The 4th Industrial Revolution and the A.I. are not Science Fiction Anymore

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When you were a kid you probably have seen or heard about Artificial Intelligence, also known as A.I.—  a film directed by Steven Spielberg. The screenplay tells the story of David (Osment), a childlike android uniquely programmed with the ability to love. But nowadays, even if we are not living with humanoids I can assure you that AI is not just a movie. Indeed, as you might know- otherwise you will know soon- we are currently at the dawn of the 4th Industrial Revolution (4IR). To keep it short the 4IR acknowledges the increased digitalisation and automatization of industry, and refers to a new era in which cyber-physical systems – technology and devices (incl. drones/robots) –  are coming together, to capture and share smart data, communicate with each other, and make decentralized decisions through autonomous systems. Hence, AI enables a constellation of new technologies that are smart, connected and that will have a consequent impact on our everyday lives.  Now that you understand what is the 4th revolution and the AI, you need to understand the global and current trends of both phenomena, their concrete impacts, potential, limits and future developments …Well, keep reading and you will.

The 4IR is calling for digitalization

Gunther H. Oettinger, the Commissioner for Digital Economy and Society said on the 19th April, when European Commission launched its first industry-related initiative of the Digital Single Market package the following:

“Digital is transforming European Industry […] Our challenge is to turn the 4th Industrial Revolution to our advantage, to reap the opportunities it brings”

The main objective of the Digital Single Market package is to press out the need for more digitalization in our society. That initiative includes the manufacturing sector that accounts in the European Union for more than 33 million jobs and 60% of productivity growth. The aim of the EU measures is to prepare a smooth transition to smart economy and smart cities by boosting innovation capacity across industry (€37bn will be invested) and focusing on key points such as for example 5G, cloud computing, data technologies and cyber-city – a highly connected city that is based on intelligent systems.

Indeed, whereas today, less than 1% of objects are connected to the Internet, there are likely to be almost 6 billion IoT connections within the EU in 2020. Hence, AI and robotics are expected to cause quantum leaps in productivity with major effects on global economies, causing radical changes in people’s lives and in all sectors of our society.  Nevertheless, if the technologies coming with the 4IR such as AI are really dazzling. They are built to achieve very specific tasks and each small improvement is subjected to an extensive and a very specialized research that could take … years.

The struggles of leading, but labor-intensive industries to keep ahead of the competition

As a concrete example of a 4IR technology, your dear friend SIRI and its ability to talk with you is a deep learning technology that you use every day without even knowing about how powerful it is. But let’s take two sectors that you know even less and that are yearning for innovation: logistics and postal services. These markets rely on outdated processes and face common needs: which are the increase of the flexibility of the supply chain, the new automated processes to keep being competitive, and the digital integration.

Indeed, the boom in the e-commerce, the increase of the online purchases and the rise of digital contents have led to dramatic changes in consumer expectations and habits. For example, at least 90% of e-shoppers mention low delivery prices and convenient return options as the most important criteria to shop online. Let’s explain this point applied to the postal sector.  This market is mainly made of two actors: National Postal Operators (NPO) such as Bpost and integrators – that are express courier services such as DHL or FedEx.  These two groups used to be in partial competition because the NPO could also largely count on letter delivery services. However, with the drop in letter volume and the increase in parcels deliveries derived from online shopping, they are becoming direct competitors. However, they are not endowed with the same tools… Indeed, the integrators rely on full track-and-trace systems, and deliver when-it-is-needed while NPO needs to comply with EU postal directives such as universal service obligation (e.g low cost everyday deliveries).

In order to avoid a NPO castaway that will unavoidably occur with their current business model, you understand that the traditional players will be obliged to increase their costs and especially labour costs, as a lot of operations are proceed with manpower labour. But labour costs already account for more than 68% of their total costs… Similarly, the logistics providers are facing higher operating costs (eg: labour and fuel) which is not profitable and not sustaibable on the longer term because of the competition of the low-waged countryies (despite the fact that the rapid industrialization has increased wages in developing countries as well).

So, now that we grasp that we need to foster innovation and develop new processes, how can we rescue these industries?

