There have been 10 megatrends in industrial revolutions. These megatrends emerge once we dissect each of the industrial revolutions, including the preindustrial one, in detecting patterns. They help us understand the way the past unfolded. Most importantly, it signals us the nature of future transformation.
The human race has been progressing through technology inventions and waves of innovation. Although we perceive invention and innovation as the creative sparks in the minds of genius, there appears to be a trend. It seems that the urge to systematically ferreting out value from the market out of ideas has created megatrends in industrial revolutions. It appears that these megatrends will play important role in systematic thinking about the future. Hence, they will help readers make better choices today, which will determine the future we will live in.
Art->Tinkering->Science->Scalable inventions->Waves of Innovation
Our knowledge-gathering begins through intuitive observation in the form of art. This is our innate ability. Intuitively we detect variables and establish a qualitative relationship among them in analyzing, interpreting, and comprehending phenomena. Based on this form of knowledge, we develop ideas and transfer them into techniques to serve purposes better. This is the tinkering form of manifestation of our knowledge and ideas into technology inventions. Subsequently, we use those inventions to innovate products to serve our purposes. In fact, our ancestors invented technologies and innovated solutions in the pre-industrial age using this tinkering approach. Moreover, as this is our inherent ability, we still practice tinkering. For example, the Innovation Foundation of India has developed a database of more than 300,000 such innovations that are in use in India. In Hindi, they call them ‘Jugaad.’
However, inventions and innovations emerging from the art form of knowledge and tinkering approaches are not scalable. Due to our trial and error approach, the refinement of them faces limits very quickly. Hence, we cannot keep making them better and also cheaper through additional ideas. Consequentially, their diffusion reaches saturation rapidly.
Fortunately, once we turn our art form of knowledge, underlying tinkering-based inventions, into scientific knowledge, we open a scalable path. Instead of a qualitative form of relations among a limited number of variables, scientific investigation finds additional variables and establishes quantitative relations among them. The formation of this scientific knowledge about phenomena and ideas of techniques, for serving purpose better, opens the opportunity to keep advancing inventions and innovations. Through scientific knowledge, we keep producing and refining ideas in making innovations increasingly better and also cheaper. Consequentially, innovations start forming big waves. Our migration from the preindustrial stage to subsequent industrial revolutions has been due to this advancement.
We also observe that there has also been a trend of using resources in different industrial revolutions. For example, the first industrial evolution unfolded around mechanical technology. We physically shaped materials into tools and techniques in using steam energy. We also introduced mechanization in production through this technique during the first industrial revolution. In comparison to the preindustrial age, we used more scientific knowledge during 1760-1870. Hence our capability was far more significant in fueling innovation waves.
Further to mechanical technology, the second industrial revolution significantly benefited from materials’ electrical properties. In fact, electric lighting, electrical power production and distribution, electrical motors, and household electrical devices played a vital role in fueling the second industrial revolution’s growth. In addition to electrical power, our predecessors also harvested electronics. Subsequently, electronics technology formed the foundation for creating innovation waves in the third industrial revolution. Moreover, Transistor’s invention led to the innovation of programmable devices, starting from computers to smartphones. Hence, the scope of innovation emerged in the form of software. Software innovations have been emerging as standalone applications and also as an integral part of most of industrial products. This is one of the major megatrends in industrial revolutions.
The first industrial revolution unfolded due to the advancement of steam engine invention and waves of energy innovations around them. Production processes were also mechanized to take advance of the supply of energy from the burning of coal. The primary driver was to replace energy provided by humans, animals, water, and wind with the steam engine. Hence, mechanization focused on the transfer of humans’ energy providing roles in production to the machine. Therefore, it’s not unfair to state that the first industrial evolution primarily focused on harvesting coal energy.
The part of the second industrial revolution also had a strong energy component. The invention and advancement of the internal combustion engine and innovations around them focused on replacing the energy core. The role of electrical technology in fueling innovation at the dawn of the 20th century was also for the purpose of production, distribution, and conversion of energy. Whether it was a light bulb or an electrical motor, they were for the purpose of consuming energy. By the way, the invention of vacuum tube-based electronics opened the door of innovations for information sharing during the latter part of the second industrial revolution. Those innovations in the information space emerged as Gramophone, Telephone, Radio, and Television.
Automation of cognitive capability will lead to the fourth industrial revolution
On the other hand, the majority of innovations driving the third industrial revolution have been in the information space. It appears that the fourth industrial revolution will likely be unfolding in the cognitive space. Instead of producing, storing, and communicating information for feeding to humans’ cognitive systems, technology inventions will imitate humans’ cognitive capability. Such technological inventions will lead to innovations for executing jobs without having the role of a human in the loop. By adding the human-like cognitive capability to machines, we will make them cyber-physical systems. One of the examples is the autonomous vehicle.
Artisans->capital intensive mass production->software-centric monopolization
In the preindustrial age, artisans with the knowledge and skill used to produce copies of products. The advent of energy technologies, starting from steam to electrical motor, made machines cheaper than human labor. Moreover, the idea of job division and specialization also contributed to innovative means for increasing productivity. Hence, we witnessed mechanization during the first industrial revolution. Subsequently, further progress was made during the 2nd industrial evolution in dividing high-level making tasks into smaller ones. Some of those tasks were delegated to machines. Instead of asking a single person to perform all of the remaining tasks, each of them was given only one task. Hence, the production process started taking the shape of a production line. This transformation started increasing the machine’s role and decreasing the knowledge and skill need of each worker.
