Thinking Differently About IR4.0

Conversations regarding the Fourth Industrial Revolutions just refuses to die. 

Ever since the term “IR4.0” has been coined in Germany back in 2011, the excitement has not let up ever since, being tackled time and time again by many media outlets without fail. But amidst the extreme media fatigue towards this subject matter, I would still like to revive this topic once again.

Why did I choose to beat up this dead horse? Because the dead horse hasn’t moved forward much at all. Well...Because it’s dead.

Here in Malaysia, there are mumbles and grumbles at our turtling rate of digital adoption. 

Why are we still talking about IR4.0 when we are still using methodologies from IR2.0? 

Why are we still heavily reliant on foreign labour in the construction industry and other 3D jobs?

Many members of the public know this. They band together, shake their fists up in the air and typed furiously on their keyboards under a unified war cry.

“Look at China! Look at Vietnam and Thailand! We are falling behind so much! Why are we so slow in moving into IR4.0 when Japan is already worried about Humanity 5.0?”

This is where I would like to shed some light and clarity on this subject matter. 

Large traditional companies are taking the steps to adapt to a new digital age. It is just that we don’t see it from a consumer’s point of view.

A few weeks back, I sat down with the folks from CompareAsiaGroup and talked about the banking and fintech industry.

“Here in Malaysia, the banking industry has been around and milking it as a business for a very long time, and there hasn’t been much competition. Obviously, through fintech, they are now beginning to wake up and feel a bit more threatened,” said Benny Chee, Country Manager for the Malaysian branch.

“The local banks here haven’t been challenged enough by encumbrance or new entrants. Unless new challenges come in, you won’t see a real reason for banks to move fast,” said Prashant Aggarwal, the Chief Commercial Officer.

However, the very next day, I also spoke to a senior executive from a global bank operating in Malaysia for decades, who wishes to remain anonymous.

He clarified that, yes, they have already adopted digital solutions way before these fintech companies started propping up in the marketplace.

At the backend, they have already digitized their customer’s data and stored it on a cloud database (which is met with heavy regulatory restrictions due to the data being stored offshore). They have also adopted Artificial Intelligence to evaluate and qualify loan and credit card applicants at a much faster rate with better accuracy.

He explained that not all digital solutions are used to create a better user experience, but instead lower their operating costs or capital expenditure, freeing up the necessary resources to improve various other aspects of the businesses, including user experience, which will only manifest itself several years down the road.

It is very easy to attribute the turtling rate of digital adoption to corporate mindsets, or mere stubbornness. However, there is a difference between being cautious and being stubborn.

Multi-National Corporations (MNC) are proactively finding ways to make their processes easier, faster and cheaper. As a business, who wouldn’t? 

In fact, they are factions within the organisations, particularly the young ones, that are championing hard for rapid digital adoptions. All across the corporate ladder, there are internal politics and struggles in which direction should the corporation take.

Which leads to the key message I would like to share. 

People give technology too much credit.

“This latest will revolutionise the entire industry! It will change the way we conduct business and live our lives!” 

Sounds familiar?

I believe that it is time we view technology differently, and what sort of role does it play in an organisation. 

For the common man, technology is seen as a solution to most corporate problems. Conversely, they condemn the companies who do not subscribe to these changes, claiming that these slow-moving companies will be left in the dust.

However, in James C. Collins book “Good To Great”, there is one sub-chapter that summarizes my point quite well. “Technology is not an enabler of growth, but an accelerator.”

And just like any accelerator, if steered into the wrong direction, your organisation would stray further and further away from the company objectives. Technology only serves as an instrument that solves a specific problem, a cog in the business model metalworks, not as a replacement for the entire ecosystem.

There are plenty of case studies of dumb company acquisitions that not only poke holes in the expenditure budget, but hurt the business as a whole all together. Take for example, eBay purchasing Skype for US$2.6 billion, and the AOL Time Warner megamerger for US$165 billion.

On a smaller scale, many F&B and retail business owners expect their sales figures to skyrocket once they have adopted digital wallet or food delivery services. I do not blame them, because there are unscrupulous sales techniques circulating in the marketplace, promising guaranteed returns after adopting their services.

Businesses should take a step back and have a clear understanding of what are the key value propositions that their businesses hold. Take McDonald's for example. Their brand new touchscreen menus and table service crew all serve Mcdonald’s core principles, which is to make meals faster, convenient and approachable to customers of all ages. Anything outside of the core business principles, they would most likely shy away from.

Is it IR4.0 technology? Not really. It is just the shuffling of human resources and digitising the food ordering process, a workflow that has already existed in sushi restaurants ever since iPads existed - an IR3.0 solution.

But is it effective? Absolutely.

At the end of the day, we should be glad that, as consumers, we have the luxury of picking and choosing which businesses to support on a whim by choosing where we spend our money.

But as a shareholder, I would rather put my top dollar on a company that plays their card well with a full, objective understanding of what the card entails, than a “chicken dung” company that jumps on a bandwagon because of the fear of missing out.