Beyond Zeros and Ones: Industry 4.0

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Guest blog by John Koldowski, Special Advisor to the CEO, PATA

As we move towards an exponential future the topic of Industry 4.0 is both very timely and very controversial. However, a pragmatic approach to industry 4.0 is a solid first step to managing its consequences to your advantage rather than being surprised by what it might bring.

What is Industry 4.0? In a nutshell, it is, in the words of Mark Schwab – Chairman of the World Economic Forum- ‘a technological revolution that will fundamentally alter the way we live, work and relate to one another’. That last component should lift the spirits of the markets within us all.

Another way to look at ‘Industry 4.0’ is a combination of cyber-systems, physical systems, the Internet of Things and the Internet of Systems – all working seamlessly together.

It came about as an initiative of the German Government research programme for computers in the industry in order to maintain a technological edge for German industry. It has since taken the world by storm.

Originally known as the’ Industrial Revolution 4.0’ the term eventually dropped any reference to a revolution for political reasons and became known simply as Industry 4.0 – the term many of us use today.

In one sense the evolution to Industry 4.0 is nothing new. We went through the first industrial revolution where water and steam power mechanised production facilities. We survived the second when electricity was used to enable mass production of goods, and we are still in the third industrial revolution with the widespread and ever-increasing use of electronics and information technology as tools for the rapid development of knowledge systems.

Industry 4.0 is, however, an entirely new development, not simply an extension of Industry 3.0. The difference between the two is that Industry 4.0 is characterised by its velocity, its speed of development and the impact that it is having – and will have – on existing systems.

Industry 4.0 is developing at an exponential rate, not a slow, steady linear one. In order to capitalise upon what it has to offer we also must develop our skills and abilities at an exponential rate or be left behind.

As in the past, all of these significant turning points in the continuous development of our global society have been met in some circles with fear, trepidation and angst but welcomed in others with anticipation of new opportunities and successes. It is no different now.

Industry 4.0 offers significant potential in a number of areas by connecting billions of more people to the web and dramatically improving the efficiency of business, government and organisations. There is also speculation that Industry 4.0 may assist in the regeneration of the natural environment through better asset management.

Consider these possibilities in terms of our travel and tourism sector for a moment. Each of those improvements relates directly to opportunities since they may define who we are and what we offer in such a way that we better align with the needs and wants of our potential customer base. Any regeneration of our natural environment is critical as, in many cases, it supports a key marketing asset for any destination.

It will, therefore, enhance – rather than constrict – our ability to communicate with and deliver to a much wider audience of potential travellers, both inbound and outbound.

What Industry 4.0 will do of course is change our jobs and the ways we do them. The fear of widespread elimination of jobs is one side of the coin but the other side offers new opportunities and potential if we evolve our skill sets along with the evolution of society in this fourth industrial age.

Embracing Industry 4.0 can offer a significant competitive advantage if done correctly. It may be sheer coincidence but along with the emergence of Industry 4.0 we also have the evolution of Marketing to – you guessed it – Marketing 4.0.

Proposed by marketing legend Philip Kotler along with two executives from MarkPlus Incorporated – Indonesia’s largest Marketing Consulting Firm – Marketing 4.0 accelerates the move away from traditional marketing processes towards digital solutions. This is not a complete move from one process to another but rather an extension of the boundaries to incorporate both, albeit at polar ends of the same spectrum.

Marketing 4.0 is all about continuous adaptation to the changing nature of consumer pathways in the digital economy. In the words of Kotler and others, it is all about ‘guiding customers throughout their journey from awareness to, ultimately, advocacy’.

The shift of power to the digital customer requires that we understand the impacts of the moves from Exclusivity to Inclusivity, from Vertical to Horizontal and from Individual to Social. What do these terms mean?

Exclusive to Inclusive is not about being similar but rather about living harmoniously – despite our differences.

Vertical to Horizontal means that competitiveness is not just about size or past advantages but also the ability to identify and connect with customers and partners for co-creation and with competitors for ‘co-opetition’, that blend of competition and cooperation.

And Individual to Social means the need for some form of social conformity where customers seek out and care about the opinions of others with a similar mindset. Social media has provided the platform and the tools for this to happen, as evidenced by the proliferation of online forums and chat rooms.

The key here is to understand that this will only grow in the future and more importantly will be driven by the availability of cheap smartphones. You must be ‘mobile capable’ to be effective.

These developments with marketing 4.0 are also consistent with a shift in social mindset as we move away from a Goods-Dominant Logic to a more Services Dominant Logic mindset. The key here is that you MUST deliver on your promise or you will fail. Your disappointed customers will make sure of that.

Now, above all, the embracing of Industry 4.0 and Marketing 4.0 requires an innovation mindset. Destinations such as the Republic of Korea have taken bold steps in the right direction. For example, according to the Organisation for Economic Co-operation and Development (OECD), the Republic of Korea became the most advanced economy for innovation in 2012, spending four percent of its GDP on research and development.

Now it’s up to the rest of us to follow their lead.