Hence, the focus shifted from artisans to capital machinery and mass production. Due to decreasing skill needs, the workforce of developing countries also became a target of production. Subsequently, it led to the globalization of manufacturing. However, the increasing role of software leading to cognitive capability development in the machine opens the possibility of human free production. The unfolding of such a possibility in the fourth industrial revolution run the risk of global scale monopolization. However, in the information space, global monopolies have already started to unfold. Notable ones are Google, FB, Amazon, and Microsoft.
Natural resource->labor->capital for mass production->ideas for creative waves with less labor
The first industrial revolutions relied heavily on the supply of coal and iron to fuel innovation waves. Natural resource stock largely determined a country’s ability to increase wealth out of industrial activities. The 2nd industrial revolution also demanded large natural resources. Particularly, the demand for petroleum was significant. However, the focus very soon shifted to labor supply. Hence, capital intensive production process got the priority. Moreover, to access the labor of developing countries, globalization of the manufacturing value chain emerged. However, there has been an increasing role of ideas in producing economic outputs. Particularly during the third industrial revolution, ideas became far more important than the supply of silicon or labor in creating economic value through innovation in the information age.
It seems that this trend of the increasing role of ideas will keep growing. Such reality is challenging natural resource and labor-based development programs. Hence, development planners should take such megatrends in industrial revolutions into consideration.
With the leveraging of steam engine inventions as waves of energy innovation, the first industrial revolution started in the United Kingdom. Gradually, it did spread in the rest of western Europe and also in America. However, Asia mostly remained untouched. Germany, Belgium, and France, along with the UK, and, most importantly, the USA became the second industrial revolution’s epicenters. The rest of the world became suppliers of natural resources to them. With the sales proceed, they also became buyers of industrial products of Europe and the USA. During the 3rd industrial revolution, Asia got integrated.
However, most Asian countries, except Japan, are labor suppliers to the global value chain. Due to the increasing role of ideas, Asia’s role in the future is not clear. Once renewable energy and electric vehicles’ ideas evaporate the demand of petroleum, what will be the future of middle eastern countries? There are many unanswered questions in the age where ideas take the upper hand in the form of software.
The making of industrial products needs natural resources and labor. Hence, both a natural resource and labor supplier had some role. Hoverer, income level as labor and natural resource supplier depend. Notably, for labor suppliers, it does not offer the path to keep increasing the income level. Hence, the next option is to reengineer the industrial products and produce imitations. However, as original innovators keep improving their products making them better and cheaper, imitation does not offer an endless path of progression. Hence, the destination is to acquire the capability of reinnovation. But, if software-centric innovation enables the winner to take all, the scope of opening an endless frontier of growth out of reinnovation also evaporates. Such unfolding realities are raising serious development questions. This is one of several megatrends in industrial revolutions that is quite alarming for developing countries.
Skilled workforce->low skilled labor in mass production->decreasing labor need ->increasing inequality
In the preindustrial age, extremely highly skilled people only could qualify for making things. Successive industrial revolutions reduced the skill needed. Particularly, job division and specialization, and production line reduced the skill requirement substantially. Moreover, it also expanded the total labor requirement. Hence, low-skilled workforce in developing countries found factory jobs. As a result, during the 3rd industrial revolution, many least developed and developing countries found the opportunity of increasing income and reducing poverty. However, the increasing role of ideas and decreasing labor need are posing challenges. In fact, most of the developing countries have no role in supplying ideas for extracting value. Hence, the growing role of ideas runs the risk of increasing inequality in the fourth industrial revolution age. This is one of the disappointing megatrends in industrial revolutions indeed.
In the preindustrial age, human beings were using renewable energy sources to power the economy. Whether the energy source was human muscle, animal, wind, or water, the resource was renewable. Moreover, the harvesting of energy from those resources did not pollute the air and damage the environment. However, successive three industrial revolutions depended on non-renewable energy resources. Neither the supply is sustainable, nor is it’s exploitation benign to the environment. Hence, harvesting energy from wind, water, and the sun will likely get momentum to meet the world’s increasing energy demand. In fact, this is one of the interesting megatrends in industrial revolutions.
Dividing the word into two halves—object and idea suppliers
In the preindustrial age, every country used to rely on its own supply of three major production inputs: natural resources, labor, and idea. However, due to lack of science, ideas in the form of tinkering were not scalable. Hence, quality of life largely depended on the availability of natural resources and high skilled labor–artisans. Successive industrial revolutions have been increasing the role of ideas. Of course, harvesting of those ideas needs natural resources and labor. However, the capability of ideas to extract value from the globally connected competitive market is far higher than the other two production inputs. Moreover, ideas are also reducing the demand for labor and making the demand for natural resources volatile. For example, the automobile industry created the demand for petroleum, making a few petroleum supplying countries rich. However, the ideas of renewable energy and electric vehicle are posing a threat to the petroleum economy’s future.
Although all human beings are creative by birth, the capability of systematically ferreting out value from the market out of the idea is limited to only a few firms and countries. In fact, over the three industrial revolutions, the world has become divided into two parts. One section is the idea producer and supplier. And only a few countries belong to this part. The rest of the countries are suppliers of natural resources and labor. In modern economic theory, natural resources and labor belong to objects.
It appears that during the coming decades, during the fourth industrial revolution, the gap between idea and object suppliers will keep growing. Furthermore, countries with the role of object suppliers will increasingly find it difficult, perhaps not impossible, to keep sustaining their growth. Hence, it’s time to look at these megatrends in industrial revolutions and formulate a sustainable and inclusive growth agenda for all.