By Dr. Aleksander Poniewierski
Nihil novi sub sole
Technological inventions have always been the trigger for new business ideas. First came a new opportunity, resulting from the innovation of a technological solution, which then turned into better or more accurate information. Only the information made it possible to increase efficiency, respond earlier than the competition, or better manage risks.
Take, for example, the construction of a telescope by Galileo Galilei, in the early seventeenth century. This invention was made for his primary occupation, namely astronomy. However, Galileo was also an entrepreneur. He was able to finance his research by selling these instruments to Venetian merchants. The merchants, with the help of this innovative technology, were able to observe approaching trading ships much earlier than their competitors. The technology enabled them to gain a competitive advantage. But did technology directly deliver business value? Of course not. Success required adapting the way they did business, or what we would call today the operating and business model, to the new technological capabilities.
The Fourth Industrial Revolution is based on many new technologies. The internet of things (IoT), artificial intelligence (AI), cloud solutions of all kinds, blockchain technology, or augmented reality (VR, AR) are technologies that, like Galileo’s telescope, are innovating and giving their users an information advantage. Similar to the Venetian merchants of centuries ago, today’s entrepreneurs have to invest in newer and bolder technologies, which are almost immediately replaced by even newer and better ones. At the same time, they must also modify their operational processes and business models. This constant change, often referred to as digital transformation, is a never-ending battle against the resistance and dissatisfaction of people accustomed to the status quo. What is at stake, however, is survival in an increasingly competitive market.
One could say that everything has already been done. But there are fundamental differences between the introduction of innovative technologies over the last 400 years, starting with the Renaissance and going through all of the industrial revolutions, and what we see today.
Knowledge as a service
Todayʼs primary differentiator is the widespread, mass availability of emerging new technologies. Whether dedicated to the individual consumer, changing customer behaviour, or entire industries, they all have one thing in common. They are all based on the provision and processing of increasingly large data sets and the delivery of business information that can be monetised. If you measure in real time and can correlate these measurements with historical data fast enough, you can accurately predict future events. If the system of such measurements is large and cross-sectional enough, then your knowledge derived from the measurements is greater than that of the best specialists that is based only on previous theoretical models and experience.
I will give the trivial example of a cab driver who knows the city very well and has been building his professional experience for years. Let him compete with an Uber driver who arrived here a week ago. Equipped with a navigation system with an active map showing traffic congestion on the road, a system for ordering rides, and cashless billing, he wins over his “traditional” colleague in practically all aspects. It’s faster, easier, and cheaper.
An experienced engineer who knows his plant and machinery will be no more effective than a computerised diagnostic system that monitors machine operation in real time through a network of interconnected sensors.
The mere knowledge of the operation of equipment or the actual process flow in one’s own plant is already a great differentiator and competitive advantage, but the real change is that it can be enhanced by buying the knowledge and experience of experts and users. Instead of organically building your own knowledge, based on individually accumulated experience, you can have it here and now. Of course, it becomes legitimate to ask whether we are becoming too dependent on the providers of this knowledge and technology, and who is really driving our business.
Democratisation of competitiveness
Carefully protected knowledge, acquired over years in specialised training courses that are available only to a few, is a thing of the past. Today, training in almost any speciality can be done in a matter of weeks, without moving from home and, if not free, it is certainly available to everyone. Today, the problem is becoming the narrow specialisation of experts and the dynamics of new technological solutions and their implementations. This is causing a surge in demand for experts with certain competencies and, as a result, their limited availability.
Since traditional knowledge, new technologies, and dedicated specialists alone do not guarantee a competitive advantage, how can companies use them to build such an advantage?
This is where another previously unknown element becomes the answer. Earlier technological innovations were created and developed in silos. They then went through a multi-year process of formal standardisation so that they could work together at all. The dynamics of the Fourth Revolution’s technological development has meant that emerging solutions are created virtually from the start with the assumption of their convergence and synergy. Smart-city solutions are a case in point. Smart cities, after all, are not built from scratch. New solutions penetrate the existing infrastructure and ensure the functioning of the new one. The element that binds them together into a unified whole is, for example, social media platforms. Many residents and visitors use them on a daily basis for communication, information on weather, services, air pollution, etc. They plan their activities based on this data. Technology that is not individually cost-effective even for a large city ensures the functioning of the entire ecosystem when used as a service. The simplicity of use and the community-assured reliability of the information avoids the expenditures that would be necessary to achieve the same effect in
other ways.
