THE FOURTH INDUSTRIAL REVOLUTION New Business Opportunities for SMEs and Crafts
by Univ.-Prof. Dr. Norbert W. Knoll von Dornhof General Secretary of WUSME World Union of SMEs
In the Middle of the Fourth Industrial Revolution (4IR)
Opportunities and Threats for Small- and Medium Sizes Enterprises (SMEs)
1.
Introduction
The Fourth Industrial Revolution (4IR) 1) is the fourth major industrial era since the initial Industrial Revolution of the 18th century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres, collectively referred to as cyber-physical systems. It is marked by emerging technology breakthroughs in a number of fields, including robotics, nanotechnology, quantum computing, biotechnology, space technology, Internet of Things (IoT), decentralized consensus, fifth-generation wireless technologies (5G), additive manufacturing/3D printing and fully autonomous vehicles.
Source: Christoph Roser at AllAboutLean.com (CC BY-SA 4.0)
Klaus Schwab, the executive chairman of the World Economic Forum, has defined it as the "second machine age" in terms of the effects of digitization and artificial intelligence (AI) on the global economy, but added a broader role for advances in biological technologies. These technologies are concerning almost every industry in every country. The breadth and depth of these changes will impact the transformation of entire systems of production, management, and governance. The Fourth Industrial Revolution (4IR) is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
2.
A new age of SMEs
Technology brought a new age to small and medum sized enterprises3IR brought a new age of entrepreneurship. Even sole proprietors began to develop their own products and services. With computers and the Internet, the 3rd Industrial Revolution (3IR), everything began to change. Information along with services and products have been delivered on the doorstep. Traditional SMEs were not prepared for this. Many are not today. Company surveys as well in developed and less developed economies revealed that Small and medium-sized enterprises are not quite ready for the fourth industrial revolution (IR4.0), which could spell trouble as the world advances further. For example in Malaysia out of some 50,000 SMEs in the country, only 300 have signed up for the evaluation for the selection process for a complimentary readiness assessment (RA) by the International Trade and Industry Ministry (Miti). Some examples of new emerging technologies with relevance for SMEs and Crafts shall illustrate the trends: Robotics, automation and artificial intelligence
Internet of Things (IoT), biotechnology Waste management and recycling block Chains
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examples shall illustrate the scope of 4IR Robotics and automation Experts on robotics and automation mentioned good reasons why collaborative robotics is the answer to SME automation. Enhanced human safety: For SMEs desiring to embrace robotics and automation, employee safety is top priority. Complex and heavy industrial robots are usually locked behind fences or cages as their rapid and heavy movements are considered unsafe for human interaction, making them unbefitting for SMEs. Collaborative robots, on the other hand, are lightweight and abide by the standard ISO/TS 15066 safety guidelines. These guidelines help small-and-medium-sized manufacturers ensure that humans can safely work with the deployed cobots. Easy deployment: SMEs often hesitate to invest in robotics because they cannot afford to spend much time, effort, and money on installing such robots. Moreover, these enterprises cannot afford to hire a qualified robotics programmer for managing these complex robots. However, most cobots can be deployed in less than a day. The operator can train and program the robotic arm to follow the desired path and accomplish tasks. Cobots can also be used by most cafts.
