The Fourth Industrial Revolution by Klaus Schwab looks at the current era of digitization and rapid technological development we’re experiencing. Schwab provides an economists’ perspective on what he dubs as the “fourth industrial revolution”, implying that the size and scale of societal, economic, and technological upheaval are comparable to that of the past three industrial revolutions. He’s right.
Before we take a closer look at the transition we’re going through right now, let’s have a brief history refresher on the past three revolutions and their societal impact.
The first Industrial Revolution (1760–1840) led the transition from man to machine in manufacturing. Innovations in steam power, water power, and chemical processed developed machinery and factory processes that created our modern day conception of manufacturing jobs. This profoundly shifted the application of labour from agricultural to manufacturing. It changed the existing socio-economic order by creating unparalleled sustained growth in both population and average income.
The second Industrial Revolution (1870–1914) is also known as the Technological Revolution. The development of synthetic materials, machines, and computers allowed for automation in factories. Innovations in transportation such as the invention of the railroad and electrical power systems connected people like never before. Like the first Industrial Revolution, this led to a burst of economic growth and an increase in standard of living as the price of goods went down.
The third Industrial Revolution (1950–2010), also known as the Digital Revolution, came from the rise of widely available and accessible computing power. The introduction of the personal computer, cell phone, and the Internet allowed the average consumer access to technology that was traditionally reserved for large organizations. This began the movement towards complete globalization and interconnectedness of people and information.
Now Schwab is introducing the fourth Industrial Revolution.
“The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”
Klaus Schwab
We’re not quite sure when it started (sometime after the third) and we’re not sure when it’ll end… but the impact will be massive. The Fourth Industrial Revolution is different than the rest because of one thing: speed.
Technology is being developed faster than ever before. The fourth Industrial Revolution is characterized by the blurring of the physical, digital, and biological. That’s why the fourth Industrial Revolution, the one we’re going through right this minute will fundamentally change the way we work, live, play, communicate, and interact with the world.
We’re talking about things like artificial intelligence, 3D printing, and autonomous vehicles which allow computers to speak to us, print out body parts, and drive cars. With big data and the Internet of Things, we’ll have cities, where buildings can talk to each other and traffic, can direct itself. We’ll have sensors and trackers on everyone and everything. It’s more than any science fiction novel could have imagined.
We all know major changes are going to be happening in the next 5 to 10 years, if not sooner. We don’t need to be a scientist, engineer, or even up to date on Silicon Valley news to know big things are happening. But if you’re like me, it’s all very overwhelming. We don’t understand the details of artificial intelligence, cloud computing, big data, or any of these fancy technology terms. We can’t possibly imagine the implications this technology could have when it’s unleashed onto the world. We don’t know how they’ll change our world, but we know they will.
“In all moments of major technological change, people, companies, and institutions feel the depth of the change, but they are often overwhelmed by it, out of sheer ignorance of its effects.”
Manuel Castells
The Fourth Industrial Revolution is a nerdy read for economists and techies. It’s all very fascinating in the grander scale but I know what you’re thinking, “What does this mean for me and my future?”. We want to know what all this radical change means for our personal daily lives, our hopes, and our goals. We want to know what our lives will look like 5 or 10 years later when we’re thinking of starting a family or buying a house. And most importantly, we want to know what we should do right now to make sure we come out of this revolution, not just surviving, but at the top of our game.
We often think of automation as a risk faced by the low-skilled workforce such as those in manufacturing or telemarketing. More and more, however, we’re seeing automation spread into other domains we traditionally as “human” work. The risk of automating taxi drivers through driverless cars is the most prolifically referenced in the news, but it extends way beyond that. Even in the transportation industry alone, we have autonomous planes, ships, trains and trucks out there in the world already.
