What does the Fourth Industrial Revolution have to do with your product?
Hint: It has a lot to do!
It’s been a while since I was first introduced to the Fourth Industrial Revolution and its concepts. It happened in late 2016 when I read Klaus Schwab’s book about the topic. At that time, the reading was kind of a mind-blowing one, making me reflect about many aspects regarding economy and society in the digital era. Since then, I have been also working with the development of digital products and, being pretty enthusiastic about both, I can’t help seeing a strong connection between them. We, as Product People, are fascinated by growth and the impact of our work. Revolution, by definition, means abrupt and radical change — but especially the Fourth Industrial Revolution is all about speed and breadth of impact, as you will see later in this post. This is just a quick and kind of obvious connection that can be made, so in this post I want to dig deeper into the Fourth Industrial Revolution and how the products we develop are strongly related to it.
The revolutions in our history
In order to talk about the Fourth Industrial Revolution, I will just briefly talk about the three previous ones. The First Industrial Revolution happened between 1760 and 1840, being marked by the construction of railroads, invention of steam engine and eventually making mechanical production possible. The Second Industrial revolution is possibly the most studied one, being lead by the advent of electricity and assembly line in the early 20th century, it was the time that mass production was made possible and virtually all industries we know used to work in this operation model until some years ago. The Third Industrial Revolution started in 1960 fostered by the development of computing, semiconductors and the Internet in the 1990s. All of those advents represent breakthroughs for humankind and therefore they have boosted the development of our society in their ages.
Until the invention of Internet in the 1990s, though, the lack of velocity and capability to spread worldwide were patterns for such revolutions. The previous revolutions were as well represented by one main event that changed the world. What happens is that the Fourth Industrial Revolution is an anti-pattern for its characteristics of depth and velocity of impact and is shaping the way we live in a much faster pace than ever.
The uniqueness of the Fourth Industrial Revolution
We currently live in an era in which internet is almost ubiquitous for all human beings, even though it was invented less than thirty years ago. Artificial Intelligence and Machine learning are subjects that had never been said until some years ago and now they are both must have capabilities for companies and professionals. The technologies brought by the Third Industrial Revolution are becoming integrated, sophisticated and powerful, creating global networks of economy and relationships. This led MIT researchers Erik Brynjolfsson and Andrew McAfee to refer to this era also as “The Second Machine Age”.
I took this picture above from the World Economic Forum’s website (www.weforum.org) because it provides a quick glimpse to all points of impact of the Fourth Industrial Revolution, highlighting the wide range of areas being disrupted in this era. We are witnessing parallel advances in Physical, Digital and Biological fields with an unprecedented pace. Due to the advent of new materials, 3D printing was made possible at the same time that new, smaller and more powerful sensors enabled IoT and inventions such as autonomous vehicles. Industry 4.0, term first brought to the table in the Hannover Fair in 2011, is also being enabled by IoT and the connectedness of the world we live in. Factories can now rely on a wide range of real time data to make decisions and improve their operations. The platform business model has been born and quickly disrupted many industries with the rise of companies like AirBnB, Uber and Alibaba. Such companies match supply and demand owning no assets, reducing their operation costs and also the amount of people needed to handle the operation. As if all of those things were not enough, gene sequencing has dramatically decreased its cost powered by AI and algorithms recently developed. We can see that fields are connected and this connectedness leads us to a dramatic shift in the way we live as a society. The advents of the First Industrial Revolution, for instance, took around 120 years to be widespread across Europe. On the other hand, Internet took around 10 to be spread worldwide. As Klaus Schwab highlights in his book:
Detroit in 1990 (then a major centre of traditional industries) with Silicon Valley in 2014. In 1990, the three biggest companies in Detroit had a combined market capitalization of $36 billion, revenues of $250 billion, and 1.2 million employees. In 2014, the three biggest companies in Silicon Valley had a considerably higher market capitalization ($1.09 trillion), generated roughly the same revenues ($247 billion), but with about 10 times fewer employees.
Schwab, Klaus. The Fourth Industrial Revolution (p. 10). World Economic Forum.
Taking a deeper look into the aspect of revenue x jobs, it may seem more scaring than the fancy side of revolution and technological improvements if not handled throughly. Oxford researches have made a list professions that are most and least likely to be automated in the upcoming years.
