Page 36 - The Fourth Industrial Revolution

beginning to feel the positive impact on the world that the fourth industrial

revolution can have. My optimism stems from three main sources.

First, the fourth industrial revolution offers the opportunity to integrate the
unmet needs of two billion people into the global economy, driving
additional demands for existing products and services by empowering and
connecting individuals and communities all over the world to one another.

Second, the fourth industrial revolution will greatly increase our ability to
address negative externalities and, in the process, to boost potential

economic growth. Take carbon emissions, a major negative externality, as
an example. Until recently, green investing was only attractive when heavily
subsidized by governments. This is less and less the case. Rapid
technological advances in renewable energy, fuel efficiency and energy

storage not only make investments in these fields increasingly profitable,
boosting GDP growth, but they also contribute to mitigating climate change,
one of the major global challenges of our time.

Third, as I discuss in the next section, businesses, governments and civil
society leaders with whom I interact all tell me that they are struggling to
transform their organizations to realize fully the efficiencies that digital

capabilities deliver. We are still at the beginning of the fourth industrial
revolution, and it will require entirely new economic and organizational
structures to grasp its full value.

Indeed, my view is that the competitiveness rules of the fourth industrial
revolution economy are different from previous periods. To remain

competitive, both companies and countries must be at the frontier of
innovation in all its forms, which means that strategies which primarily
focus on reducing costs will be less effective than those which are based on
offering products and services in more innovative ways. As we see today,
established companies are being put under extreme pressure by emerging

disruptors and innovators from other industries and countries. The same
could be said for countries that do not recognize the need to focus on
building their innovation ecosystems accordingly.

To sum up, I believe that the combination of structural factors (over-
indebtedness and ageing societies) and systemic ones (the introduction of

the platform and on-demand economies, the increasing relevance of
decreasing marginal costs, etc.) will force us to rewrite our economic

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