4IR potential to reboots European Industries

No worries, new technologies got the point. Smart systems such as KIVA robots used by Amazon and more and more drones that can be Unmanned Aerial Vehicles or Unmanned Ground Vehicles. Both systems can multitask, avoid errors and work 24/7 through a cloud connection and sensors. Besides, according a recent report from Business Insider, spending on drones are expected to top $12 billion USD and more than 805,000 shipments will be executed by commercial drones by 2021. The figure 1 shows the value generated by drones on the most relevant and addressable industries. For example, in the postal sector, Royal Mail (UK’s national postal operator) started to consider the use of Amazon’s drones to deliver some parcels in order to cut the cost and to implement a full track and trace system through the cloud.

There is no need to be a genius in economics to understand that such improvements in automated systems will improve factory operations and productivity while reducing labor costs and consequently this will lead to a reduction of OPEX and CAPEX as well as fuel costs (less transportation costs). As a result, the companies will be more efficient, scalable and… remain or become again European). Indeed, the Single Digital market will lead to the need and the creation of new jobs thanks to the automatization of “routine” tasks. Nowadays, already some industries cannot find the needed skilled people but it could be up to 825,000 unfilled vacancies for Information and Communication Technologies in 2025 according the EU. In addition, this jobs creation will reduce the brain drain of highly talented student and PhD from Europe to the US and the massive delocalization to Asia because of a full optimization and cost efficiency of European industries.

Ethics & Regulation side 

As drones are a nascent technology, one of the main hurdles for drone economy is the regulatory framework. I think that 3 main points can be pointed out The first point is the regulation of the drone flight. If the United States seem to have the biggest potential, the regulatory framework is more friendly in Europe where we counted more than 2,500 commercial drone operators in July 2015, and around 1,000 in the USA.  One important thing to mention is that there is absolutely no regulation for the outdoor flight of autonomous drones. The second point regards the safety that the national aviation authorities and the private sector have to ensure. One part of a safe supervision system is to develop a complex air-traffic management system for Unmanned Aerial Vehicles to prevent collisions with other flying objects. Moreover, drones have to possess auto-fail functions, preventing an uncontrolled fall from the air to the ground.  The third point and the more compelling right now is privacy. Indeed, when drones fly, they collect data, sometimes confidential or sensitive information about private property or private behaviors. Specifically, regarding data protection, drones companies need to comply with the Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data and with the National Data Protection Laws. However, this is a broader problem, concerning not only drone powered solutions, but also internet and telecommunication services.

Furthermore, a lot of people are afraid of the AI and the implementation of robots in general. In my opinion it is simply because they got the message wrong. Indeed, you could be afraid of flying vehicles especially drones that are accused to collect your data and can carry weapons. I’m too. But I think this fear is due to the fat that people are now facing something completely new that can outperform human capabilities as when Google’s AlphaGo – a smart computer that learns from his mistakes-  defeated 4-1 the human champion Lee Sedol at the fiendishly complex game of Go.

Will we see flying cars from our balconies?

To be frankly honest with you, I’m pretty sure that drones will not fly outside delivering parcels before at least one or two years, just because the regulatory framework will not allow that. Similarly, smart robots and fully autonomous systems are not already here. But one day they will thanks to progress in the technology, new design, etc. Get used to.  But the question about the AI and ethics is also raised by the EU that started coyly to set up a “robot tax” with respect to the fact that people are afraid about the fact that AI technologies “come to steal all jobs”. One of the more ludicrous suggestions of this draft project is that as robots are as smart as human they should pay social security taxes for all the social security benefits the human workers won’t get.

But, in 2050 or even in 2025 would we see some flying cars like in Harry Potter? Very probably …yes and there will not be any witchcraft involved. Obviously, the urban landscape will be irredeemably transformed. Some signalization, and special roads will be designed as well as a new traffic management. Nevertheless, the industrial side is the tip of the iceberg. Indeed, some companies are developing robots to deliver blood in remoted areas in cooperation with NGO’s such as UNICEF. Recently, some French hospitals started to rely on robots to improve the everyday life of children suffering from leukemia and other orphan diseases. The robot is connected through the cloud to their home and the children can control it from their hospital bed and be present with their family for a couple of hours.   Now, don’t tell me that this is not amazing!

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