It’s almost impossible to turn around nowadays without finding another article predicting the impact that AI and other emerging technologies – the so-called Fourth Industrial Revolution – will have on our future. It’s one of the hottest topics being discussed by forward-thinking business leaders today. And well it should be. The fact that we are on the cusp of dramatic change in how business, workplaces and our very lives are carried out is inescapable.
Some writers picture a utopia where humankind is freed from manual labor, where machines do all the work and all people receive a universal basic income from the revenues that machines generate. This view further pictures all people, having been freed from the need to work for a living, as devoting their time to altruism, art and culture.
Other writers picture a dystopia where a tiny elite class has seized control of AI and uses it to produce all the goods and services needed by society. In this view, that miniscule elite uses their control of AI to hoard all the world’s wealth and trap almost all people in inescapable poverty.
Other writers yet take a broader view of AI’s future. This view sees little ultimate disruption beyond adopting new paradigms in the workplace. Workers who now work in routine, repetitive jobs would be displaced from them as AI performs those jobs more efficiently, but AI creates new, higher-value jobs that make the net job loss close to zero. All that’s needed, in this view, is for displaced workers to learn the skills needed to fill the new jobs.
These perspectives are often presented in their most simplistic forms and fall victim to exaggeration. The utopian view exaggerates the ability of AI to function without human input. The dystopian view exaggerates estimates of potential job losses. The broad view, which I call the organic view, exaggerates the ease of transitioning workers from the routine, repetitive jobs that AI will replace into the skilled, higher-value jobs that AI will create.
Where does our future lie? Are we ascending into a Golden Age, or plunging into a Dark Age? Are we about to experience only a minor hiccup in the workforce? Our future likely does not lie at any of these simplistic extremes.
It would be foolish to ignore AI as nothing more than yet another new technology. It will require dramatic changes in how leadership and management operate. It will be a career-changer not only for blue collar workers, but all the way up to the C-level. It will thus require a willingness by leaders to adapt to its new paradigms if they are to thrive in the new world those paradigms present, and an awareness of how to prepare future generations for employment in a future heavily dependent on AI. Envisioning our future by examining our past.
AI and the other technologies driving the Fourth Industrial Revolution will change our workplaces and our lives even more than any of the past three did. Think about that statement for a moment.
Transformations from the First Industrial Revolution
The First Industrial Revolution introduced the steam engine and subsequent mechanical manufacture of what previously could only be manufactured by hand. This multiplied humankind’s physical ability by enabling goods to be produced much faster and less expensively.
It spurred increased consumption of goods that previously had been available only in limited quantities. It made mechanical transportation (trains) possible, also multiplying the physical power of animals whose superior natural strength people had exploited. Finally, it spurred a shift in the workforce from farmers and craftsmen to factory workers and led to migration from rural settings to cities.
This did not happen without pain. The second half of the nineteenth century in England was a time of rapid population growth coupled with widespread improvements in health and great reductions in the number of people on the verge of starvation. Those improvements were possible because of the rapid advance of enclosures, in which land that had previously been found on the strip system with every villager having an allocation of strips was taken from those villagers and combined into individual farms.
Those enclosures can therefore be seen over the long term as a good thing – but the impact on the dispossessed poor at the time of enclosure was harsh and sometimes devastating. In the last paragraph, we used the expression ‘migration from rural settings to cities.’ That was not how those migrants saw it at the time. Individual farms required less labor than strip farming, so that there was now a surplus of unemployed farm laborers. They did not migrate to pit villages and manufacturing towns as a matter of choice. They went because they had no alternative. In the seventeen sixties, there was a violent explosion in the Lambton Colliery near Durham in north-east England in which every man and boy working underground was blown up the shaft like balls from a cannon. When their grieving relatives searched for their remains, they found body parts scattered over a wide area.
Every one of those pit workers had worked on the land a few short years before as strip farmers. They went to work at the colliery because enclosure had removed their strips from them. It is no stretch to say that enclosures killed them.
Lancashire cotton workers could tell much the same story as looms in factories made home working uneconomic. The end result was to be cheaper production and wider access two high quality furnishings and clothing. The immediate effect was misery.
This is the law of unintended consequences at work. As we move into this Fourth Industrial Revolution, greater care is needed to think through the impact on all stakeholders.
And nor was this only a nineteenth century English manifestation. Advanced industrial countries in North America and Europe saw widespread job losses throughout the second half of the twentieth century as basic manufacturing jobs were outsourced to Asia in particular and also to Africa and South America. Towards the end of the twentieth century and in the first decade of the twenty first, high-tech jobs like coding and web design made similar transfers.
