The 5 Paradigms Shaping Industry 4.0 And Their Impact On Family Office Investments
Industry 4.0, or the fourth industrial revolution, is approaching so fast that we’re still trying to make sense of how to approach it, nevermind consider exactly how it will affect family office investments. And yet, it’s already upon us! The first three industrial revolutions moulded modern society. With each of these revolutions—mechanization and the steam engine, mass production and electricity, and the rise of IT systems and technology— changing the world around us forever. Right now, it’s happening again.
The fourth revolutions and everything it brings with it was the focal point of the recent Global Manufacturing and Industrialization Summit (GMIS) in Yekaterinburg, Russia. Topics discussed included everything from the governmental responsibility, the role of private business and the focus of bodies like the United Nations (UN) and their multilateral agencies.
During the opening of this summit, H.E. Eng. Suhail Al Mazroui, the UAE’s Minister of Energy and Industry, said, “The GMIS is a platform to engage policymakers, industry, companies and finance.” He also made mention of how Industry 4.0 was influencing our way of life and the way it could contribute to the prosperity of humankind by advancing the UN’s Sustainable Development Goals (SDGs).
These SDGs have been a testament to the power of shared vision, and what can be achieved when all stakeholders—governments, industry, businesses, academia and individuals—work together towards a common goal. To better understand the fourth industrial revolution and Industry 4.0, we need to look at the five paradigms that are shaping this.
1. Sustainability (SDGs)
With this revolution, we are looking at the challenges through a different lens. The UN’s Sustainable Development Goals (SDGs) have helped companies better understand the challenges that exist and need solving. To reach their goals by 2030, the UN has not only spearheaded the creation of an entirely new segment, namely “impact companies”, but has also set the tone and direction around which issues companies should address, and how they should go about doing this. This newly defined segment has, in turn, also made companies a lot more purpose-driven and sharpened the focus on impact investing.
2. People-centered Focus
Unlike the previous industrial revolutions, Industry 4.0 is not about technology taking center stage, but rather about putting people first. With the ability to introduce technology to take over tasks that humans previously did, we are freeing people up to do what they want, or feel best equipped to do. It’s not only about giving people a choice on what they want to do but also about advancing equality amongst people. This equality extends to different groups and countries, as well as equal opportunities for men, women and everyone else.
3. Globalized change
The changes happening now and the issues that we’re trying to solve are ones that affect everyone. At the opening of the GMIS, Russian President Putin reiterated that the responsibility for the future of the planet lies with everyone, and that the development of such new technologies must be a truly global endeavour, with broad international cooperation and collaboration between states and business and academia. One country can’t just sit back and expect another country to solve either their own issues or those of others. Similarly, partnerships are needed to support each other and make sure we’re not all trying to solve the same problems.
Technology enables us to better understand nature and the problem-solving opportunities it provides. Many experts in this space agree that the natural world will be playing an ever-increasing role in the years to come.
“We need to find a formula that puts us in greater harmony with the natural world.” Badr Al-Olama.
When looking to nature and biomimicry, this should not only be applied to the creation of niche, high-end products; in fact, its real power lies in transforming everyday mass-produced items like paper clips or velcro. Nature can be the starting point for new ideas to find innovative solutions to everyday problems.
Despite all the recent technological advances made in areas like Artificial Intelligence (AI) and Big data, technology should not purely be viewed as the complete solution to our current problems. Instead, they should be used as tools that can assist in obtaining a better understanding of the holistic solutions that may emerge from other areas such as nature, and fields like biomimetics and biomimicry. Technology should be regarded as a cog in the system and not the solution.
How To Get Started
Dmitry Kozak, Deputy Prime Minister of the Russian Federation, stressed that a coordinated understanding of the future is necessary at a time when economic competition and rivalry is creating uncertainty. “For 200 years, we have been creating challenges—this brings economic change and gives birth to economic uncertainty and disjointedness.”
To embrace the changes brought about by Industry 4.0, family offices can start by relooking their current investments and re-evaluating their risk appetite, especially around impact investments. By ensuring investments are aligned with the paradigms of the fourth industrial revolution, investors can ensure that they are part of the solutions, rather than the problems.
The third GMIS will take place in Hannover, Germany 20 – 21 April 2020. #GMIS2020