We can notice that the jobs least likely to be automated are all related to creativity, mastering human relationships and require a high level of cognitive skills. In contrast, tasks that are performed on a daily basis with a repetitive characteristic are at stake with the development of computers that are capable of replacing and being better than humans at tasks that require rapid and repetitive decision making through the use of algorithms. The set of skills needed to perform roles that are not at stake, though, is a very challenging one. The Future of Jobs Report was published in 2016 by the World Economic Forum and brings us a forecast of the necessary skillset to be relevant in the workplace until 2020, as shown in the picture below:
The main concern here is that the highest share of the world’s population lacks the majority of such skills. A small minority of innovators with high cognitive skills is being able to hit the world with platform products that meet consumers demand worldwide creating global network effects. The possession of intellectual capital is strengthening its value over labour and it causes many workers to be unmotivated as they see no perspective of improvement in their lives. The US Census, for the first time in history, shows that productivity is being enhanced by replacement of workers, instead of the creation of new products that require more workers to operate. This is another difference from the previous industrial revolutions, that used to create new operations and jobs in almost the same share that it has replaced.
Another thing that Klaus Schwab points out in his book is the concern about public and private leadership. If the leaders of the world don’t acknowledge the unconventional aspects of the Fourth Industrial Revolution and embrace their social role in this era, the impact of the current revolution can be as hazardous as the most pessimist ones predict. Not as a coincidence, this is the trigger that made me relate the Fourth Industrial Revolution to Product Management.
Product Management to embrace the revolution
I can bet that if you are a product manager, you are now working with a platform product or at least thinking about it. You don’t need to be aware of the concepts of the revolution to realise that this business model is becoming commoditised and dominating. But, have you ever wondered the impact that such model can have in your organisation and society?
Even though sometimes product people are not formal leaders in organisations, leadership is a great part of what product managers do. So, as I mentioned in the previous paragraph, do you think you are a leader that understand the real impact of your work? Far beyond from delivering new products and features, product managers are also in charge of analysing how teams are preparing their skillset for this new era. When a new feature is delivered, is your company service desk being trained to gather new insights of customers instead of simply asking questions? Is your product team investing in PoCs of sophisticated algorithms or Machine Learning? Do you stimulate engineers of your team to improve their social skills, build relationships to other teams in order to solve complex problems? By doing this, you are not only developing your organisation and society as a whole, but also developing skills that are going to be necessary to implement your product features if you still want to be relevant. Consumer expectations have shifted dramatically, from P2P products to the usage of data to anticipate consumer’s needs. Experiences provided by products like Spotify and Netflix are expected to all industries, not only to entertainment anymore. There is a whole field called Anticipatory Design (you can read this Medium post for further information https://uxdesign.cc/design-experiences-that-are-one-step-ahead-2254e98d07b2) that can be studied to start doing so.
Another thing to be taken into consideration while developing new products is the collaboration between companies, specially if you work in a big one. Whenever you feel you lack the skills to develop something, it is worth taking a look in the marketplace and think about partnerships. Technology has decreased the cost of entry in the market and there are lots of small companies providing services that can be useful for a wide range of products and, in the meantime, fostering new entrants to the market. Regardless the size of your company, collaboration within the company is mandatory for achieving success nowadays. As consumers expectations have rose, so have employees’. Hierarchy will not make your team achieve the best results, but rather collaboration and an environment that stimulates growth.
More directly related to product development, the World Economic Forum’s Global Agenda Council on the Future of Software and Society surveyed in 2015 more than 800 executives and experts of information technology around the globe and asked them about technology breakthroughs they believed would happen until 2025. The table below, taken from Schwab’s book, shows the percentage of respondents who believe in each item of the list. This is a very good source of things to be aware of and grasp opportunities to develop them in your products.
In order to take advantage of such things, product teams must be willing to embrace uncertainty and the possibility of failing. If you think about the first item of the list and try to build some product that connects clothes to the internet, a concern about cybersecurity will also be risen. This is another subject that you and your team need to study to survive in the digital era. We must always question our patterns and operating models and adapt them if we want to fully grasp the potential of the Fourth Industrial Revolution. The term “Agile Government” is also being discussed, as many experts understand that the velocity of our regulators is going to make them obsolete and useless if they don’t rethink the way they do their job. So, even if you face a regulatory issue with your product, why not question it?
At last but not least, I believe empathy is a very important thing for Product Management and User Experience and many Product Managers are masters in this subject. But what if everything we have learned about interacting with each other changes? This concern came into my mind while reading the quote below in Klaus Schwab’s book.
According to MIT’s Sherry Turkle, 44% of
teenagers never unplug, even while playing
sports or having a meal with family or
friends. With face-to-face conversations
crowded out by online interactions, there are
fears that an entire generation of young
people consumed by social media is
struggling to listen, make eye contact or read
body language.Schwab, Klaus. The Fourth Industrial
Revolution (p. 101). World Economic Forum.
Once again, questioning our patterns (even about the way we empathise) and the way we do things will be crucial to understand and lead this revolution that is all around us. Product People are leaders that need to be deeply aware of the underlying questions of this digital era that is changing the world faster than ever.
I hope this post was insightful about the Fourth Industrial Revolution and the changes that are happening in our world. I’m very glad to share my thoughts with the product community so we can discuss about the role we play in this environment.
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