The Impact of the Four Revolutions
The first three industrial revolutions had impacts well beyond the work environment. They reshaped where and how we live, how we work, and to a large extent, how we think. The World Economic Forum has proposed that the fourth revolution will be no less impactful.
During the first industrial revolution in the eighteenth and nineteenth centuries, the factory replaced the individual at-home manufacturer of everything from clothing to carriages, creating the beginnings of organizational hierarchies. The steam engine was used to scale up these factories, starting the mass urbanization process, causing most people to move from a primarily agrarian and rural way of life to an industrial and urban one.
From the late nineteenth into the early twentieth century, the second industrial revolution was a period in which preexisting industries grew dramatically, with factories transitioning to electric power to enhance mass production. The rise of the steel and oil industries at this time also helped scale urbanization and transportation, with oil replacing coal for the world's navies and global shipping.
The third industrial revolution, also referred to as the digital revolution, was born when technology moved from the analog and mechanical to the digital and electronic. This transition began in the 1950s and is still ongoing. New technology included the mainframe and the personal computer, the Internet, and the smartphone. The digital revolution drove the automation of manufacturing, the creation of mass communications, and a scaling up of the global service industry.
The shift in emphasis from standard information technology (IT) to artificial intelligence is likely to have an even more significant impact on society. This fourth revolution includes a fusion of technologies that blurs the lines between the physical, digital, and biological spheres2 and is marked by breakthroughs in such fields as robotics, AI, blockchain, nanotechnology, quantum computing, biotechnology, the Internet of Things (IoT), 3D printing, and autonomous vehicles, as well as the combinatorial innovation3 that merges multiples of these technologies into sophisticated business solutions. Like electricity and IT, AI is considered a general-purpose technology – one that can be applied broadly in many situations that will ultimately affect an entire economy.
In his book The Fourth Industrial Revolution, World Economic Forum founder and executive chairman Klaus Schwab says, “Of the many diverse and fascinating challenges we face today, the most intense and important is how to understand and shape the new technology revolution, which entails nothing less than a transformation of humankind. In its scale, scope, and complexity, what I consider to be the fourth industrial revolution is unlike anything humankind has experienced before.”4 This fourth revolution is creating a whole new paradigm that is poised to dramatically change the way we live and work, altering everything from making restaurant reservations to exploring the edges of the universe.
It is also causing a significant shift in the way we do business. Changes over the past 10 years have made this shift inevitable. Companies need to be proactive to stay competitive; those that are not will face more significant hurdles than ever before. And things are happening more quickly than many people realize. The pace of each industrial revolution has dramatically accelerated from its pace in the previous one, and the AI revolution is no exception. Even companies such as Google, which has led the mobile-first world, has substantially shifted gears to stay ahead. As Google CEO Sundar Pichai vowed, “We will move from a mobile-first to an AI-first world.”5
Richard Foster, of the Yale School of Management, has said that because of new technologies an S&P company is now being replaced almost every two weeks, and the average lifespan of an S&P company has dropped by 75% to 15 years over the past half-century.6 Even more intriguing is that regardless of how well a company was doing, its prior successes did not afford protection unless it jumped on the technology innovations of the times.
Along similar lines, McKinsey found that the fastest-growing B2B companies “are using advanced analytics to radically improve their sales productivity and drive double-digit sales growth with minimal additions in their sales teams and cost base.”7 In another paper, they estimated that in 2016, $26 billion to $39 billion was invested in AI, and that number is growing.8 McKinsey posits the reason for this: “Early evidence suggests that AI can deliver real value to serious adopters and can be a powerful force for disruption.”9 Early AI adopters, the study goes on, have higher profit margins, and the gap between them and firms that are not adopting AI enterprise-wide is expected to widen in the future.
All this is good news for businesses that embrace innovation. The changeover to an AI-driven business environment will create big winners among those willing to embrace the AI revolution.
AI Myths and Reality
To most people, AI can seem almost supernatural. But at least for the present, despite its extensive capabilities, AI is more limited than that. Currently, computer scientists group AI into two categories: weak or narrow AI and strong AI, also known as artificial general intelligence (AGI). AGI is defined as AI that can replicate the full range of human cognitive abilities and can apply intelligence to any given problem as opposed to just one. Narrow AI can only focus on a specific and narrow task.
When Steven Spielberg created the movie AI, he visualized humanoid robots that could do almost everything human beings could. In some instances, they replaced humans altogether. AGI of this type is only hypothetical at this point, and it is unclear if or when we will develop it. Scientists even debate whether AGI is actually achievable and whether the gap between machine and human intelligence can ever be closed. Reasoning, planning, self-awareness: these are characteristics developed by humans when they are as young as two or three; but they remain elusive goals for any modern computer.
No computer in existence today can think like a human, and probably no computer will do so in the near future.10 Despite the media attention, there is no reason to be concerned that a simulacrum of HAL,11 from Stanley Kubrick's film 2001, will turn your corporate life upside-down. On the other hand, artificial intelligence is no longer the stuff of science fiction, and there is already a large variety of successful and pragmatic applications, some of which are covered in Part II. The majority of these are narrow AI, and some, at best, are broad AI. We define broad AI as a combination of a number of narrow AI solutions that together give a stronger capability such as autonomous vehicles. None of these are AGI applications.
So how are companies using AI to succeed in this ever-changing world?