The solution sought by governments in North America and Europe has been to upskill workers whose jobs have been outsourced through education and continuous training. As this book will show, those efforts will have to be intensified.
Transformations from the Second Industrial Revolution
The Second Industrial Revolution introduced electricity and mass production methods that again multiplied the effects of the First Industrial Revolution. The first revolution had multiplied humankind’s physical ability to produce goods. The assembly line multiplied that ability once again, making it possible to produce even more complex goods faster and less expensively.
The mechanical transportation introduced by the first revolution in the form of mass transit vehicles such as trains now became attainable by individuals in the form of automobiles. The workforce shift introduced by the first revolution became more pronounced. Powered machinery enabled farmers to accomplish more with fewer workers and factory work in burgeoning cities became more the norm.
Once again, we should not forget the element of pain because – once again – the movement of workers off the farms and into the factories was quite frequently something forced on them and not done by choice. The tendency in more recent years towards municipal zoning and for people to commute to work from more pleasant residential and sometimes semi-rural homes had not yet begun. It was a shock to the psyche to leave behind a country existence in order to live in a busy city where the noise never stops and moments of solitude are difficult to achieve. Some people never got over that shock.
Infrastructure in the form of commuter transportation (see, for example, Ontario’s GO Train network in Canada) eased these problems, but was some time in coming. What we have now is the ability to better foresee pain points for people – all people – and take steps to avoid them from the beginning.
Transformations from the Third Industrial Revolution
The Third Industrial Revolution introduced the computer. Unlike the first two revolutions, which multiplied humankind’s physical capabilities, this third revolution multiplied humankind’s mental capabilities, making it possible to retain more data and process it faster than humans could. This made it possible for people to process far larger amounts of information than unaided people could normally do and expand the range of projects they could accomplish.
This revolution expanded as the technology improved. It originally involved prohibitively expensive equipment that only the wealthiest organizations could afford and that required an entire floor of a building to house. Then it contracted to tabletop devices that individuals could afford, and contracted further to what we experience today, where most people carry in their pockets a handheld device that has more computing power than all the computers of NASA’s 1960s space program combined and offers instant access to people and vast storehouses of information all around the world.
And was there pain, too, in these transformations? There certainly was. Until the middle of the 1960s, every manufacturing company had rooms full of draftsmen at drawing boards and/or accounts clerks at desks. Thanks to the ability of computers to produce and change drawings and to process data, a comparatively tiny number of draftspeople and clerks now handle a much larger throughput and do it more efficiently and more accurately. That transformation is now over and people who, fifty years ago, might have left school to become accounts clerks or draftsmen now take other jobs. And that’s good – but we should not let it blind us to the economic difficulties that so many of those displaced workers experienced at the time or to the loss of the social contact and sense of validation that came from working in a large room filled by people doing similar work.
The reference to social contact and validation is a reminder that organizations do well to provide meeting places for their workers where things other than work can be discussed. It has also been a driver in the proliferation of places where, instead of working at home, freelancers can rent a desk and office facilities for short periods. The greatest attraction of those facilities for many freelancers is not the desk and the Wi-Fi connection but the fact that they can buy a coffee in a communal meeting room and chat to other freelancers. The Third Industrial Revolution increased the loneliness of a not insignificant portion of the population, and the next Industrial Revolution will do the same. Loneliness can kill. Eliminating it is a challenge for leaders in the age of AI.
Transformations promised by the Fourth Industrial Revolution
Considering the seismic changes that each of these previous revolutions created, how could we say that this Fourth Industrial Revolution could change our workplaces and our lives more than any of these past ones did? What this coming revolution, largely driven by AI, promises to do is to multiply both the physical and mental capabilities of humankind and combine them into systems that give us unprecedented control over our physical world.
It promises to put control of objects halfway across the world at our fingertips, uncover new ways to optimize agriculture, manufacturing, daily life and even our own health and take control of our physical world in ways we only now are beginning to be capable of imagining. Here is a small example of the kind of world AI and other emerging technologies are propelling us toward.
Imagine a “smart” industrial facility in which vibration sensors are attached to core components of the machinery as part of the Industrial Internet of Things (IIoT). Those sensors send data into the cloud. The cloud is yet another emerging technology that enables individuals or organizations to access computational resources physically located off-site. In the cloud, an AI analytics program estimates each component’s Remaining Usefulness Lifetime (RUL) so the system gets maximum use out of each component. This process greatly enhances current maintenance procedures that replace components pre-emptively, well before they would likely fail. Such AI analysis is estimated to be able to reduce replacement costs by 20%.
