Thirty-eight percent of American workers may need to change occupations by 2030, according to PwC. That means about 45 million people already in the workforce might need to be retrained over the next 11 years. In the same vein, McKinsey Global Institute has estimated that approximately 50% of the activities people are paid to do, representing USD 16 trillion in costs to the global economy, can be automated using currently available technology.
Rapid developments in artificial intelligence (AI) and robotics—coupled with ubiquitous connectivity and vast, easily accessible processing power—are laying the groundwork for fundamental structural changes in the global economy. These mutually reinforcing catalysts are driving exponential innovation across a wide swathe of the economy, reshaping entire industries and creating new ones.
Interestingly, these catalysts are not new in and of themselves. For instance, the early work in modern-day artificial intelligence began in the 1950s, even though progress was limited given the lack of necessary processing power; and, of course, robots have been commonplace in manufacturing for well over 30 years. What’s prompting this new era is the compounding effect of developments in each of these areas. For instance, massively powerful and easily accessible computing power has greatly accelerated developments across AI, robotics, and the internet of things. Similarly, rapid developments in AI have greatly enhanced the capabilities of robotics, complex network management, and our ability to make sense of the vast amount of data captured by an increasingly connected world.
It is not purely technical advancements that are facilitating this revolution: a cultural shift towards a more open, sharing economy has also lowered the barriers to entry for many innovative startups. The open source community has evolved to include valuable intellectual property and sophisticated foundational components made freely available by large companies, such as Amazon, Google, and Facebook, for use by third parties. Couple that with on-demand services, such as effectively limitless computing power, and it’s easy to see how many traditional barriers to entry have been lowered across many industries.
We now stand on the cusp of this new era, the so-called Fourth Industrial Revolution. A term coined by Klaus Schwab of the World Economic Forum (WEF), it refers to this period of pervasive change in which the characteristics of man and machine begin to merge, whereby human capabilities are enhanced by genetic engineering and wearable and implantable technology, and machines acquire human characteristics, including cognitive capabilities. The WEF uses the term cyber-physical systems to describe the symbiosis of man and machine.
Some have argued that the innovation and change underway today is simply an extension of the Third Industrial Revolution, which heralded the introduction of computers and the digital era in the late 1960s/early 1970s.3 However, the Fourth Industrial Revolution represents a step change both in terms of the rate of change and the nature of it. The digital era is transitioning from one largely involving the automation of rote tasks to one that now includes the advanced cognitive capabilities typically associated with humans. The rate and breadth of change anticipated over the next decade is also unprecedented, resulting in what is likely to be a very different-looking world.