The Fourth Industrial Revolution and the Power of Data
The Fourth Industrial Revolution is fundamentally about data – the ownership, transportation and manipulation of data and how it is used to drive productivity.
“The last pilot was probably born a few years ago” – so started my conversation with an artificial intelligence scientist from a prominent American university about the Fourth Industrial Revolution.
Startling as it may be, we are living in the world of the Industrial Revolution 4.0. The US Postal Service has started testing autonomous trucks delivering mail across 2,000 miles. Perhaps the last truck driver was born a few years ago as well.
One can be either an optimist or a pessimist about the slings and arrows of outrageous fortune. Either you see a light at the end of the tunnel, or a fast approaching train. The Fourth Industrial Revolution will have plenty for both camps.
The Fourth Industrial Revolution is fundamentally about data – how this data is managed and used to drive productivity.
Let us forget for the moment various buzzwords (big data, blockchain, artificial intelligence). A simpler analogy would suffice. Alexander the Great conquered Europe on horseback and so did Napoleon a few thousand years later. While they spoke different languages and lived in different eras, they would not find their worlds particularly different (setting aside the obvious superiority of the French language). Now think of your great grand parents from the early 1900’s – they would be utterly lost in today’s world. How about yourself?
I am willing to bet that unless you are in the technology sector you probably have little understanding of the basic things you do every day. Do you know how your email works? Do you understand how Google or Facebook algorithms chase you around the internet with adverts? How about your iPad or smart phone? Do you know how to fix them or how to tinker around with them?
Both Napoleon and Alexander the Great understood their weapons of war, how to take care of their horses and command their men. As did most of their soldiers and generals. Today, it would be surprising if any military general actually understood how a drone operates (beyond the computer game screen).
Sadly 99% of humanity has virtually no comprehension of how everyday technology works – and it is about to get much more complicated.
The opportunity lies in both simplifying the complexity and taking commercial advantage of the Fourth Industrial Revolution. Without sounding too grandiose – the Googles of this world are fundamentally very primitive technologies.
In my simple view the opportunity lies in both simplifying the complexity and taking full commercial advantage of the Fourth Industrial Revolution. Without sounding too grandiose – the Googles of this world are fundamentally very primitive technologies (which is why they bought DeepMind – the UK artificial intelligence diamond).
In basic terms, Facebook designed a pretty interface (something your children will be able to do by the time they leave school) that gave ‘free’ services in exchange for data. Google came up with a very clever mathematical formula: how to count the popularity of web pages. Neither business could make any money until they started trading their user’s data via advertising. With the smartest PhDs in the world – the basic model is – give people candy and in return get hugely valuable data. Primitive but beautiful.
In the non-digital world a similar business model would be free hotel rooms. You can stay in my hotel for free but I reserve the right to sell your jewellery, tell everyone about your sleeping habits (and who you sleep with) and follow you for the rest of your life with offers of the most fantastic products. And if you protest the above, I would say – hey but it makes my service to you even better because your lover enjoys Californian Pinot and my friend who runs a wine shop has the best in the country.
We have an extraordinary opportunity to transform the nature of data and it has to do with property rights. Who owns your data as an individual or business is absolute key. Data is today’s Napoleon’s horse. Let’s come back to the buzz words.
Why is blockchain such an interesting technology? Simple – it is a record of transactions and ownership that is always true. Blockchain uses clever mathematics to check if the record is true by solving complex mathematic equations. It is beyond 99.9% of people to understand the math, but it is not beyond us to understand that in math 2+2=4. Blockchain makes sure that 2+2 is always 4 and if it is not, then the record is false.
So if you own your data – as in all the records about yourself, your family and your business – you now have technologies that enable you to trade that data because a blockchain type technology can verify both ownership and transactional history. Forget eye candy from Facebook, demand money from them for sharing your photos and roping in your friends to do the same.
In my view there is a huge commercial opportunity that empowers individuals and businesses to trade their data easily. We already do it everyday but without the ability to make money on these trades.
In my view there is a huge commercial opportunity that empowers individuals and businesses to trade their data easily. We already do it everyday but without the ability to make money on these trades. Just recall the last time you applied for a mortgage or a credit card. You traded your data in return for a service. While for you it is a one off trade – for a credit card company it is a cash cow as they make money on every purchase you make. In fact, in the Industry 4.0 world, you may not even need credit cards. You will go into stores and simply exchange data with the autonomous selling robot for a particular product or service.
Artificial intelligence is another great buzz word. I have yet to see a commercially viable artificial intelligence product in our everyday lives. At best, most artificial intelligence commercial applications are clever macros (let’s call them excel macro 2.0). The real power of artificial intelligence in commerce will begin to impact our lives in ways that are unpredictable. It all depends on data.
API (Application Program Interface)
The question is not whether robots will replace humanity, but how data is organized, stored and transported. Organizing data is a big challenge (transportation is becoming easier, faster and cheaper). So instead of looking at the sexy AI robots, lets focus on a rather boring technology called API (Application Program Interface). Why? Elementary Watson. API is an old technology that big companies in the tech and corporate world developed to exchange data. An API is a simple communication tool that helps different computer systems and databases to send data to each other regardless of whether you have a PC, a Mac, SAP or Oracle. In other words, everybody gets to keep their old gear but can exchange data using a common language. Let’s call it the Esperanto of data.
APIs are a clever little technology because it enables standardization or data transport across the economy and it works. For example my start up, MachFast.com, just launched the UK’s first company incorporation application with a business current account. Using the same tech we launched a business energy switching service, EnergyBillKill.com. We are neither a bank nor a company formation entity (it is a government business). We are also not an energy company. Yet we can do both activities in under 10 minutes. Users own their data and we empower them to obtain services by exchanging data for services. In due course we will combine the above with proper artificial intelligence as well as some form of a blockchain.
APIs get us into the weeds – at a 10,000 foot level – think of the Industrial Revolution 4.0 as ownership, transportation and manipulation of data. Everything else is an instrument of the above – be it an autonomous driving car, a Jeff Bezos rocket or your social media account.
For legacy businesses the above is a huge opportunity as well as a challenge. Today’s world is data. Today’s Napoleons are mathematicians and PhD physicists. If we solve the data ownership problem then we are more likely to control our destiny. If we continue to treat data as something other than property, we may end up in our own matrix film.
Michael is an American entrepreneur and a seasoned banker. He is currently disrupting business-to-business services in Europe, having recently launched a new platform in the UK. The platform is simplifying how business services are bought and sold. MachFast Group recently launched the UK’s first free incorporation services with current accounts, machfast.com, and business energy switching services, energybillkill.com.
Michael’s banking experience spans Europe and Asia with global European and American banking groups across finance and strategy. He was instrumental in scaling an emerging markets small business-banking platform and was a co-founder of a UK bank challenger venture, Copernicus.
Michael holds Economics Honours and MBA degrees from The University of Chicago.