When such analysis determines that a part is near the end of its RUL, the AI system sends a request directly to an industrial 3D printer in the facility to fabricate the replacement part. If printing the part on-site is not feasible, the AI system could autonomously send an order to an outside part supplier for a replacement part, using the Internet of Payments (IoP), a combination of IoT, AI, blockchain’s distributed ledger system and cryptocurrencies. The part supplier could manufacture the part and deliver it by drone, self-driving truck or delivery robot, any of which would also include some degree of AI to enable safe and speedy delivery.
In the whole example so far, no human intervention would be needed (unless the part’s cost exceeded a predetermined spending limit). That eliminates the need for equipment checks by maintenance engineers, people to place purchase orders, accounts receivable and accounts payable specialists, shippers or delivery drivers. The technologies handle all those steps without human intervention.
The first human intervention occurs when the part has been printed or delivered. A part-time maintenance engineer is notified to install the part. Even here, technology changes the replacement process.
Rather than needing multiple specialist engineers on staff to maintain each complex system, the facility could employ an engineer with general rather than specialized skills to perform the replacement. Such an engineer would be able to perform tasks beyond their training thanks to step-by-step by augmented reality (AR) guidance. AR uses AI and sensors to provide instructions that can walk a user through a complex procedure using visual images that overlay the object being repaired. These visual images respond to the user’s position relative to the object and the user’s movements so that the overlaid images always correspond to what the user sees.
This scenario is not some pipe dream, but is derived from a real-life project we worked on for an industrial facility. The functionality achieved in the project has not yet reached the mainstream, but this scenario is already used in specialized environments. What we believe will eventually push this scenario into the mainstream is its success. The savings and efficiencies achieved were unprecedented.
In terms of job impact, this combination of emerging technologies – pulled together by AI – replaced 150 people who had worked in various maintenance functions or in the supply chain with one part-time maintenance worker. Many – but not all – of the workers in the jobs replaced were upskilled to better-paying jobs in the same firm. The rest were let go – and that includes not only some of the maintenance workers, but also those in formerly key positions in the supply chain.
This is the likely pattern for future job disruptions by AI and the emerging technologies that AI brings together. This is also why it is essential that leaders understand how to position themselves, so they can thrive in the coming job shifts instead of becoming a casualty.
Having seen how AI and the technologies it harnesses affected that single industrial facility, consider the effect AI will have as it expands. The same technologies are currently being applied on a smaller scale across cities, transportation systems, power distribution grids, water and waste management systems and food providers. Smart cities and all the elements that go into where we live, how we get around, how we work, what we eat and how we live our lives rest on systems that enable these converging technologies to offer great potential for improved efficiencies and improved sustainability.
Does this mean we are entering a Golden Age where all things will be under our control and no problems will exist? Hardly! We need only look back to previous industrial revolutions to see that dramatic workforce and cultural shifts caused by new technologies are never trouble-free.
The negative effects of past industrial revolutions
The First Industrial Revolution’s mechanized means of manufacture displaced craftsmen who had spent years learning their craft and performed it under fairly comfortable working conditions. It replaced them with low-skilled and low-paid laborers who worked under harsh conditions in early factories. That workforce shift spawned the Luddites, whose protests at this shift that threatened their livelihood erupted in violence, destroying machines that supported the workforce shift. This protest was quickly quelled by force, as were later destructive acts against the use of threshing machines that reduced the need for hired farm laborers in the early 19th century.
The Second Industrial Revolution’s mass production capabilities intensified the industrialization of society. More mechanization of agriculture further reduced the need for farm laborers. The growing replacement of horse-drawn transportation by cars dramatically reduced the need for horses, and the reduced need for horses dramatically shifted agricultural demand, one-quarter of which had previously been devoted to growing hay to feed the vast number of horses. And, as the number of horses fell, so did the number of blacksmiths. As late as 1900, blacksmith was the fourth largest occupational group in America. Every village had its own blacksmith; so did every town and city neighborhood. Blacksmiths not only shoed horses but also carried out all sorts of small manufacturing activities. By the 1920s, the number of blacksmiths in America had fallen to a level at which the occupation ceased to be separately identified in the census.
Unregulated speculative financial practices seeking to cash in on the new technologies ultimately spurred the Great Depression. Working conditions in factories and predatory labor practices pushed displaced workers and their families into dire straits. Only when labor laws caught up with the shift in the workforce and World War II reignited demand for manufacturing did the disruption caused by the Second Industrial Revolution finally stabilize.
The Third Industrial Revolution’s disruptions were far subtler. In many ways, it took the workforce in the opposite direction. Whereas the first two revolutions replaced skilled workers with low-skill workers, the third revolution consistently pushed workers to obtain higher skill sets. Both blue-collar and white-collar workers found themselves continually needing to obtain more skills as factory and office environments became more complex.
