THE BLOG
09/12/2014 10:42 am ET Updated Nov 12, 2014

Industrial Revolution 3.0

The accelerated pace of life makes it difficult to take stock of the patterns drawn by deeper forces shaping the world. We marvel at amazing gadgets but we easily lose sight of the powerful industrial revolution that is gaining momentum.

It is easy and dangerous for business and government leaders to underestimate the breadth and depth of its strategic implications. Putting the rising revolution in a historical context can allow us to anticipate and better prepare for change to come.

Revolution 1.0 transformed the world in the 1800s. It was powered by coal and moved by iron machines and factories, railways and steamships. The telegraph allowed for instant communication across oceans and continents. Agricultural innovations such as enclosures, crop rotation, selective breeding brought productivity gains freeing rural labor. Access to vast tracts of land and resources in the Americas, Africa and Asia made food and materials like cotton abundant and triggered an unprecedented rise in standards of living and population growth. England and Western Europe became dominant global powers.

Revolution 2.0 shaped the 1900s. It was powered by oil. Cars, buses and planes were the new means of transportation. The telephone, TV, cinema and radio transformed communication and society. Manufacturing became vastly more productive with assembly lines, standardized and specialized machine tools and dumb robots. Urbanization led to the rise of the service economy.

Agriculture changed again with mechanization, chemical fertilizers, pesticides, and industrial farming. Steel, aluminum, plastic and synthetic fibers underpinned the economy. Revolution 2.0 brought modernization and unprecedented quality of life and population growth across the world. The US and Western civilization remained leaders.

Today Revolution 2.0 shows clear signs of fatigue and decline. Rising oil prices and unprecedented debt levels are putting a huge burden on global growth and job creation. Youth unemployment is massive and widespread, at 28 percent in the Middle East and over 40 percent in parts of Europe, creating a fertile ground for extremism and conflict. Food prices remain near historic peaks and threaten to erase progress in poverty eradication and further aggravate social tension. IPCC warns of dire impacts of climate change.

At the same time Revolution 3.0 is gaining strength and beginning to shape the 21st century. Internet and billions of mobile and connected devices are rapidly redefining communication. Renewable energies are gaining ground to fossil fuels. Networks of electric and hydrogen powered drones and autonomous vehicles are poised to redefine transportation. Social and flexible robots, 3D printers and nanotechnology are transforming how we make things, making complexity free and labor costs less relevant.

Artificial intelligence is replacing humans in a growing array of activities. Novel materials such as carbon nanotubes, bioplastics and graphene are poised to replace those of the second revolution. Synthetic biology is beginning to redefine transformation processes just like chemistry did in the past. Agriculture is becoming a high-tech sector with genetically modified crops, remote sensing, prescription planting as well as urban agriculture and bioprinted meat. The private sector is leading the creation of a space economy with reusable rockets, nanosatellites and space robots.

Like in the past, the seeds that will shape this century were planted in the previous one. In fact, many of its foundational technologies already exist and well-funded innovative startups are making strides towards their market success. Elon Musk, for example, is simultaneously working to reshape the space, automobile and solar panel installation sectors. If anything, this revolution has yet to show its full power with new developments in nanotechnology, for example.

Just like the previous versions, this revolution will eventually bring abundance and rising standards of living. It will also bring massive shifts in the balance of power and bring profound changes in society. The transition to the new era will result in turbulence and create the conditions for conflict. Disruptive innovation will dominate value creation. Entrepreneurs will spearhead change replacing the constructs of the second revolution.

New paradigms are becoming dominant. Adaptability and nimbleness are being sought over predictability and scale. Value chains are being replaced by fluid multi-tiered ecosystems. Ownership is being trumped by access. Talent is becoming global and freelancing is growing over full-time employment. Open innovation, crowdsourcing and the maker movement are gaining ground over big labs. Networks are overcoming hierarchies.

The speed of Revolution 3.0 is brutal due to its digital and exponential nature. Its magnitude will also dwarf previous revolutions. For example, IDC predicts that we will generate 44ZB of data by 2020 versus 1.8ZB in 2011.

But qualitative quantum leaps make it unique. While other revolutions replaced muscles, smart machines are now replacing humans in cognitive functions. We can read, edit and print DNA and create new life forms. We will have to move from biosphere exploitation to regeneration. We are on our way to become a multi-planetary species.

Revolutions 1.0 and 2.0 brought massive conflict and adaptation costs in the form of conflict, inequality and pollution. During Revolution 2.0 we paid the price for the abuses of Revolution 1.0 in the form of communism and racial tensions. In Revolution 3.0 we will pay the price of Revolution 2.0 in the form of debt and environmental stress. Why not hack the future and make it better?['

We can reinvent education to make it relevant for the future and address the growing skills mismatch challenge. We need to get ready for a world with fewer jobs and abundant opportunities. We can stimulate the development of technologies to cover basic necessities at a small fraction of the cost. We can accelerate the growth of renewables to make energy abundant and cheap, boost global growth and reverse greenhouse gas emission trends.

Ignoring or resisting change and protecting the structures of Revolution 2.0 over the emergence of Revolution 3.0 will involve a hefty price. History shows that those who proactively embrace and lead technology revolutions reap their benefits. Let's surf the technology tsunami coming our way and make the future better.