The Fourth Industrial Revolution is being driven by extreme automation and extreme connectivity. Extreme automation will, as a first step, expand the range of jobs it is possible to automate, to include not only highly repetitive low-skill jobs, but also highly routine medium-skill jobs. As we outline in the next section, the relative impact of this extreme automation on income inequality between low-skill and high-skill labor looks set to intensify.

We expect artificial intelligence (AI) to be a pervasive feature of the Fourth Industrial Revolution. Extreme automation via AI will increasingly automate some of the skills that formerly only humans possessed. Where AI could be poised to make the biggest gains is in big data processing, potentially including the processing of language and images, which have thus far been off-limits for computers to understand. Extreme automation could allow more robots and AI to produce output, analyze results, make complex decisions, and adapt conclusions to environmental factors.

Extreme connectivity enables more universal, global and close-to-instant communication. It is giving rise to new business models and is opening up economic supply in ways previously not possible. Indeed, the creation of Uber, the taxi-hailing smartphone app, was only made possible by the explosive increase in portable Internet-enabled devises. Supply effectively created its own demand. Services like Facebook, WhatsApp, Pinterest, Snapchat, Twitter, and Instagram have come to play a pivotal role in the social interaction of citizens around the world.

Extreme automation can also be coupled with extreme connectivity, allowing computing systems to control and manage physical processes and respond in ever more “human” ways. This represents a democratization of the ability to communicate between and among governments, corporates, humans, and machines. The advent of “cyber-physical systems” may allow robots and AI, via extreme automation and connectivity, to “cross the chasm” between the technosphere, the natural world, and the human world.

Eoin Treacy's view

Here is a link to the full report.

For a moment let’s not think about the future, let’s focus on today. Customer service at Ebay is largely computer driven. When I phone my health insurer 80% of the options do not require a conversation with a human. The same is true of Amazon customer care. Quicken loans is doing away with the mortgage brokers, insurance agents were largely dispensed with in Europe years ago. This is a trend and jobs that do not require human interaction will increasingly be automated. 

Walking down in the street in Los Angeles, the businesses one sees are service oriented. Restaurants, nail salons, mattress stores, doctors, dentists, pet care etc. all require physical locations. Mom and pop stores that once depended on reselling are gone. Whatever can be bought online will be. There is a very clear message here. If you are not technically or academically minded you had better be people friendly because machines will displace just about every other job. New types of jobs will emerge and adaptability will be a prized skill. 

This could represent perhaps the greatest risk to developing economies as competitive labour is removed from the cost equation. That is why I was so interested to hear from Softwear’s CEO that they are receiving some of their most interested potential customers from major manufacturing centers in Asia. They are as aware of this issue as we are so they have no choice but to take action now to preserve their market share. 

It seems clear that two things will be required to drive economic outperformance in future. Short supply chains and access to large consumer bases. Companies like Primark, H&M, Zara and Pandora bring out new styles on almost a weekly basis. Technology is about 3 years away from someone visiting a site, completely customising an outfit and having it arrive by courier the same day. There will always be a mass market bracket for consumables but the customisation and personalisation of consumer goods is where growth is likely to come from. One of the reasons China is racing to develop a domestic consumer sector is because of this trend.