Along the way, large classes of occupations were still displaced by new technologies. Secretaries who had been relied upon to translate dictated or handwritten information into formal, printed materials were displaced by the ability of white-collar workers to produce their own printed materials by means of PC-based word processing and desktop publishing software. Factory workers whose work involved some of the most routine functions have found themselves replaced by early efforts at automation. But, mostly, the trend in the Third Industrial Revolution has been to require increasing levels of skills from workers.
Challenges of the upcoming Fourth Industrial Revolution
Our emerging Fourth Industrial Revolution continues that trend, but puts it into overdrive. The skill-acquisition curve of the Third Industrial Revolution was relatively gradual compared to what is coming.
Much has been made of the effect of growing automation on blue-collar jobs, with advanced robotics increasingly depressing the wages of factory workers and decreasing the availability of entry-level jobs there. Nor are these effects limited to blue-collar workers. As AI and other emerging technologies continue to advance and converge, they will also hit white-collar workers, and they will hit them hard.
AI is increasingly becoming capable of many of the tasks that occupy most middle-skill workers – both blue-collar and white-collar. It can crunch numbers faster and more accurately than the best analysts. It can discern patterns in data that are too subtle for most analysts to notice. It can optimize processes to a more granular degree than the best operations managers. It can even assess complex sets of variables to engage in high-level decision-making that formerly only top-level executives performed.
Are we then headed into a Dark Age where humans will be rendered obsolete? Again, the answer is a resounding, “No!” AI and the other emerging technologies are not a step into a world that says, “No humans needed.” In fact, to fulfill their potential these technologies will need qualities that only humans can provide.
The road to achieving this potential will not be smooth. Businesses, government and education are already repeating some of the worst mistakes that led to disastrous disruptions and dire conditions in past industrial revolutions. This book will look at what AI and other emerging technologies can do and where they are headed to see where potential problems lie and help chart a course that takes us safely through the minefield ahead. It will look at how we can prepare ourselves and the people who depend on us for their jobs – and their livelihoods – for the smoothest possible path into our future in an AI-enabled world.
Key success factor: Leadership
The human dimension of the Fourth Industrial Revolution is even more challenging than the technological dimension. In all industry discussions, the widely underrated success factor is leadership.
Leaders of tomorrow are the game changers who will have to chart their organization’s and their workforce’s way through the Fourth Industrial Revolution by embracing disruptive change and encouraging and enabling their employees to do the same. Roles they will need to master will include motivator, innovator, facilitator and assimilator. Leaders will have to focus on shaping their team’s trust in new technologies, sensitize them to AI risks, and take away their fear regarding changing job requirements and even potential job loss.
While expert technical knowledge remains highly important as we digitize and automate more and more, the success of the Fourth Industrial Revolution depends increasingly on factors other than technical expertise.
History allows us to look back on the mistakes of the first three industrial revolutions. While recognizing the long-term gains in productivity, welfare and standards of living (average life expectancy in Japan in 2015 was nearly 84 years. In 1900, it had been 44 years), we are also able to look at the pain suffered by many of those who lived through those three revolutions. We can take the long-term view that it hurt at the time, but it was for the best.
But was it? For everyone? Not for those men and boys shot out of the Lambton Colliery shaft like cannon balls. Not for farm laborers driven into towns to die of consumption. Not for skilled home weavers who were obliged to swap a living wage for life at subsistence level.
There are some interesting historical observations to be made. In Lancashire, England, when female weavers working at home were able to earn sufficient money to provide for themselves and their families, some 30% of them chose not to marry. They had children, but they did not – and this was by choice – either marry the children’s fathers or live with them. They were free, financially, to live as they chose and they chose to live alone even when they had children. Once the mills were established and home weavers had been priced out of existence, the number of female weavers who did not marry fell to 2%. (These figures come from an exhaustive examination of Lancashire parish registers in a form as yet unpublished). Why did they choose to marry when, previously, they had not? Because you could not raise a family on one person’s wages, and especially on one female person’s wages. You needed the wages of two people even to achieve a bare subsistence level.
What a careful study of the negative impacts of the previous three industrial revolutions tells us is that the people driving and benefiting from those revolutions – the leaders of the day – paid very little attention to any of what we might now call ‘soft skills.’ The only things that mattered were economic and financial. To put it bluntly, if they couldn’t spend it or invest it, it didn’t count.
If similar pain is to be avoided in the Fourth Industrial Revolution, leaders will need to be much more aware of the impact of their actions on every stakeholder. And every stakeholder means not just the managers, not just the shareholders, not just the organization’s employees but every single person on whom the organization’s activities and choices have any impact whatsoever. Social awareness must be far more than a buzzword. It must become a reality embedded in the organization at every level.