Recent developments in the field of robotics and automation, artificial intelligence, and connected technology are giving rise to a new generation of collaborative robots that work side-by-side with their human counterparts, thereby reducing the fatigue of performing repetitive and dangerous tasks in workers. Small and medium-sized enterprises can hugely benefit from such advanced automation solutions. Therefore, SME owners are increasingly investing in collaborative robots to boost their productivity and profitability, and promote a safe work environment. 4. Internet of Things - IoT Small and medium-sized businesses do not have the same opportunities as large and multinational companies when it comes to innovating with IoT technology. They generally do not have sufficient human, financial or development resources to build these new digital and IoT-based solutions themselves. Source: oT Analytics GmbH, Astra Tower, Zirkusweg 2, 20359 Hamburg, Germany, 2018 IoT Analytics mentions 9 opportunities for external IoT innovation by rank in a 2017 study: Third-party full-service provider (44%) - The SME buys services and products from a fullservice provider with out-of-the-box solutions Corporate Ventures (36%) - The SME creates its own venture arm, which strategically invests in numerous startups in relevant areas, Company Builder / Agency (36%) - The SME develops together with experts who facilitate the integrated innovation process, Strategic Partnerships (32%) - SMEs cooperate with other firms in certain strategic areas, which are normally formalized in a commercial contract, Incubators / Accelerators (30%) - The SME creates its own arm, which strategically supports many startups in relevant areas, Innovation Labs / Spin-off Programs (22%) - The SME creates its own legal entity that acts as an in-house startup or interface to the startup ecosystem, Direct startup engagement (20%) - The SME is co-developed with a start-up, Ecosystem innovation (16%) - The SME joins an ecosystem to work together to deliver solutions within a framework for strategic cooperation and information exchange, Open Innovation (10%) - The SME uses different innovation tools across organizational boundaries (eg hackathons).
Internet of Things - IoT Small and medium-sized businesses (SMEs) don’t possess the same options as large and multinational corporations when it comes to innovating with IoT technology. They generally do not have sufficient human, financial or development resources to create these new digital and IoT-based solutions by themselves.
Source: oT Analytics GmbH Astra Tower,Zirkusweg 2, 20359 Hamburg, Germany, 2018
9 ways for external IoT Innovation ranked (by occurrence) Third Party Full Service Provider (44%) – The SME purchases services and products from a full service provider with ready-to-use solutions Corporate Ventures (36%) – The SME creates an own venture arm that strategically invests in numerous startups in relevant areas Company Builder/ Agency (36%) – The SME co-creates /co-develops with experts that facilitate the end-to-end innovation process Strategic Partnerships (32%) – The SME partners with other firms in certain strategic areas usually formalized in a business contract Incubators / Accelerators (30%) – The SME creates an own arm that strategically supports numerous startups in relevant areas Innovation Labs / Spin-off Programs (22%) – The SME creates an own separate legal entity that acts as an inhouse startup or as an interface with the startup ecosystem Direct Startup Engagement (20%) – The SME co-creates /co-develops directly with a start-up
Ecosystem Innovation (16%) – The SME joins an ecosystem to co-create solutions within a framework for strategic cooperation and information sharing Open Innovation (10%) – The SME uses various tools of innovation across organizational boundaries (e.g., Hackathons) Biotechnology Biotechnology and life sciences contribute to the modernisation of industry worldwide. They are used in a variety of industrial sectors such as healthcare and pharmaceuticals, animal health, textiles, chemicals, plastic, paper, fuel, food, and feed processing. Taking advantage of biotechnology helps the EU economy grow and provides new jobs, while also supporting sustainable development, public health, and environmental protection. The main applications of biotechnology in economy can be classified into three broad groups: In healthcare and pharmaceutical applications, biotechnology has led to the discovery and development of advanced medicines, therapies, diagnostics, and vaccines. For example, biotechnological breakthroughs have created new medicines for patients suffering from growth diseases, metabolic diseases, multiple sclerosis (MS), rheumatoid arthritis, cancer, and Alzheimer’s disease. In agriculture, livestock, veterinary products, and aquaculture, biotechnology has improved animal feed, produced vaccines for livestock, and improved diagnostics for detecting diseases such as BSE, foot and mouth disease, and