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