But automation extends beyond even these jobs. The rise of artificial intelligence, the Internet of Things, and big data are automating jobs traditionally seen as creative or, at the very least, intellectual. There are artificial intelligence lawyers, financial advisors and even journalists. Mainstream startups such as Wealthfront and Wordsmith are already introducing artificial intelligence technology to automate these jobs. So whatever job or field you’re working in now, there’s a chance (possibly a very high change) that it will be automated in the not-too-distant future. (If you’d like to torture yourself, this chart breaks down the likeliness of automation in various fields. If you’re truly masochistic, two researchers have listed over 700 professions by likeliness of automation so go and see where your job sits).
“We must also keep in mind that this is not only about talent and skills. Technology enabled greater efficiency, which most people want. Yet they also wish to feel that they are not merely part of a process but of something bigger than themselves.”
Klaus Schwab
The nature of work is changing. Since the first Industrial Revolution, the world was divided into employers and employees, there was nothing in between. People worked for organizations for literally decades. Now we’re seeing the rise of freelancers and mini online businesses. There are platforms like Etsy, 99Designs, and Fiverr which allow individuals to sell their products or services on a per project basis. Services like Airbnb and Uber allow us to rent out our personal assets. Long story short, there’s plenty of small “jobs” and opportunities for individuals to make a living from.
Take, for example, fictional 25-year-old Billy. Billy can wake up in the morning with his Airbnb tenant in the next room. He’ll hop into 99Designs to upload his work for today and complete a couple of tasks on Fiverr before Uber notifies him of an available passenger to pick up. At the end of the day, he’s done plenty of work but there’s no coherency. There’s no sense of purpose or a system that his work is a part of.
Instead of being part of the company missions of Airbnb, 99 Designs, or Uber, Billy is simply a negligible cog in the wheels of these massive companies. With the nature of work heading in the fragmentation of jobs, along with the popularity of frequent job-hopping among us millennials, there’s a risk of losing a grander sense of purpose in the work we do. That means, instead of looking to companies or organizations to provide us with a mission as we’ve traditionally done, we have to form our own purpose for our lives. Instead of hitching our lives to the missions of corporations, we have to use these organizations as tools to help us achieve our own purpose.
“In a world where nothing is constant anymore, trust becomes one of the most valuable attributes.”
Klaus Schwab
News has never so quickly become irrelevant as it is today. Our world is so connected and so instantaneous that everything exists in real-time. With Periscope, Facebook Live, Snapchat, and a million other platforms, we are virtually present everywhere, all the time. A day old tweet might as well have been a century ago in Internet time. It’s crazy how fast technology is developing.
Just think back to 10 years ago. In 2007, the first iPhone had just been released along with the first Kindle (both were crazy chunky and quite ugly by today’s standards). Airbnb and Uber hadn’t been founded yet and Twitter was barely a year old. Now, smartphones and ebooks are the norm. Last year, Airbnb had over 80 million guest arrivals, Uber fulfilled over 1 million rides every day, and Twitter had over 313 million monthly active users. All that in only 10 years and it’s only going to get faster.
Technology developed exponentially meaning, the growth we’ve seen from 2007 until today will be minuscule compared the growth we’ll see from now until 2027. The more technology develops, the faster future technology will develop. The world is going to change quickly and constantly. In an era of constant, unpredictable change, we’ve got to two things: adapt and build trust. We’ve got to be able to change our skills, our thoughts, and our ideas as the world changes around us. But we also need to find constancy and stability by finding people, organizations, and even ideas we can trust to guide us through this era of change.
*Parts 3–5 is going to go into more detail on each of the 3 changes above. So if you’re bored already, don’t keep reading. It won’t get any better for you.
Articles on automation are usually either complete doom and gloom, unbridled optimism, or cold, hard facts. Some argue this wave of automation is different, that the technology is smarter and faster. There’s no way our economy and job market can keep up even if new jobs are created. The optimists argue that, though there’ll be a loss of jobs in the short-term, in the long-term, whole new industries will be created and the job market will return to normal.
Personally, I’m an optimist when it comes to technological change. Throughout history, there have been thousands, if not millions of jobs and industries that have been wiped out from technological unemployment, but nevertheless, those economies continued thriving. In the long-term, societies often benefit from technological change. But that doesn’t change the fact that, in the short term, it’s going to suck. Especially if you’re working a job or in an industry that’s going to be automated. And knowing that “eventually” things will return to normal doesn’t make it better.