salmonella. It has also enabled the use of enzymes for more efficient food processing and improved the breeding of plants to obtain desired characteristics. In industrial processes and manufacturing, biotechnology has led to the use of enzymes in the production of detergents, pulp and paper, textiles, and biomass. By using fermentation and enzyme biocatalysis instead of traditional chemical synthesis, higher process efficiency can be obtained, decreasing energy and water consumption. This leads to a reduction in toxic waste. The EU Commission expert group on bio-based products calls for alignment of bioeconomy strategy with the EU policy framework (Published on: 15/11/2017. Alone EU bio-based products and biofuels represent roughly EURO 57 billion in annual revenue and involve 300.000 jobs. Waste management and recycling 4IR also comprises the reduction of waste volums. Every year the world produces more than 4 billion metric tons of municipal and industrial waste: Municipal waste 1.7 to 1.9 billion, Industrial waste 1.2 to 1.7 billion, Hazardous industrial waste 0.5 billion. Other
wastes include construction, mining, agricultural and forestry wastes. If we include the many other categories of waste, the total is no doubt much higher estimated at 3.4 to 4 billion (metric tons). Waste to Energy Policy asintegral element of IR4 remains central to renewable energy business case in much of Europe, USA and Asian Countries and new rules designed to shift that support to a market-based mechanism have raised some uncertainties. Nonetheless, new sources of investment suggest Waste-To-Energy-Projects can still be financed. A “green� economy is characterized where economic benefits and growth is maximised, and all natural resources are been sustainably managed. The waste economy is one of many environmental sectors with policy actions contributing to the overall macroeconomy, and to a transition to a green economy. Waste management is an important sector that needs to be promoted. Business potentials in recycling industry need to be explored by the entrepreneurs. Governments should come forward to provide all kinds of incentives & supports to promote this sector. Tax incentives, interest subsidies or interest free loans, technical consultancy services and marketing support for waste recycling enterprises may be some of the measures that the Government may consider, so that many more entrepreneurs would come forward as well as SMEs and Crafts would diversify into waste-management/recycling sector. Waste to energy technologies also decidedly contribute to. the protection of the world's climate.
Source: Industry 4.0 Scenario Planning How will the industry 4.0 transformations affect SMEs in Germany by 2030?, Hochschule Fürtwagen University, 2017
Unternehmensmfragen in entwickelten und weniger entwickelten Volkswirtschaften haben gezeigt, dass kleine und mittlere Unternehmen für die vierte industrielle Revolution (IR4.0) noch nicht ausreichend vorbereit sind. Dies könnte zu empfindlichen Hemmnissen für kleinere Unternehmen in der zukünftigen wirtschaftlichen Entwicklug führen. In Malaysia haben sich beispielsweise von rund 50.000 KMU in diesem Land nur 300 für die Bewertung des Auswahlverfahrens für eine kostenlose Bereitschaftsbewertung (RA) durch das Internationale Handelsund Industrieministerium (Miti) angemeldet. Die meisten Cobots können jedoch an weniger als einem Tag bereitgestellt werden. Der Bediener kann den Roboterarm trainieren und programmieren, um dem gewünschten Weg zu folgen und Aufgaben auszuführen. Cobots können auch von einigen Handwersbetrieben verwendet werden.
Source: oT Analytics GmbH, Astra Tower, Zirkusweg 2, 20359 Hamburg, Germany, 2018
Source: Investopedia, Luke Fortney Updated Feb 10, 2019
Smaller Enterprises: An innovative staircase to success The Approach The chalanges of IR 4 for SMEs need the development of a new architecture of support policy. I call it "Staircase to Success", starting with reforms of National and International Institutions aiming at the reduction of constraints for doing business up to igniting innovations and taking advantage of additional and new business opportunities. Reforms of National Institutions and Removing of Development Obstacles The following National Institutions that are decisively responsible for doing business need to be monitored and reformed with utmost speed are: Starting a Business, 2. Dealing with Construction Permits, 3. Getting Electricity, 4. Registering Property, 5. Getting Credit, 6. Protecting Minority Investors, 7. Paying Taxes, 8. Enforcing Contracts, 9. Trading across Boarder, 10. Resolving Insolvency. The Enterprise Surveys (what businesses experience) of the World Bank Group investigate on a regular basis, which top business environment obstacles SMEs are facing- These are: Electricity, Access to Finance, Political Instability, Practices of the Informal Sector, Corruption, Crime, and disorder, Tax Administration and Tax Rates,Access to Land, Custom and Trade Regulations.
