The next industrial revolution is here, ready or not

Once every few generations the world has seen an industrial revolution made possible by technological breakthrough. Steam power, electricity, commercially available computers, the Internet were all catalysts for transformative change.

Now it is happening again.  

What makes this next revolution profoundly different is that it is not one single technology acting as the catalyst – instead there are many technologies, arriving at scale, at once. Advanced artificial intelligence and machine learning; continued increases in compute power widely and cheaply available through the cloud; massive increases in data from connected devices and sensors; super-fast, super-reliable networks; automation using both physical and virtual robotics. Standalone any one of these technologies is a game changer – put them together and the world will never be the same.

Why it is different this time

To the layman it might already feel like technology is already everywhere but the reality is very few industries are fully automated or digitised. Most “things” are not connected, most data is not analysed to drive step change productivity improvements and opportunities. That is about to change and three dynamics are driving this:

Firstly, the continued increase in compute power. Moore’s Law has held true for 50 years with the amount of compute power doubling every 18 months and today a couple of internet entrepreneurs working from their garage can access as much compute power as was delivered by the world’s most powerful super computer 15 years ago – and they can access it on demand, for a few dollars through the cloud from Amazon web services.

Secondly, the volume of data generated from connected devices and sensors. More data has been generated in the last two years than in the history of mankind. The ability to store and process that data cheaply is important but the ability to analyse and act on it is transformational. With the Internet of Things projected to increase the number of connected devices in the world to more than 50bn over the next five years, the volume of data and, most importantly, the insight and opportunities it contains can only be imagined.

The third dynamic is the significant advances in all forms of engineering. New manufacturing processes like 3D printing and advances in software engineering and algorithms are leading to further development of machine learning and artificial intelligence. All of that means that in the revolution now underway the physical world will be digitised and infused with intelligence as data is collected, analysed and acted on autonomously.

Impact on business

What does that mean for today’s businesses? It means the adage that every company needs to be a technology company has never been truer or more urgent than it is right now. Changes are visible already in every sector where robotics and machines are already being developed for autonomous use. In manufacturing, ABB’s YuMi robot is a forerunner in a new era of robotic assembly line co-worker. YuMi is a collaborative, dual arm, small parts assembly robot that includes flexible hands, camera-based part location and state-of-the-art robotic control. It uses 3D sensors to identify the shape of an object and then works out what type of grip it needs to pick it up. YuMi is not about replacing people on assembly lines but instead working alongside them – hence its name “you and me”.

In transport, already two thirds of the trucks built by Scania and on the road are connected and constantly sending information to a central data base about how they are performing, what maintenance they may require and even what they are hauling. Scania see a world where ultimately their trucks will run autonomously and they are already well advanced in “platooning”, where two or more trucks can be linked virtually in convoy using connectivity technology and automated driving support systems. It is interesting that even companies like Scania are facing disruption as well with Tesla recently launching a new truck that has systems to collect all data from those vehicles and has also introduced platooning.

In resources, Telstra recently laid almost 500 kms of fibre for Chevron to their gas platforms off the North West Shelf of Western Australia. Chevron’s aspiration is to operate their offshore gas extraction platforms autonomously, improving productivity and safety at the same time and the fibre gives them the bandwidth they need to carry the volumes of data necessary to operate a very sophisticated and complex operation remotely.

In retail, clearly shopping centres are feeling the pressure from the vast product range and convenience of online shopping. The recent sale of Westfield to Unibail-Rodamco is just one of many profound changes sweeping the sector. But shopping centres are well-positioned to appeal to customers by offering experiences and services that cannot be replicated online and in the future no doubt much more effort will be devoted to attracting shoppers through a mix of leisure and entertainment options. It is a similar story in the entertainment sector where the OTT streamers like Netflix and Amazon are influencing industry structures (witness the sale of 21st Century Fox to Disney).

And in healthcare, high speed connectivity and wearable devices are making the delivery of health services more effective and personal. Robotics in surgery are now commonplace and increasingly assist doctors with many procedures. Tony Costello, Australia’s leading prostate specialist and a leader in this technology, uses robotics in more than 70% of the procedures he now conducts.

Robotics are not just limited to the physical world – software based algorithms are now used to solve issues and problems and Telstra is already using chatbots (a type of virtual assistant) to talk directly to customers via live chat or with a company call centre agent.

These are all very different technologies in very different sectors but they all have one thing in common – they rely on high quality, fast, reliable and secure telecommunications networks. Networks are critical because there is no tech innovation today that is not intended to be connected – from drones to driverless cars, cloud computing to online banking, e-commerce to the Internet of Things.

Think you can do nothing or opt out? You can’t

The lesson in all of this is that change on an extraordinary scale is happening now – like it or not. And it has only just started. It is at pivotal moments that you have a choice - be conservative or be bold, pull back or invest where you know you should.

For our part, it is at times like these that Telstra has made its boldest decisions, doubled down on our investments to lift our differentiation and move to the next technology first and fast. One of the most important decisions we have recently made is to increase our level of investment in the business by up to $3bn over the next three years. 

There are two key aspects to this:

Firstly, in creating networks for the future which is important because data traffic on our mobile network is already growing around 40% per annum. Last year alone over 5000 petabytes of data travelled over Telstra’s fixed and mobile network every day and by the end of 2020 we will need five times the capacity of today's traffic. This is about meeting that demand but it is also about building the foundations for the next generation of network – it is about 5G, it is about platforms for the Internet of Things, and it is about new standards of resiliency and redundancy. Secondly we are also investing to digitise our business to fundamentally change the nature of the experiences our customers have with us.

The incumbent’s dilemma

And that is the dilemma for every traditional company today – to transform rapidly in a fast digitising world. To see the opportunities, not the threats. To see that business as usual is no longer an option and that there are no shortage of companies that have already become the canaries in the coalmine of digital disruption. The next industrial revolution is not slowing down, in fact it is only just getting started.