Articles, like this one, on automation usually discuss the broad scope of what society needs to do, what will change the nature of work, and general trends we can expect. While they’re intriguing and thought-provoking, they’re not actionable. They don’t apply to our personal lives and what we can expect to change about our work in the next 5 years. We don’t want to know, “What will happen to the world when machines take over?” but rather “What should I do to protect myself from automation?”. We don’t want to know what society’s going to do or how the government’s going to save us. We want to know what’s in our control that we can take action on!
I’m with you. But before we can understand what we need to do to protect ourselves, we’ve got to understand what exactly we’re protecting ourselves from. The real threat we’re facing is technological unemployment which is a term for the loss of jobs caused by technological change. This technological change could be machines directly replacing the labour of workers (think robot arms in assembly lines) or it could be a complete transformation of the way things are done which renders some jobs obsolete (how the invention of the automobile made coachmen an outdated profession).
Automation usually makes us think of the first type of technological change: machines directly replacing humans. This is why we often think we’re protected from automation because we associate it with those working in low-skilled jobs such as screwing the caps onto toothpaste bottles (actually, that’s probably been automated already). It’s natural because the automation is visible and tangible. We can see the machine doing the action.
But it’s usually the second type of technological change that really wipes out jobs. It’s when technological change allows for entire processes to be made more efficient or changed completely. This is when factories change their process to require zero human labour, or when companies create amazing FAQ pages and chat bots so they need fewer customer service agents. These mentally laborious jobs make it difficult to envision how a machine will replace humans because often, a machine can’t do it at the level of human, just differently. A chatbot and a FAQ page don’t exactly replace a human, but it’s close enough that it’ll do the job.
It’s this type of technological change that wipes out white-collar jobs, the mentally laborious jobs. The work of white-collar jobs can be loosely broken down into two categories:
This doesn’t necessarily mean doing the exact same thing every time, like entering data into a spreadsheet, but rather anything that follows a similar process repeatedly. Customer service, for example, can be considered repetitive when we bring it down to call centres and online chats. Every white-collar job has its repetitive work. Lawyers are often drafting up hundreds of similar contracts on a regular basis. Journalists are usually stuck writing regular fact-reporting articles on sports games or government white papers that follow a generic structure. What kind of repetitive work do you do in your job right now?
Here the term “creative” is used very loosely. It’s not just the fine arts, writing, or poetry but any work that involves problem-solving, coming up with ideas or creating something new. It could be brainstorming a way to present the data you’ve found or figuring out a way to get around the import law for your product. Most high-paying jobs have a creative aspect to it… that’s what you’re getting paid for! It’s (one of the reasons) why CEO’s get paid so much. The work they do involves decision-making and problem-solving at the highest level. What kind of work do you do that requires you to be creative?
Now take a quick sec to think about the job you’re doing and write down the percentage of your work that’s repetitive or creative. If you’re struggling to come up with a number, you can look through your to-do lists for the last month and see how many tasks you see repeated. Or, even if they aren’t repetitive, how many of your tasks are mindless, miscellaneous work and how many are big, creative projects requiring knowledge and expertise?
A general rule of thumb when it comes to automation is this:
It’s pretty intuitive. The more repetitive work you do, the easier it is for someone to build a machine to carry out that task. It’s much harder to build a multi-purpose machine that can make decisions, give expertise, and switch strategies based on the situation. So if you’ve got a high likelihood of automation (or even if you don’t), what can you do?
If you’ve got a lot of repetitive, mindless work that you can do with your eyes closed, it’s time to spice things up. I’m not saying you need to do something drastic like quit your job, but look for opportunities to challenge yourself within the work you do. If you’re doing simple data entry work, find out what that data is for. Learn how it applies to the bigger picture and think about how you can use it to improve the company’s performance. If you’ve been doing the same report for 2 years, bring it to the next level. Go above and beyond what your boss or your clients are asking for so you push yourself to deliver more value with the work you do.
