You may have heard the term “Industry 4.0” recently, especially if you’ve attended a tech conference in the past year or so. Klaus Schwab, founder and executive chairman of the World Economic Forum and the term’s creator, defines the fourth industrial revolution as:

“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.”

When thinking of industrial revolutions, most people are either thinking of the first, where we first saw steam power, or the second industrial revolution, which harnessed the wonders of electricity.

The third industrial revolution has been unfolding during our lifetimes, with the emergence of digital technology, and of course, the internet.

The fourth industrial revolution, or “Industry 4.0” builds on the strides taken by the third industrial revolution to create a world that’s more than immensely interconnected, but one that’s also redefining our economies, governments and workforce.

Economics of Industry 4.0

The economics of Industry 3.0 are largely those of convenience — it’s never been easier to travel somewhere or purchase an item if you have the money. Industry 4.0 builds on the scaffolding of this more convenient economy, which Klaus claims could “lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop…and the cost of trade will diminish.”

As automation begins to replace the world’s busywork and those of intermediaries, it allows all of us an opportunity to see a “net increase in safe and rewarding jobs.” Entrepreneurs don’t need as much assistance to get their business of the ground and operate efficiently. Large enterprises can focus staff efforts on more strategic initiatives.

These advantages brought on by automation can enable organizations to take on more customers and support efforts to scale and grow their business.

Governments and Industry 4.0

As we begin to transition from the third industrial revolution to the fourth, it’s become ever easier to communicate with and engage with governments. Through channels like social media, average citizens now have direct access to not only government agencies, but even heads of state at the highest levels.

In addition to making communication easier, technology continually disrupts entire industries and fundamentally changes how humans live.

Governments looking towards the future will need to, as Klaus puts it, “embrace ‘agile’ governance.” This means ensuring that governments can quickly react to the needs of their citizens, whether it’s regulating a new or disrupted industry, responding to a natural disaster or addressing national security threats. The power of big data will also become crucial for the governments of the future, as they can use it to analyze the effectiveness of policies or social programs, and gain insights from its collective engagement with citizens.

As society moves forward at a rapid pace with technology, it’s clear governments need to keep up. One way today’s governments have started is by keeping more open lines of engagement between them and their constituents with online services, using tools such as digital forms and public portals.

Humanity 4.0

The third industrial revolution, in many ways, has already fundamentally changed some aspects of human nature. Streaming services have redefined what it means to own content and collaboration software is redefining how humans work together and social media has markedly changed how human relationships are formed. To many, the quick access to anything and everything that smartphones possess has already turned modern humans into partial cyborgs.

AI is also increasing human cognitive capabilities in its own way, being able to process much larger data sets than the average human is capable of.

For example, today’s doctors have already started using AI to help identify medical complications earlier. This emphasizes that technology not only has the power to transform lives, but to save them as well.

As the fourth revolution begins, AI’s importance will become even more pronounced, allowing workers across industries to be more efficient and focus on big-picture initiatives that further drive innovation and have the potential to truly change the world.

Future 4.0

Despite all the vast technological and cultural changes wrapped up in this revolution, it’s ultimately up to the people, governments and business themselves to decide where these changes lead us.

To learn more about how your organization can do its part in being digital-first and prepare for the future of business, governance and more, read our digital transformation whitepaper, which outlines ways you can innovate on your organization’s processes for the future of work and beyond.