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4IR: What is the Fourth Industrial Revolution and how can leaders harness it?

Globalization 4.0 is here to stay. The international community is once more called to dissolve barriers and install linkages in order to overcome an uneven and slow-paced recovery in a decade that has been significantly affected by financial crises, social changes and pandemics. As we stand at the cusp of the Fourth Industrial Revolution (4IR), the interplay of new technologies, existing institutions and political maneuverings becomes evident. 4IR technologies present us with a myriad of opportunities for different services, with far-reaching effects. The introduction of robotics, big data analysis and 3D printing has ushered in a new era of both economic disruption and social discovery. So how can 4IR technologies be harnessed to their full potential?

The concept of the Fourth Industrial Revolution was first used by Klaus Schwab, the founder of the World Economic Forum, in 2016. He suggested that 4IR implies the existence of a world in which physical and virtual systems of manufacturing coexist harmonically at the international level. Yet this wave isn’t only related to smart and interconnected machines and systems. It is the fusion of these new technologies and their interactions across the physical, digital and biological domains that make 4IR significantly different from previous revolutions.

Artificial intelligence, big data, 3D and 4D printing, blockchain, augmented and virtually reality, cobots and robotics are the basic pillars of the Revolution. It brings together separate elements that, when combined, bring forth sweeping transformation in the economy, society and the labor market. A new portfolio of technologies alone won’t help businesses get through a recession, however. Getting the most out of 4IR technologies requires a different mindset. Corporations, governments and individuals need to embrace the idea that technology can be a path to unleashing value, not only from better-performing operations, but also from smarter trained workforce and up-to-date institutions that have the tools to drive societies through tough times into recovery.

Citizens have been increasingly given the ability to use these technologies to seek greater autonomy, and this places governments and institutions at the epicenter of disruptive alterations. Old ways are changing, and the new digital age is raising questions concerning the necessity, ability, and future of forms of governments as we know them. If governments are too slow to adapt to changes and generate the efficiency gains needed to maintain public support, they implications of the recent changes will be too large to prevent social unrest from arising.

These observations imply that governments need to address three main areas if they hope to harness the full potential of 4IR.

First, governments need to develop and progress on their own as much as possible. Despite seeming utopic and far from feasible, governments have shown their adaptability and their potential to harness sudden changes, as was the case with the COVID pandemic and the 2008 financial crisis. Taking Greece’s example, the speed of digitization of the public sector has been remarkable in the last months given the need to vaccinate a population of almost 11 million.

Second, the existence of infrastructure is pivotal for the harmonization of new technologies and economic progress. The recent shift towards renewable sources of energy, clean technologies and the elimination of resource scarcity is associated with the emergence of new or the improving of existing institutions that will align governments with new players in the market. Additionally, institutions are also important for the tackling of pending issues of significance, such as income inequality, the refuges crisis in Europe, and human trafficking.

Source: ‘The Fourth Industrial Revolution’, Deloitte Insights

Third, governments must maintain social cohesion in an era of major social disruptions, labor market instabilities and changes in wealth and income distribution. Markets have experienced recessions and acceleration time and again in the past decades, and they have almost always found ways to bounce back within a small period of time. Yet now, in a period of rising inequality and failing levels of trust, political leaders are becoming skeptical about the ability of new technologies to eliminate rather than create barriers.

Traditional models of governance are being disrupted. The way of managing and securing information, the functioning of bureaucracies in an increasingly more technological environment, and the implementation of regulations for the harmonization existing institutions with new principles are some of the challenges current leaders have to face. Many governments are slow in implementing new means that will facilitate changes, and this generates dissatisfaction and an erosion of trust between different key actors. However, what many don’t grasp is that these new technologies are far from simple to adopt. They are multifaceted, complex, continually evolving, encompassing and have far reaching consequences in a multi-stakeholder environment.

Agile governance is the answer to these rapid changes. In an international setting in which change can be observed in every sector, current leaders have to exploit the potential that the tools of 4IR offer them and integrate them in efficient ways. The pandemic has showcased that, in times of crisis, governments can become creative, efficient and daft in drafting effective policy solutions. Reducing the time lag often experienced by policymakers, eliminating distrust between electorate and politicians and ensuring stability in the labor market is the path to follow. Despite seeming utopic and far from tangible, the results of these processes will be gradual and will determine the future of a more globalized and better integrated world.

Image source: https://unsplash.com/photos/vhSz50AaFAs

Originally published for Tra I Leoni at https://traileoni.it/2021/05/4ir-what-is-the-fourth-industrial-revolution-and-how-can-leaders-harness-it/

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Tags: , Last modified: May 18, 2021