Industry 4.0 is the Solution to Post Covid19 Economic Recovery

Many countries around the world are tackling the health impact of Covid19, most face an equally difficult problem, dealing with the economic consequences. Looking at this from a UK perspective, the challenge is twofold. The first is how to manage the economy in such a way that we avoid a long deep recession or a depression. The second is managing debt. This is not just the vast levels of debt that have been incurred through short term measures such as the furlough scheme, but also the cost of the economic stimulus package that will be needed if we are going to avoid a depression.

The economic parallels with the 2008 financial crash seem clear. In both cases the UK government borrowed vast amounts of money to deal with a dramatic global event. Many commentators have suggested that the economic cost and impact of Covid19 will be far greater than the impact of the 2008 financial crash. To make matters worse, at the beginning of the Covid19 crisis, UK debt levels were far higher than they were in 2008. Now there are also the looming challenges of climate change and Brexit, both of which are likely to create economic as well as social challenges.

There is however some good news, we are near the beginning of a new industrial revolution, big data, artificial intelligence and the internet of things combine to create the fourth industrial revolution, sometimes also referred to as Industry 4.0. Some commentators argue that the impact of Industry 4.0 will be far greater than any of the previous industrial revolutions.

At this point you might be wondering, what exactly is the fourth industrial revolution, why is its impact likely to be so significant or even what were the other three. I answer these questions now, starting with an overview of previous industrial revolutions. The first industrial revolution, is the one that most people are fully aware of, the move from agriculture to industry enabled by coal and steel. The second was mass production, most famously applied by Henry Ford. The third took place during the second half on the 20th Centuary, it included, electronics, telecommunications and most significantly computing.

What sets the fourth industrial revolution apart from the third is changes in data collection, data processing and mass communication. The development of sophisticated computing in the forms of artificial intelligence (AI) and machine learning have opened up the potential to do almost everything differently. One of the most significant development is computing that is able to make sense of unstructured messy data. This development enabled the materialization of big data. Big data is not just, data sets that are large in volume, big data is also defined as being both rapidly growing and unstructured. Previously, computers could only make sense of data sets neatly arranged in databases, now they can also make sense of data without requiring it to be formatted for processing. The ability to make sense of unstructured data has also enabled the emergence of the internet of things.

The internet of things (often referred to as simply IOT), is devices that are connected to the internet without being directly controlled by people. For example, traffic lights, thermostats, lights and even car components are increasingly connected to the internet. Devices directly controlled by people, such as laptops and smartphones now represent less than 50% of the things that are connected to the internet. Such a development is significant as, all these things collect data, data that could be processed to inform decision making in many different ways. The total amount of data produced around the world now doubles every 2 years. IOT has been enabled by AI, as it requires computers capable of making sense of messy data to bring together and make sense of the uncoordinated data from many different products made by many different companies.

Perhaps the most significant component of Industry 4.0 however, is mass collaboration. In their Book Wikkinomics the authors Tapscot and Williams famously argued that mass collaboration will change everything. Here I am arguing that the mass communication they described is part of Industry 4.0. In the early days of the internet, like traditional media, it was based on one to many communication. More recently, as social media and web searches have developed, different forms of communication between different people and devices are emerging. These have enabled collective intelligence responses that bring together people and computers to solve complex problems. This article illustrates some applications of collective intelligence to Covid19.

Industry 4.0 means that more efficient and effective business models are becoming possible in almost every industry, not just in manufacturing, but across service sector industries as well. The implementation of the changes I have outlined could significantly increase productivity and harness innovation. The impact of Covid19 is also starting to break down resistance to digital transformation as companies have been forced to apply digital changes to enable remote working. It is often said that necessity is the mother of invention, and there is some evidence that is becoming true in response to Covid19. The theory of disruptive innovation supports the logic that industry 4.0 is likely to disrupt established business models.

Avoiding recession will require an economic stimulus package comparable to, if not larger than the one applied in 2008. To enable a rapid economic recovery, I suggest that such a package should be targeted towards enabling organisations to move towards Industry 4.0 and also to help them reduce their carbon impact. If climate change is not considered, in the near future we could find ourselves facing the far larger challenge of avoiding climate catastrophe. I do not see Industry 4.0 and climate measures as separate. Industry 4.0 is closely aligned to the concept of smart cities. Smart city thinking often includes ideas about how to harness the digital technologies mentioned earlier to improve efficiency, improve society and reduce climate impact. Smart city measure are frequently aligned with the 3 P’s of the triple bottom line: people, planet and profit. More detailed thoughts about how smart city thinking could address the challenge of climate change are outlined here.

So my suggestion is that as companies and governments think about how to respond to the economic impact of Covid19, instead of how to get back to normal instead they should take a forward thinking approach and re-imagine what the future could look like. At its most basic level this could include considering new ways of holding meetings and hosting events. More adventurous companies will however implement more radical change. Some will take bolder steps such as breaking down hierarchical structures, to engage employees from across their workforce to contribute to innovation. The theory of disruptive innovation that I referred to earlier, suggests that, only companies that make such dramatic changes will survive. I recall a speaker at a smart city conference a few years ago argue that every organisation that fails to adopt an industry 4.0 business model will fold within the next ten years. I outlined more detailed thoughts about that conference in a previous article here.

If you want to discuss how I might be able to help your company harness the potential of industry 4.0 to enable you to survive and thrive post Covid19 get in touch. I have insights from academic research and a plethora of innovation techniques from my creative background. Relevant research includes a PhD that focused on harnessing the potential of digital technologies to improve efficiency. I enclose a link to the abstract here.

Ideas in this article builds on thoughts I discussed in an earlier Industry 4.0 post, it can be found here


  1. […] I originally posted this blog in LinkedIn in September 2019, however, I believe that the Covid19 epidemic has escalated the urgency of the situation. Governments around the world are already starting to invest vast amounts of money in economic stimulus measures. This gives a unique opportunity to refocus economies towards a more environmentally positive way, or to use one of the buzz words of today, to build back better. I outlined this economic argument in more detail in this blog post in May […]


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