New Business Opportunities and Promotion of International Trading, - and Industrial Partnerships Humanity will change more in the next 20 years than it has in the previous 300 years. Exponential technologies such as artificial intelligence, combined with advanced robotics, virtual reality, synthetic biology and quantum computing keep accelerating the speed of societal transformation. New emerging markets for SMEs and Crafts are “Green Technologies” (e.g. Cleaning techniques, waste to energy, organic fertilizers, protection of the environment.) Examples for new Business Opportunities are, to mention some: AUTOMOTIVE Auto Repair & Maintenance Services, BUSINESS SERVICES Advertising/Marketing Services, CHILDREN'S BUSINESSES Personalized Children's Products, Food Delivery Services, HEALTHCARE SERVICES, GIFTS & NOVELTIES, HOME IMPROVEMENT Home Staging, MAINTENANCE Blinds Cleaning and PERSONAL CARE Fitness Businesses. The “Staircase to Success” shall lay the foundation for an environment where SMEs and Crafts can grow to their full potential for creating jobs, particularly for women and younger people in less developed economies, reducing poverty, protect the environment and improving living standards. Chambers of Commerce and other employers 'and workers' organizations as well as national and international civil societies, which promote the rights, interests and competitiveness of smaller companies, play a particularly important role in the fourth industrial revolution, especially in the areas of information and advice to its members. 7. Summary Business surveys in developed and less developed economies have shown that small and medium-sized enterprises are not yet sufficiently prepared for the Fourth Industrial Revolution (4IR). SMEs are often reluctant to invest in robotics because they can not afford to spend a lot of time, effort and money on installing such robots. On the other hand, collaborative robots are lightweight and comply with the safety guidelines of ISO / TS 15066. These guidelines help small and medium-sized manufacturers to ensure that people can work safely with the Cobots they use. Biotechnology and life sciences contribute to the modernization of the industry worldwide. SMEs are active in important areas of biotechnology and contribute significantly to innovation, such as in biological fertilizers. They are used in a variety of industrial sectors such as healthcare and pharmaceuticals, animal health, textiles,
chemicals, plastics, paper, fuel, food and feed processing. Tax incentives, interest rate subsidies or interest-free loans, technical advisory services and marketing support for waste management companies can be some of the measures that governments could consider, so that many more entrepreneurs, SMEs and craftspeople would specialize in innovative waste technologies and thus crucial to protecting the global climate could contribute. Blockchain technology is not as widespread as it could be, mainly because blockchain users do not trust each other, research shows. Economists often view trust as a cost because it is desirable to establish oneself. But the entrepreneurs really want to use systems that they can trust. They intuitively understand that cultures and companies with strong confidence avoid the hidden costs caused by anyone who is constantly trying to cheat the system and not be cheated by others. Chambers of Commerce and other employers 'and workers' organizations as well as national and international civil societies, which promote the interests and competitiveness of smaller companies, play a particularly important role in the fourth industrial revolution, especially in the areas of information and advice to its members. Literature The Fourth Industrial Revolution: what it means and how to respond". World Economic Forum. 2018-03-20. Schwab, Klaus (January 11, 2016). The Fourth Industrial Revolution. World Economic Forum. ISBN 1944835008. Ab Rahman, Airini; et al. (2017). "Emerging Technologies with Disruptive Effects: A Review" (PDF). PERINTIS eJournal. 7 (2). ^ Techopedia, What is the Digital Revolution? - Definition from Techopedia". Techopedia.com. Retrieved 2016-12-12. Marr, Bernard. "Why Everyone Must Get Ready For The 4th Industrial Revolution". Forbes (blog). 2016-12-12. "New Forum Center to Advance Global Cooperation on Fourth Industrial Revolution". October 15, 2018. "Conflict Resolution in the Fourth Industrial Revolution". OpenMind. 2018-02-14. Park Tchi Wan. 2018. From the Fourth Industrial Revolution to the Fourth Shared
Revolution. Studies in Philosophy East-West null: 321-346. Skilton M, Hovsepian F. 2018. The 4th Industrial Revolution. Industrial Biotechnology. 2012. . Biotechnology Journal 7:n/a-n/a Sara Mohammed, Public vs. Private Blockchain, Aug 9, 2018 Scott T, 2017, Blockchain, Publishers: Lulu Com