel and crowdfunding
for intellectual property, challenge funds and tax incentives for seed start-up
teams and incubation, venture capital and accelerators to support early-stage
growth, government-backed incubators and enablers from the policy and
regulatory environment, and equity for the continuous growth.
Human capital matters. The 4th IR has the potential to empower people and
innovations to a far greater degree than in the past, while the creativity,
perception, and imagination of human beings at every level of every
organization would sustain a core driving force of our world.
6.
Fair and Mutual Beneficial Cooperation between Big Companies and Small and
Medium Enterprises (SME) or Start-Ups. SMEs and start-ups have advantages in
capturing new emerging technology possibilities and new market needs. However,
they lack the capability of large-scale investment or large-scale R&D to
introduce new possibilities and address new needs. Cooperation between big
companies and SMEs, including start-ups, is necessary to develop new
possibilities of the 4th IR. Market experimentation or a trial-and-error
strategy can be adopted more by SMEs or start-ups. If such a trial is
successful, then a larger company can expand this success. A large company can
buy the success of an SME or start-up and share the profits with the SME or
start-up through proper merger and acquisition and strategic alliances. Such
mergers and acquisitions and strategic alliances between large companies and
innovative SMEs/start-ups are very common in the US economy. When the US
economy is strong, such cooperation is active, but when the economy is wholly
dominated and owned by large companies the economy loses its vitality.
Fair and mutually beneficial cooperation between large companies and SMEs
or start-ups will improve the possibility of survival in the era of the 4th IR.
SMEs and start-ups conduct trials and large companies expand the tested success
of SMEs and start-ups. Although this strategy is best at the national economic
level, for the strategy to be successful, fair, and mutually beneficial
relationships are required. In the Korean economy, the current lack of fair and
mutually beneficial cooperation between large companies and SMEs/start-ups can
be a great threat to survival in the era of the 4th IR.
7.
Convergence of Real and Virtual World. The secret of Unicorn Company is an
example of the convergence of the real and virtual worlds. The trend of future
business is the integration of the business value chain called end-to-end (E2E)
integration. Hardware and software are combined to connect Products and
Services (PSS). Thus, unmet human desires can be satisfied through the
convergence of the real and virtual worlds.
8.
Using External Knowledge Than Internal Knowledge. According to recent
research by the Hyundai Research Institute (2016), the results of the growing
industries in leading countries led to the conclusion that competitiveness in
six industries related to the 4th IR is increasing in comparison to that of
other industries. The Korea Information Society Development Institute (KISDI)
analyzed industrial structure changes in 2016. In manufacturing, the
application of ICT technology in 3D printing, cloud computing, IoT, and big
data is expected. Also, it is reported a changeover to integrated thinking to
analyze manufacturing and services as one value chain. Lee and Olson in 2010
claimed that the source of the competitive edge has moved from economy-of-scale
to economy-of-scope and economy-of-expertise convergence to
economy-of-convergence. Therefore, the digital-based convergence technology
should be exploited in a different way from the past. We should disperse the
roles between private enterprise and the government. Private enterprise should
focus on developing technologies as the disruptive innovations that are needed;
the government should focus on supporting basic research and generic technology
without profit, which is not easy for the private enterprise to work on.
Digital innovation has been identified as having the greatest advantage for
securing the competitiveness of a start-up business (Federal Ministry for
Economic Affairs and Energy in Germany, 2017). Digital innovation is expected
to provide soft power and to be the kernel of power enabling changes in
production methods (smartening), changes in trade and distribution (N to N),
and convergence. Soft power means the capacity to materialize innovation in
business, converging creative ideas with technology, knowledge, and products.
According to an empirical study that was recently conducted, start-ups have
been using external knowledge more than internal knowledge to acquire soft
power. Although the results are different for each industry, demands from
companies and customers are important as external knowledge sources. This
highlights the importance of public support for business.
9.
Deep Data è Co-Creation è Open Innovation è Business
Model. To transform existing industries, such as manufacturing, medicine, and
finance into a customized manufacturing and service industry based on data and
intelligent information technology, a platform based on intelligent information
technology should be built. In particular, it is necessary to build a value
chain system that leads to Deep data è Cocreation è Open
Innovation è Business Model. In the case of deep data, we actively
support the portion of the cost structure of the 4th IR and utilize the rest of
the system to create the market.
Building deep data that provides high accuracy provides a foundation for
promoting convergence between industries and utilization of cloud linkages. In
particular, AI research should be easily accessible to all fields of science,
technology, and industry. To support start-ups and venture start-ups related to
the 4th IR, it is important to support convergence research of databases among
various industries, while actors within the same industry should share the supply
chain through governance as a platform. In particular, a deep data distribution
market for AI development should be established
10.
Increasing the Level of Flexibility. New businesses and start-ups in an era
of the 4th IR should focus on increasing the level of flexibility to the
digitalized world and the capacity to generate emerging cyber environments
among IOTs, organizations, and individuals. New business opportunities come
from open innovation and social innovation to solve many competing interests
and conflicts. More specifically, start-ups should consider the following
business trends from the 4th IR: interoperability, virtualization,
decentralization, real-time capability, service orientation, and modularity.
11.
Globalization by Default. The
direction for the change will be open innovation and globalization by default.
Open innovation is a strategy to create and acquire advanced technologies
associated with the fourth generation. Globalization by default is a way to
enter the global market. As we observe in the case of KakaoTalk, the Korean
market is too small for a company to grow into a global player. Unless a
start-up is intended for the global market at its initial start, it would be
almost impossible to expand to the top-tier level.
Hence
from the above review, I conclude the following: (1) The various definitions of
the 4th IR have the common point that the next-generation digital technologies
will be the basis of revolutionary change in all industries; (2) The ways to
respond to the 4th IR in terms of institutions have the common point that the
creativity of organizations should be increased; (3) The ways to respond to the
4th IR in terms of Technology have the common point that most new combination
technologies are important; (4) The way to respond to the 4th IR in terms of
firm innovation and start-ups is the development of creative new business
models.
Most of
all, the way to effectively address the 4th IR is the development of dynamic
open innovation business models with the expansion of open innovation culture,
and the expansion of the feedback loop of an open platform business model.
Georgios Ardavanis – 01/10/2023