The democratisation of access to technology and knowledge has created a new kind of partnership and entrepreneurial ecosystem-building. Thanks to the networked (i.e., multidimensional relationship without hierarchy) nature of partnerships and open-source models, it is now possible to build new and complex innovations extremely quickly and efficiently. This lowers the initial investment required to launch a solution. Each partner adds to what they already have, reaping the benefits of the whole. As a result, many times there are partnerships built for one product or one service.
Economy of scale
Practically all Fourth Industrial Revolution technologies involve the acquisition, transmission, and processing of huge amounts of data. Therefore, their true value is revealed in complex and extensive applications. The interconnection of devices and people through a common internet network has created an environment in which we have at least as many recipients of data as people and devices generating it. The scale we face in exchanging this information is difficult to imagine, yet we have the technologies to harness it.
The previously mentioned lack of initial investment for new solutions is supported by another common and new phenomenon: users of products and services are themselves investing in the devices through which they can use these products and services. We are talking here primarily about mobile devices. In addition to the initial investment (purchase), the user pays a subscription for its use, supplies it with energy, replaces it with a new model on a fairly regular basis, and even takes care of its self-service. This phenomenon makes the vast majority of new solutions profitable for providers in general. What’s more, the unification of the technologies used makes this ecosystem easy to manage. Just 10 years ago, an average investment in a new product or service (connected) for 10 million users would have been beyond the financial reach of the world’s largest corporations. Today, reaching hundreds of millions in single months is commonplace.
Opportunity or threat?
Technological innovations have always had two faces. On the one hand, they delighted, they were magical. Imagine the reactions of a nineteenth-century peasant who came to town and saw a car or an electric light bulb. But on the other hand, technology has always caused fear – fear of change, but especially of health and safety. Often this fear has been used to delay the popularisation of new solutions by those interested in maintaining the status quo.
The Fourth Revolution is all about data. Already, during the great computerisation and robotisation of the late twentieth century (the Third Industrial Revolution), the need to secure and protect it began to be recognised. For it turned out that what constitutes a competitive advantage can easily be lost through unauthorised access to computer systems. Even worse, data can be illegally altered, leading to production losses and even damage to production lines.
However, while in the Third Industrial Revolution we could contemplate the failure of production lines without IT support, in the Fourth it is simply impossible. Thus, cybersecurity has become one of the most important challenges for virtually every area of life in developed countries.
Clearly, data protection risks have touched all areas of our lives. Privacy, identity protection, intellectual property, falsification of financial transactions, and testing of artificial intelligence algorithms are nowadays challenges not only for users or technology manufacturers, but also for regulators or government agencies.
New challenges are also emerging: the need to protect the climate and environment, issues of technological dominance in the geopolitical dimension, and ethics in cyberspace, to name just a few. The fundamental issue is the place that humans occupy in this ecosystem. We must not forget that technology is for people, not the other way around.
About the Author
Dr. Aleksander Poniewierski is the Global Digital and Emerging Technologies Leader at EY, one of the largest international professional services organisations. His focus is on the development of strategy, design, implementation, process optimisation, business model innovation, security and protection for global clients.
Aleksander has a deep understanding of the evolving technology sector and knows how to help companies use it to improve their operations and the world around them.
Aleksander was recognised by IoT World as IoT World Leader of the Year 2020.
Aleksander is a renowned keynote speaker at international conferences and visiting professor at leading universities around the globe. He graduated with a master’s degree in Information Technology from Upper Silesian University and received his PhD in Economics from Poznan University of Economics.
You may also check out Dr. Aleksander Poniewierski’s book entitled, “SPEED: No Limits in the Digital Era” which offers great insights to enhance your business in emerging trends: www.speednolimits.com
