Industry 4.0: a revolution of convergence

Neal Gandhi
Neal Gandhi
Chief Executive Officer and Co-Founder

We are in the midst of a fourth industrial revolution. It is not driven by any particular technological advancement, but rather brings together many disparate and already existing technologies; networking them together, along with immense cloud-based computing power, to automate a huge variety of tasks and decisions.

It will change everything. Leaders who want to guide their organisations through this new era successfully must stay on top of the art of the possible.

An often-misused term, coined in Germany and in popular use in central Europe, Industry 4.0 refers to the ongoing 4th industrial revolution, where technologies that have been used independently for many years are being brought together, their benefits multiplying through network effects. In manufacturing, this makes possible totally automated supply chains and predictive maintenance. It means using data to predict when assembly line machinery needs maintenance so it doesn’t break down and cause a delay in manufacturing. It means automated systems predicting customer demand accurately, scheduling manufacturing, and ordering components so they’re delivered just in time. It means bringing together big data, cloud systems, machine learning, robotics, Internet of Things, blockchain and other emerging technologies to transform the journey from raw material to consumer.

This transformation is already well under way in large swathes of the manufacturing industry, where the days of factories with hundreds of employees are already long gone. But now the term is spreading to the rest of the economy, as people from many other industries grapple with what data-driven automation means for them. Reactions range from alarmism of the ‘robots will take all our jobs’ kind to extreme skepticism about the claims made by self-interested boosters of emergent technologies like blockchain and autonomous vehicles.

“You cannot sit back and rely on your previous experience because everything is changing so quickly.”

If you’re one of the people struggling to make sense of it all, you’re in the right place. This is the first in a series of posts in which we’ll dissect and interrogate the different emergent technologies that are converging to enable the fourth industrial revolution, and take a reading of the economic landscape into which they’re emerging. I’m not making any claims to clairvoyance here, and I’m not really in the business of making predictions but, as usual, our best guide to the possible shape of the future may be to look at similar points of past technological development. And there, I have first-hand experience.

The enablers of the digital revolution

In 1994 I worked for a networking software company called Novell. Because of the job I had, I found myself in Silicon Valley pretty regularly and saw first hand the early years of the World Wide Web. In December 1994, Netscape first launched its Navigator browser and the rest is history. During 1995, I saw that you could trade shares and buy cars online. Meanwhile in the UK, the Peperami sausage website was website of the year. Me and three friends figured out the UK had spectacularly failed to see that the Internet was a platform for transforming industries, instead preferring to see it as new media. So we set up a consultancy helping corporations make sense of the new possibilities.

I was extolling the benefits of ecommerce when people were accessing the Internet using a 56k modem. It would take a minute to load a page. It probably would have been quicker to jump in the car and drive to Tesco. People looked at me incredulously when I showed them the “future of shopping”.

But there was no denying that the customer promise of being able to shop whilst watching your favourite TV show, or on the way home from work on the train was an alluring one. Sure there were some hurdles to overcome. Fast broadband needed to make its way into the home. WiFi needed to work to unshackle the laptop from the desk. Smartphones and tablets needed to be invented to enable mobility, alongside 4G networks that meant super-fast browsing pretty much anywhere. But when these enabling technologies arrived, as they always do, the true power of ecommerce was released. Today ecommerce represents around 20% of all retail sales and is growing at around 16% per year, while in-store retail is declining at an alarming rate. CBInsights charts 39 traditional retail casualties in the US since January 2015.

And I think that’s the lens to look through when discussing the impact of technology in the future. There are a whole load of technologies that are vying for your attention in the media today. From blockchain to autonomous vehicles to AI, these technologies have all got to go through their own hype cycles and, more than likely, additional enabling technologies still need to come to market before they can go mainstream. But I assure you, all of them will.

Enabling technologies of the fourth industrial revolution

5G networks

The promise is of connection speeds of 1Gbps or above, 1 millisecond round trip times, support for upto 100 times the number of devices and up to a 10 year battery life for low power machine type devices. Combine this with the seemingly infinite processing power available in the cloud and the possibilities are endless.


Enabled by 5G networks, and even something as humdrum as the Raspberry Pi, we’re going to be able to build sensors into almost anything. Imagine a device that simply transmits its location, in a form factor that can be embedded into a product, and with a battery life measured in years, all for under a dollar or two. Layer over that additional data sources and you begin to invent business models that were previously unheard of.


There’s tons of hype right now about blockchain and often this is mixed up with questions around cryptocurrencies such as Bitcoin or Ethereum. But where blockchain could be really useful is in the re-establishment of trust. From the financial crash of 2008 and subsequent bailing out of banks, to today’s world of fake news, discredited experts and corporate exposures, trust really is on the back foot. It seems everything can be manipulated. It’s no wonder people are crying out for a new way to establish trust, one that doesn’t involve a single authority but rather the irrefutable validation of millions of people.

Artificial Intelligence

General AI is still a long way off, so I’m really talking about Narrow AI, here. Multiple narrow AIs can be brought together for performing a single task like speech or image recognition, or driving cars. A rules engine that can transcribe audio cannot be used to drive a car. In my opinion, most of the things that claim to be AI really aren’t – we’re simply using the massive computing power of the cloud to process more information that we’ve been able to before. We’re also using the massive amount of data combined with that increased computing power to gain deeper insights that ever before.