Do you have more transferable skills or specialized skills? Most people have a mix of both. Transferrable skills are general skills such as communication or an analytical approach to problem-solving. They can be applied to any industry or job. The expertise you have in your job is specialized. This means that if your job ever became completely automated, all those skills would go to waste because they couldn’t be applied to any other field.
But your expertise is also why you’re doing such awesome work at your job right now. That’s why you need to adopt the T-Strategy. It involves ensuring you’re building both depth and breathe in your knowledge and expertise. Not only does this make you less vulnerable to automation but it could also help you inject more creativity into the work you’re doing now by bringing together expertise from different fields. I first wrote about the T-Strategy, its importance, and why it works in the article Are You A Generalist or a Specialist? (It’s one of the most popular blog posts of all time, go check it out!)
At the end of the day, humans are infinitely smarter than machines. We can process emotions and problem-solve complex situations. We can gauge circumstances and make judgments based on an infinite number of factors. We can understand context, subtlety, and non-logical thinking. That’s why, when it comes to automation, most of the time it’s not entire jobs being automated, just parts of it. When we see news about AI (artificial intelligence) lawyers, doctors, and journalists we’re not seeing robots completely rendering those professions obsolete. Rather, we’re seeing machines step in to do what’s repetitive for humans. This way, we can see that machines and technological change will help you do more and better work, rather than steal your job but only if you’re willing to step in to do the work that machines can’t.
It’s now possible for someone to work as an Uber driver, be a host on Airbnb, and work freelance as a wedding photographer all while holding two part-time jobs at a non-profit and an oil rigging company. We’re living in a time when our careers are more fragmented than ever before. Yet more people than ever before feel the need to find purpose in their work. The nature of work and how we see work is fundamentally changing.
Historically, people worked one job for their entire lives. If you were born a farmer, you died a farmer. If you chose to train as an architect, you were an architect for life. Your career became your identity because it was constant. Even 50 years ago, when society looked pretty much the way it does now (on the outside), it was the norm to work for one company your entire life.
Now we’re seeing the highest turnover and job hopping rates than ever before. Just to give you a feel for what it’s like, on average millennials work 5 jobs by the time they’re 32… double that of the generation before. 60% of millennials are open to a new job if the opportunity presents itself and 21% have changed jobs within the last year. Not only are we switching between jobs fast, but we’re also finding more people working multiple jobs at once. With more part-time opportunities, the ability to work remotely, and the rise of freelancing we find people working 3 part-time jobs or multiple freelancing gigs in different industries. Basically, we’re a non-committal bunch.
It’s not just the number of jobs we’re working that’s changing but also the nature of our work. In the past, work used to be a place. It was an office, a factory, a farm, or a workshop. All the tasks we had to do were contained in the physical location. Now those boundaries are blurring. Technological change has allowed for people to work remotely from anywhere, anytime. This removes, not only the physical boundaries of work but the time boundaries as well. It means we’re seeing people work hours vastly different from the traditional 9–5. People shoot off emails while waiting at the bar for friends at 8 PM and don’t need to wake up until 10 AM the next day.
I’ve personally completely embraced this new nature of work. I’m working multiple jobs remotely while still in school. I haven’t held my jobs for very long (less than a year) but I love the work and the companies I’m working for. I love all of it — the blurring of work and life, the flexibility with my time, and the fragmentation of my work. It keeps me engaged and working more efficiently than if I was just holding one job. But it does mean that I’m often working on tasks that seem completely disconnected (at least to an outsider).
So when our work is fragmented, when we’re working multiple freelance gigs and part-time jobs or even if we find our one job becoming a jumble of fragmented tasks, how we do find purpose in our work? How do we prevent our careers from becoming a series of disconnected to-do lists and instead, as part of something bigger?
Companies that succeed have clear mission statements. Why? Because the mission statement is what brings the company into one unified unit moving in one direction. It helps guide the actions and decision-making throughout the organization so everyone is working towards a single mission. Southwest Airlines is one the most successful airline companies to have ever existed because their mission statement is clear: To provide cheap, fast flights with great customer service. Their clear mission statements helps everyone, from the CEO to the flight attendants, make the right decisions.
