Innovation at a cross-roads. Industrial revolution marked by the cyber-physical

James Mabbott, Partner, Head of KPMG Innovate

It is hard to escape conversations about the future at the moment.

What is clear is that business, government and community leaders are all grappling with the impact or potential impact of technological, socioeconomic and cultural change. One of the key drivers of this change is the impact of industry 4.0. An industrial revolution that is marked by the cyber-physical. The increasing use of and development of artificial intelligence, the development of the internet of things, and the proliferation of cloud based ‘as-a-service’ offerings.

A revolution that promises easy and ubiquitous access to knowledge, and systems that augment human decision making and the ability to solve really big problems. This is going to see new business models emerge, new products and services and new roles. And there are existing businesses and practices that will fall by the wayside. This is a key hallmark of revolution.

In previous industrial revolutions the creation of the new led to, by and large, positive changes. Technological changes that made certain types of labour easier or automated, leading to both new jobs and new labour pools. Socioeconomic changes that led to better wealth, education and health outcomes. And cultural changes that have led to greater workforce inclusiveness and opportunity for all in society. Opportunities regardless of race, religion, gender, ability and identity.

The cyber-physical world is a culmination of great innovation.  For some this is what innovation is all about. The emergence of new technologies and the application of these to create the new. It is why we cannot divorce innovation and technology as being one and the same in lay terms even though in technical terms they can be very different things.

And this is why innovation, a term that should be closely aligned to opportunity, jobs growth, economic prosperity and productivity, finds itself at a cross-roads. The combination of innovation and industry 4.0 is creating a view of the future that is troubling. Industry 4.0 and the discussion around what it might entail poses a series of uncomfortable challenges for society:

  • An imbalance in job creation vs job destruction
  • An industry based on skillsets like STEM where there are significant diversity challenges
  • Augmented decision making that is potentially biased and inexplicable
  • Wealth distribution that sees a concentration of wealth in a very small percentage of the population
  • Waste management, pollution and recycling challenges related to IOT devices
  • Energy production and consumption needs increasing dramatically

These are ethical challenges at their core. Are we prepared to hold back automation to protect jobs? Or is it right that workers who are female, or have a disability, or come from particular ethnic backgrounds could be excluded? Does it matter that there is bias in AI systems? Are winner takes all economic systems (network effects) good for society in the long term? What impacts to climate and environment will we see due to energy demands and use of toxic metals or long life plastics for sensors?

The reality is the outcomes here are unclear. What is clear though is that we need to have a conversation because the outcomes will be what we choose them to be. And that choice will be either a conscious and deliberate one or one we make by inaction. The conversation needs to be about the type of society we want to have. The type of world we want to live in and the type of opportunities we want to create for ourselves and future generations.

The good news is that as leaders we have the opportunity to do something about this now.

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