John McCarthy, who coined the term Artificial Intelligence in 1956, said “as soon as it works, no one calls it AI anymore”. Many of the logic based systems that were previously called AI are no longer considered AI today. I guess that’s how AI will creep up on us. There won’t be some big bang. Algorithms will become ever more powerful, the volume of data to analyse will grow exponentially, tasks will become automated, jobs will change, and 10 years from now, the world will look very different.

“As soon as it works, no one calls it AI anymore.”


I’m not talking about those robots you might see in car factories, or even in Ocado’s warehouses. It’s the software robots that are the real threat to jobs. You’ll have probably seen McKinsey’s projections that in about 60 percent of all occupations, 30 percent or more of their constituent activities could be automated, with technologies available today. Unlike in the past, these robots are changing office-based jobs rather than manufacturing jobs.

One of the phrases of the moment in this area is Robotic Process Automation. This is easy-to-configure process automation software that promises to automate many repetitive tasks. One of the leading vendors in this space is Blue Prism, a UK based company with a valuation of £1bn. Their sales are doubling year on year as they conquer the world with their software.


Siri, Alexa and Cortana were the start. Gartner predicts that 30% of all device interactions will be voice based by the end of 2018 and that, over the next 5 years, 50% of organisations will spend more on bot development than on mobile app development. The most recent Apple Watch has a built-in eSIM so, combined with Apple EarPods, you no longer need to have your iPhone with you. Apple’s augmented reality headset is slated for launch in 2020 and, if early reports are to be believed, it’s the product that will finally replace the iPhone.

Add to that real world technologies like AIPoly with advanced image recognition, and our days of needing to enter information on smartphones or other interfaces are coming to an end. Before long we’ll be speaking rather than typing, having information read to us and presented to us as an overlay over the real world.

Convergence in markets

Facebook, Apple, Microsoft, Alphabet (Google), Amazon; otherwise known as FAMGA (hat tip, plus Tencent and Alibaba: the future of these companies will have a huge say in how technology is going to impact our world over the next ten years. From companies which all looked completely different at their inception (PC manufacturer, search engine, software publisher, bookseller, social network etc), these giants now look remarkably alike as they vie for control of the infrastructure on which our daily interactions and transactions play out.

“While the focus is on FAMGA, there can be no ignoring Alibaba and Tencent. Alibaba has a 55% ecommerce market shar”

Apple’s future looks bright. As their market share in smartphones averages at around 15%, they’re not in danger of falling foul of antitrust authorities. And I’m convinced their AR bet will pay off, mostly because Jony Ive is back in charge of design. Similarly, Microsoft have navigated the last few years extremely successfully. Azure is growing at a phenomenal rate and they went through the antitrust wringer several years ago. That changed the culture within Microsoft to become very aware of the risks.

Alphabet and Facebook have been too busy growing like crazy to be aware of the challenges that arise for companies that become dominant in their marketplace. Both have been embroiled in controversy of late and, despite their huge lobbying power, may soon face a reckoning. A break up of Alphabet or Facebook could have a profound impact on the marketing ecosystem.

Amazon, who today account for some 40% of all ecommerce, may face similar pressures in time.

While the focus is on FAMGA, there can be no ignoring Alibaba and Tencent. Alibaba has a 55% ecommerce market share in China. Towards the end of 2017, Alibaba announced they were planning to spend around $15bn expanding their international footprint. At the time of writing this piece, Tencent’s market cap comfortably exceeds Facebook’s, with latest quarter revenues of $10bn. With anti-competition threats to Alphabet, Facebook and Amazon in western markets, both Alibaba and Tencent could well emerge as the winners, particularly as they face no similar threat in their main market.

What does it all mean?

Those of us tasked with guiding our organisations through these dramatic changes have a personal responsibility to know what’s going on. At the very least, you need to keep on top of the possibilities. You don’t need to necessarily know how things work, although a basic level of knowledge helps, but you do need to know what can be done. You then have a responsibility to help others in your organisation make sense of it all.

You cannot sit back and rely on your previous experience because everything is changing so quickly. I recently spoke to a former CEO of a Fortune 500 company. His comments were “It’s easy to sit back and say you’ve seen it all before, but that would be very dangerous.” He continued “Most of what you’re told is hype but perhaps 25% isn’t, and that’s the 25% you can’t afford to ignore.”

You can, of course, choose not to keep up, but if you do, you really should ship out and make room for someone who is prepared to help bring innovation to your organisation.

Also, you need to choose your digital partners carefully. Are they up to date? Will they help upskill you and your organisation? Will they leave you in better shape than they found you, or will they keep everything in a black box making you ever more reliant upon them? I read recently that M&S recently outsourced digital innovation in a £25m deal. That’s insane!

So to conclude. We’re in the middle of a hugely exciting time. Jim Bowes calls it the new renaissance, in which technology frees people up and creates new possibilities in all walks of life. I agree with him wholeheartedly: we’re in an amazing period of history and to make the most of it, you’re going to have to keep up and understand the difference between hype and reality.

Don’t worry: you’ve got help. In the next few posts on Future Thinking, me and Jim will take a closer look at some of the emerging technologies mentioned above; we’ll explore the ways in which they’re going to change how people produce, market and consume goods and services, and we’ll look at the wider effects that will have on all our lives.

News and Views

Neal Gandhi
Neal Gandhi
Chief Executive Officer and Co-Founder