Engineering in the 4th industrial revolution is on the brink

Engineering for fourth industrial revolution

in Business strategy

by Dr George Beaton, beatoncapital

‘Engineering in the 4th industrial revolution is on the brink’ is not intended to be a melodramatic assertion. Rather it makes the point that the 4th industrial revolution is here, now. It offers as many opportunities as it poses risks and threats.

This post explains the tenets of the 4th industrial revolution and the reasons why Innergise and beatonlive have combined to present a world-first conference on the future of engineering in this dramatically changing environment.

“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders…”, wrote Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, in January 2016.

Schwab was referring to three hallmarks of the 4th industrial revolution that explain why it is ‘unlike anything humankind has experienced before’:

Systems-wide impacts. The 4th industrial revolution involves the transformation of whole systems, across geographies, industries, businesses, and the whole global community.
Speed. Previous industrial revolutions (steam, electricity, computing) evolved at a linear pace. This one is exponential; this is the result of the world now being multifaceted and deeply interconnected. We all understand this is being driven by new technology. What’s not as well understood is that new technology spawns further new and even more capable technology.
Breadth and depth. The 4th industrial revolution is building on the computing/digital revolution. It integrates many technologies in ways that are leading to unprecedented paradigm shifts in the economy, business/professions, society, and for individuals.

Centrality of engineering

Given the centrality of engineering to the well-being of humanity and the environment, it is now timely to bring together the best engineering-related minds and stakeholders in this future. The purpose is to explore what engineering will look like in the near future, and how the leadership of firms can think about themselves in this future. Hence the reference to being ‘on the brink’ in the title of this post.

Origins of the 4th industrial revolution

The 1st industrial revolution used water and steam power to mechanise production. The 2nd was based on electric power, enabling mass production. The 3rd was built on electronics and information technology to automate production.

And now the 4th industrial revolution is building on the 3rd (i.e. digital) revolution, which started in the middle of the 20th century. The 4th industrial revolution is characterised by the combination of technologies, resulting in the blurring of boundaries amongst the physical, digital, and biological spheres; it is creating pervasive cyber-physical systems.

Drivers of the impact of the 4th industrial revolution on engineering

The 4th industrial revolution is being powered a break-neck speed by a series of mega-trends affecting engineering:

Exponential technology. The impact of technology as a substitute, not just a complement, for engineers’ services will be more dramatic than most predict.
Client transformation. The speed and intensity with which clients in the engineering supply chain are transforming the ways in which they meet their needs will occur more rapidly than most anticipate.
Hyper-competition. Hyper-competition amongst engineering firms will cause changes in industry structure, including clearer delineation of strategic groups and proliferation in the number and type of providers, intensifying supply-side competitive dynamics. As supply chains evolve with technology, new competitors will emerge that will look quite different to traditional competitors.
De-regulation. De-regulation will progressively reduce, even remove, restrictions on almost all aspects of practice and the ways in which engineering services are delivered.
Incumbents’ inertia. If other professional services are a guide, many incumbent engineering firms will be slow to develop the capabilities in change management and innovation that are needed to remain profitable in the conditions expected in the future.
Climate change. More frequent natural disasters and growing strain on scarce resources will necessitate smarter engineering solutions, creating opportunities for innovation and specialisation.
The rise of developing countries. Economic growth causing demand for high-order services in populous developing countries will reshape traditional sources of demand for consulting engineering services.

The cocktail being brewed by these mega-trends explains the subtitle of our conference: ‘Being fit to lead in the face of imminent disruption’. It is addressed squarely to the leaders of all firms.

Promise and impacts of the 4th industrial revolution

Technological innovation is leading to supply-side transformation, manifesting in efficiency and productivity gains. Some the impacts are summarised below, drawn from Klaus Schwab’s paper.

On business

The development of technology-enabled two-sided platforms that combine demand and supply will disrupt existing industry structures. Examples abound, some of the best recognised being Uber and Airbnb. These ‘sharing’ platforms enable people, assets and data to work together in vast, virtual project teams (rather like the making of a Hollywood movie). Entry barriers are being lowered, resulting in new business models and collaborative working and innovation. Innovative and out-of-the-box services, formed by the fusion of ideas, unrestricted by old boundaries, and fuelled by technology are one of the many manifestations of this trend.

The unstoppable shift from the simple digitisation of the 3rd revolution to innovation based on combinations of technologies (the 4th revolution) means consultancies must re-examine their delivery models. Their leaders must understand the rapidly changing environment, challenge their mindsets and legacy business models and innovate.

On people

The 4th industrial revolution is not only changing how individuals live and work, but also affecting our identities, privacy, patterns of consumption, the very conception of work and careers, and our relationships.

On governments

Regulation and education are also caught in this maelstrom. Public policy inevitably lags, as do most universities. The rationale and processes of government regulation and the mainly mechanistic nature of tertiary education are being challenged. Well-trodden, hierarchical approaches no long suffice.

Our Advisory Board – with thanks

beaton and Innergise are most grateful to the members of our advisory board who volunteered their services in guiding our work in researching Engineering your firm for the 4th industrial revolution:

Andrew Mather, President, Consult Australia
Marlene Kanga, President-Elect, World Federation of Engineering Organisation
Michael Hanna, Head of Infrastructure – Australia, IFM Investors
Lucia Cade, Chair, South East Water