With a clear mission statement, all the infinite number of opportunities available to them turn into tools to achieve their mission. When they’re confronted with opportunities for new projects or faced with a difficult situation, they only need to ask themselves what decision would bring them closer to achieving their mission.If it an opportunity doesn’t bring them closer to achieving their mission, it’s not the right tool and it’s rejected no matter how great the opportunity seemed.
To find purpose in the modern fragmentation of work, we need to operate like a company. We’ve got to put forward a clear purpose that will help us decide which opportunities are right for us, and which we should turn down. Instead of adopting the mission statements of companies we’re working for, we have them work for us. They become tools to help us achieve our own life purpose.
Your purpose doesn’t have to be the specific field or work you do either. If you’re working in finance, for example, your mission doesn’t necessarily have to be “to help companies succeed by applying financial expertise” (that’s a pretty boring life purpose anyways). Instead, your work is the means by which you achieve your purpose.
Your purpose may be “to help inspire inner-city kids to work hard to improve their future living standard”. There are different ways you could use your financial expertise to achieve that purpose. You could work in education and inspire kids to go into your field where there is job security and high pay. You could work as a CFO for a non-profit organization who provides resources to kids. You could even work for a juvenile prison that will help rehabilitate kids who’ve lost their way.
By deciding what our life purpose is then choosing the work we do, our work goes from something we do for others to something we do for ourselves. The companies, organizations, and people we work for become tools to help us achieve our life mission, whatever that may be. This gives us a natural filter to decide on which opportunities to take and which to reject.
Change is going to happen. Tomorrow won’t be the same as today. New technology, ideas, and perspectives are going to keep coming out. And we have no idea what the world is going to look like in 5, let alone 10, years. It’s no secret that jobs will become automated and lifestyles are going to change. Most people sit on either the side of “Change will destroy us.” or “Change will save us.” but in reality, change is neutral. It’s neither good or bad. It’s how we react to it that will determine whether it improves our lives or destroys it.
So the real question is “What should I be doing today to make sure I’m ready for tomorrow… if I don’t even know what tomorrow will look like yet?”.
It’s not just the uncertainty of what tomorrow will look like that stresses us out. It’s also that it’s affecting the decisions we make today. Knowing change is coming makes us deeply reluctant to commit to anything today, because it might not be the best decision tomorrow. We can’t commit to a career because we don’t know if it’ll exist in 5 years. Students today are having a tough time choosing a degree because who knows what the world will look like 4 years from now when they finally emerge from college? We don’t want to commit to buying a house, having a kid, or even getting a new phone because the market might change, our minds might change, and Apple might release a newer, better iPhone.
So what are we supposed to do in the face of all this damn change? How do we find the confidence to commit to a path, a strategy, or a decision long enough to get somewhere if we don’t know the future?
There are two things we’ve got to do in order to be ready for change… whatever form it make take. We’ve got to be adaptable and we’ve got to trust.
Let’s be clear on one thing first. There’s a difference between being adaptable and being a flip-flopper. Being adaptable means committing to go eat Chinese tonight, but be willing to grab a hotdog instead when we realize the restaurant is closed. Being a flip-flopper means walking back and forth between the Chinese restaurant and the hot dog stand, being unable to decide between either. Adaptability means committing to an idea, a strategy, or a decision but changing your mind when times call for it. Flip-flopping means being indecisive and unable to commit to anything.
As with most things, being adaptable is easier said than done. It might help to break down adaptability into two key traits. The first part of being adaptable is being flexible. The second part is being versatile. Flexibility is the willingness to change. Versatility is the ability to change.
Say you’re a lawyer and your boss tells you your firm in new artificial intelligence technology. It’ll be able to take over aspects of your job like drafting up contracts or filling out forms. If you’re adaptable, you’ll let the AI do the mundane tasks and use the extra time to do more complex work that machines can’t do, like interacting with clients or negotiating better deals. But to do so, you have to be both flexible and versatile.
