Christensen’s theory of disruptive innovation describes disruption as the transformation of business models and value networks by technology or business innovation. We cannot predict the future but we can identify ongoing patterns of change. So, as your co-passenger in this journey – during what I believe to be the most influential periods of mankind – I can tell you what I see outside of the window. How it’s impacting the future and co-existing with the present.
David Foster Wallace once recounted a story to his audience. I will quote that and use his line of thinking to address the topic of today’s discussion. Quote: “There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, “Morning, boys, how’s the water?” And the two young fish swim-on for a bit, and then eventually one of them looks over at the other and goes, “What the hell is water?” The immediate point of the story is that the most obvious, ubiquitous, important realities are often the ones that are the hardest to see and talk about. Let’s keep that in the back of our minds.
Paul Gilster defined “digital literacy” as the easy access to information, ability to assimilate, and react to it. Finally, in his book, “The Digital Economy: Promise and Peril in the Age of Networked Intelligence”, Don Tapscott describes the Age of Network Intelligence as an all-encompassing and revolutionizing phenomenon fuelled by the convergence of advancements in human communication, computing power, and content.
The global economy is disrupting many things – from consumer behaviour to new business models. And digitalization underpins this shift. The result is that organizations see their business models upend as they deal with the astonishingly fast technology shifts and human wants. In some ways, Industry 4.0 owes its genesis to this as it refers to the intelligent networking of machines and processes with the intent to achieve higher efficiency and productivity. It focuses less on the principles of social fairness and sustainability and more of digitization and AI-driven technologies to achieve the before mentioned gains. But that has not happened completely.
Let me elaborate a little bit.
There are many critics who say that Industry 4.0 itself hasn’t been adopted quite well. Organizations recognize digitalization as a means to gain competitive advantage. However, while some have leveraged it to gain business edge; others have not been that successful, suggesting that there is no unique way in which it can be used. Most of digitalization failures can be attributed to the fact that many try to enter the space by mimicking the strategies that others have created. However, closer examination of new age success stories shows that, progressive organizations and societies tie their digital initiatives to innovative strategies to create path-breaking means of engagement, managing information, support inventories, building a better system, and delivering value that probably was not known earlier.
But how does one define ‘value’? What is the real problem that we are trying to solve?
Which leads to the second question – who defines that value? Are those your customers, or investors, or competitors or all of them together including your employees? Or is it also your planet, your environment?
Who defines these values?
Enter Industry 5.0, which is envisioned as a medium that recognizes the power of industry to achieve societal goals beyond jobs and growth. And in the process become a vehicle to provide resilient prosperity while respecting the balance of environment, limits of our planets and putting wellbeing of humans at its centre. If I can quote research then the three axes on which it operates is human-centricity, resilience, and sustainability. It focuses on combining the strengths of humans and machines; bio-inspired technologies; digital twins; data analysis; AI to manage complex adaptive systems; and lastly energy efficiency, renewable energy etc. Thus, its core idea is to complement existing Industry 4.0 using research and innovation to design towards supporting future societal values.
Most industrial shifts throughout the ages have traditionally been driven by natural disasters or great conflicts. The last couple of years also seem to be such a watershed moment where we might be transitioning from information society to a super-smart society. We tend to use exotic jargons and buzzwords to describe concepts, Industrial revolution included. But if we strip that off, Industrial revolutions is essentially separating man’s work with machine’s work. And it is on this aspect, that Industry 5.0 may be different as it could be the vehicle that leads to the rise a composite bridge between humans and machines with the intent of sustainability and self-preservation. Therefore, Industry 4.0 is technology driven while Industry 5.0 is value driven. And the former needs the later to deliver on societal needs, higher values and responsibilities which become the underpinning of a smart society.
And if one looks closely these ideas are already playing out in front of our eyes but we fail to recognize the patterns. Digital Literacy, Networked Intelligence, Access to information and its application powered by Human Imagination is leading changes in all spheres. Like give birth to a revolution as social media forced open the windows in the most oppressive states to let the winds of change blow which we call the Arab Spring. Like private entrepreneur, Elon Musk will put a sports car into space and use StarLink to provide internet to war-torn Ukraine. Like Drones will deliver pizzas and products. Like AI will help write the scripts of popular TV shows. Like taxi aggregators changed the very concept of cab services by making the “driver” and the “car” both fungible elements of the business model.
In India, a project called Crowdring has turned the featureless “unsmart” mobile phone into a tool for fighting corruption. In China, an old-fashioned website called Baby Come Home helps parents find their missing or abducted children. In Brazil, an open-source culture has created Catraca Livre and the remarkable Fora do Eixo, a co-operative which organizes thousands of cultural events across the country through a cashless barter system. Mexico, meanwhile, has produced Medicall Home, a revolutionary national primary healthcare service based on the mobile network. Of the many systems that have breached the 1 billion user mark, most have come from private enterprises – Facebook, Google, etc. Aadhar is the only non-US technical system to have more than 1 billion users but also the only one which has been created by a public sector entity. And it is driving new values in the lives of millions of Indian citizens and help create new business/public models.
I bring these examples, to demonstrate the phenomenal power of disruption that new-age technologies can deliver. So, when we think about Disruptive Technologies specifically Industry 5.0 and their effect on society, we need to think about inspiring new solutions that solve difficult problems (both social and business); those solutions that impact a vast majority of people; and those that inspire new ideas which others can follow.
To bring home the point, our technologies are advancing at breakneck speed and while the capabilities it provides are endless, our knowledge of how to use it is limited.
Let me explain that.
As humans on one hand, we have the extraordinary power to imagine but at the same time we are plagued with faults. To overcome these inherent faults, our powerful imagination helps create advance systems and societies that overcome them. However, these very systems tend to curtail our imagination. Because Industrialization begets scalable efficiency and feels comfortable in it. So, it views imagination as the enemy. And that is because, as humans we like to live our life on our default settings, which inhibits us to break out of our constraints. This default setting is fuelled by the dark side of disruptive technologies which puts the focus on performance. Which in turn leads to over-imagination of risks and downgrading of potential rewards. As I said earlier, technology-driven vs. value-driven.
Hence, the real shift is to veer away from ‘technology implementer’ trajectory towards a ‘value delivery’ trajectory. And that’s how we should harness digitalization. To re-awaken our imagination and overcome our cognitive biases that bind us to the practices of the past. It is up to us as to what disruption we want – do we want to use the digitalization to iron out that LAST chink in the armour; remove that last inefficiency in the process. Or do we want to use the digitalization to as a catalyst and amplify our imagination to discover new avenues, add new sources of value, and allow humanity to flourish.
To close, I again paraphrase David Foster Wallace and he says, it’s this simple awareness of what is real and essential, which is so hidden in plain sight that we have to keep reminding ourselves again and again: “This is water. This is water”.
