4IR: Implications for the Private Sector in a New Era

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Around 1760, the precursors to the Industrial Revolution began to take shape in Europe and North America. Businesses mechanised their production, increasing efficiency and, in turn, profits.

A century later, during the Second Industrial Revolution, communications and logistics advanced rapidly, allowing the private sector to expand globally1. The Digital Revolution marked an explosion of diverse technologies that altered all aspects of everyday life, with the Internet of Things arguably its greatest manifestation2.

In 2016, economist Klaus Schwab coined the term ‘Fourth Industrial Revolution’ (4IR) in his book of the same name. The 4IR represents exponential technological growth compared with linear growth as in previous revolutions3. Now more than ever, 4IR technology is embedded into every facet of life, and this is particularly true of the private sector, which is required to innovate products, alter customer strategy and reimagine its workforce in order to survive.

“…Products are purchased and sometimes consumed, instantaneously.”

Product Innovation

4IR technologies are having a major impact on product innovation. Global CEOs and senior business executives note that the acceleration of innovation and disruption is difficult to understand and anticipate, leading to constant surprise for even the most connected4. Companies that find novel ways of innovating products that serve our existing needs are leading the way.

Nowhere is this more prevalent than in the products we interact with daily. The lines between the animate and inanimate have become blurred, with technology enabling humankind to rewrite biology to augment our lives.

Analogue products, even those with an established tradition, are seen as increasingly anachronistic. For example, our watches and other accessories are intricately intertwined with our existence, continually measuring our heartrates and changing how we interact with our environment.

In the near future, automated driving will supplant the need for commercial drivers, forever altering logistics and supply chains. At the core of all of this product innovation is consumer-centricity.

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Customer Strategy

The way in which consumers interact with products is crucial; patterns of consumer behaviour, driven by access to mobile networks and data, demand companies alter the way they design, market and deliver products and services5.

A significant trend is product development that incorporates both supply and demand to disrupt existing industry structures6. This is most apparent within the ‘on-demand’ and ‘sharing’ markets, where consumers are increasingly dictating supply chains through their purchases.

Digital platforms, such as Netflix and Amazon, enable consumers to access a vast array of products. There, products are purchased and sometimes consumed, instantaneously. Overall, economies continue to be driven by how consumers are served. Companies that fail to recognise this trend, including supranational firms, risk supercession by their innovative counterparts.

“As employers desperately seek innovation, the need for diverse, highly specialised employees is all the more apparent.”


The interplay between product innovation and customer strategy in 4IR is forcing companies to reassess their business conduct. 4IR has disrupted both the workforce and the structure of companies, and we are now seeing a transition from information- and knowledge-intensive jobs to innovation-intensive jobs7. That transition has deepened the divide of workers and forever altered HR practices.

As employers desperately seek innovation, the need for diverse, highly specialised employees is all the more apparent. These innovative workers are shaping how companies conduct their business. They act as free agents, partaking in projects or networks with independent contracts for one or more companies8; as such, the terms of their work are often fluid.

Gradually, innovative workers are becoming less physically present; their ability to work remotely often affords them that privilege. Moreover, they receive considerable latitude with their working hours arrangement. Such concessions provided by companies to their innovative workers are simultaneously exacerbating tensions with mid-level employees.

As automation increases and processes become streamlined, the threshold for what is considered specialised labour increases, hollowing out mid-level employment. Mid-level workers are becoming disillusioned as their wages and benefits stagnate in companies9, and this labour volatility is something companies must watch closely if they hope to maintain productivity.

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Satisfying Demands

4IR represents the inexorable evolution of technologies that carry far-reaching implications for the private sector. The changes companies face will impact all aspects of their business, and they will be forced to reexamine their practices in order to remain relevant.

Of paramount concern should be the ways in which companies’ products satisfy consumer demands for quality, convenience and variety. The on-demand and sharing markets greatly influence how businesses develop their products, forcing competitors into innovating products constantly and raising quality expectations exponentially in the process. Businesses would do well to reflect how their product can be physically or digitally integrated into the life of consumers.

Businesses must also anticipate the acute shift in workforce trends. The traditional nine-to-five, physically present employee is becoming a thing of the past. That is particularly the case with highly specialised employees, many of whom expect flexibility with their hours and remote work. But while catering for innovative workers, companies must also recognise the input of their mid-level employees.

Overall, business leaders and senior executives must be cognizant of the changing landscape of industry. The 4IR will challenge their capacity to be proactive in understanding and developing solutions to its reality: figure out how to take part or get left behind. 

1Davis, T. P. (2019, January 22). The Fourth Industrial Revolution: Shaping a New Era. Retrieved from Journal of International Affairs: https://jia.sipa.columbia.edu/fourth-industrial-revolution-shaping-new-era
3Schwab, K. (2016, 01 16). The Fourth Industrial Revolution: What it Means and How to Respond. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/
7Johannessen, J.-A. (2019). The Workplace of the Future: The Fourth Industrial Revolution, the Precariat and the Death of Heirarchies. Abingdon, Oxon: Routledge. 
9Schwab, K. (2016, 01 16). The Fourth Industrial Revolution: What it Means and How to Respond. Retrieved from World Economic Forum: https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/