Flexible because you have to be willing to embrace the new technology and work with it. It means you’re willing to let go of the work you’ve been doing, hand it over to the machine, and challenge yourself with new work that you’re less comfortable with. Versatile because you have to be smart and skilled enough to do so. If you only have the ability to do the jobs your AI can do, and you’re unable to learn new skills then you’ll have to continue doing the work you’re doing now.
That’s why being adaptable all comes down to learning. Learning involves both embracing change and improving your skills. In fact, the futurist Jacob Morgan argues that, in the near future, knowledge workers will be replaced by “learning workers” because the most important skill is the ability to absorb new information quickly.
So how can we become both flexible and versatile? Flexibility is all about being open to change. Really, it’s a mindset shift more than anything else. Instead of seeing change as a threat, we start seeing it as an opportunity… because that’s what change really is. To be versatile is a bit tougher. We’ve got to be willing to get out of our comfort zone and constantly learn. We have to adopt the T-strategy and learn both specific and transferable skills. To learn more about the T-Strategy, check out the blog post Are You A Generalist or a Specialist?.
“In a world where nothing is constant anymore, trust becomes one of the most valuable attributes.”
Klaus Schwab
The only way to deal with constant change is to trust. We have to trust that we’ll be able to deal with anything that comes our way. We have to trust that certain people, ideas, or organizations will help lead us through change when we don’t understand what’s going on. Trust is what gives us something constant and stable to hold on to even when everything around us is changing.
And where does trust come from? It comes from a clear purpose or vision.
When we trust in people or organizations, it means that we know they will help guide us through change that we don’t understand. We all have a friend that’s an expert in some kind of difficult-to-understand technology, like internet security for example. We might not understand all the new security technology coming out and it can be overwhelming trying to figure out which app to use or whether a new program released is worth it. But if we trust in our friend, he’ll tell us whether something is worth our time to learn or if it’s just a fad we should ignore.
If we trust in ourselves, it means we know that we have the skills to learn and adapt when things change. It also means that we know what we’re aiming for in the long-run. The world might be changing but it won’t change what we want or who we are. It’ll only change the tools available to us to get what we want. That’s why it’s so important to find one vision or purpose to commit to, not just milestones in life. Milestones are short-term goals like buying a house or hitting a certain level of income. They’re motivating in the short-run but focusing on them will turn us into flip-floppers. (If you’re struggling with bridging your short-term goals with your life purpose, check out this blog post: Remember Your Original Mission)
If we focus on the goal of hitting a yearly income of $60K for example, we’ll be jumping from one opportunity to another depending seems to be paying more. Instead, we have to be clear on our ultimate purpose. Do we want $60K so we can support our family? Then we should only go for opportunities that will leave us time to spend with our spouses or our kids. Or do we want $60K so we can travel the world? Then we should only go for jobs that will give us the flexibility to travel on our own time.
LEGO, for example, has a clear purpose: to inspire and develop the builders of tomorrow. It’s both specific and adaptable. That’s why they can continue putting out great products even as technology in manufacturing and public taste in toys has changed. When we trust in ourselves and in others, we stop trying to keep up with the whims of technology. Instead, we give ourselves the power to pick and choose which changes to adopt to and which to ignore.
“Advantage is neither transitory nor immortal. Hence, strategy is not an either-or exercise about seeking flexibility OR sustainability. It is about both.”
Roger L. Martin
Change in all forms is rough, but the world (and therefore YOUR world) is going to change whether we like it or not. It’s adapt or die and I trust you’ll choose the right option. (Adapt. Adapt is the definitely the right option.)
P.S. If you’re an economics nerd like me, The Fourth Industrial Revolution by Klaus Schwab is a pretty enjoyable read. Even if you’re not, it’s pretty short (only about 100 pages) but insanely insightful. You can get it here.
P.P.S. If you’ve reached all the way to the end of this post, I’m assuming you weren’t bored to tears. I’d super appreciate it if you’d hit that little heart button (:
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