The Fourth Industrial Revolution in El Salvador: opportunities and risks Anne Marie Engtoft Larsen, World Economic Forum
Definiendo la 4RI y por quĂŠ importa Defining the 4IR and why it matters
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The Fourth Industrial Revolution
What is it?
An inclusive mental model A societal transformation What is the Fourth Industrial Revolution?
Emerging industrial models A systemic governance challenge
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The Fourth Industrial Revolution matters for value creation Seven digital companies are responsible for ~80% of value creation in last 10 years.
Note: Data set includes Top 25 companies in the world by market capitalization; Each year was categorized by digital and non-digital; Net value creation measured for each year ยงSource: Capital IQ Database; Bain Analysis
The Fourth Industrial Revolution matters because it impacts competitiveness
The Fourth Industrial Revolution matters because it creates and amplifies risks
The Fourth Industrial Revolution matters because it creates and amplifies risks
CaracterĂsticas del futuro Characteristics of the future
DIGITIZATION
DEMATERIALIZATION
DISRUPTION
2014
2016 Source: Brundage et al, 2018, Future of Humanity Institute
2015
2017
DEMOCRATIZATION CRISPR Cas9
Hiroshi Nishimasu, F. Ann Ran, Patrick D. Hsu, Silvana Konermann, Soraya I. Shehata, Naoshi Dohmae, Ryuichiro Ishitani, Feng Zhang, and Osamu Nureki - Crystal Structure of Cas9 in Complex with Guide RNA and Target DNA http://dx.doi.org/10.1016/j.cell.2014.02.001
Invertir en liderar la transformaciรณn Invest in leading transformation
EVERY SINGLE ORGANISATION NEEDS TO
SIMULTANEOUSLY BUILD A CHEAPER, BETTER, FASTER HORSE
AND
IMAGINE THE CAR
It’s not easy to be digital: Most transformation efforts fail to deliver TRADITIONAL TRANSFORMATION
DIGITAL TRANSFORMATION
In a study of hundreds of companies executing major changes…
Based on Digital Barometer 2017 (n=1,012)*…
12%
Achieved or exceeded the expectations that were set
5%
Achieved or exceeded the expectations that were set
38%
Failed to deliver, producing less than 50% of the expected results
19%
Failed to deliver, producing less than 50% of the expected results
50%
Settled for dilution of value and mediocre performance
71%
Settled for dilution of value and mediocre performance
Source: Bain Digital 360 Barometer survey 2017
But leaders are asking challenging questions along the way…. WHAT WILL MY SECTOR LOOK LIKE?
HOW MUCH SHOULD I DISRUPT MYSELF?
“How do I think about my industry digital direction when it is part of a broader ecosystem… how will boundaries change?”
“Digital natives tend to run future business models at a loss and worry about profitability later… how do I compete?”
“How can we anticipate the next dominant business model of our sector?” “What will interaction with customers and citizens look like in the future?”
“Should we forget our history? How much attention should we give to historical capabilities vs. groundbreaking/nascent innovations?”
HOW DO I BALANCE CLEAR DIRECTION WITH AGILE INNOVATION? “How do leaders simultaneously make sure there is clarity of execution, while also building in agile processes which give more decision making to teams on the ground? Are traditional methods of governance fit for purpose?”
“Overformal product development roadmap delivers scale but lacks speed & flexibility. A more agile approach delivers speed but lacks scale. How do you balance this?”
The Fourth Industrial Revolution
SDG-related opportunities
Digitalization can help realize the UN’s Sustainable Development Goals (SDGs) and bolster the three pillars of development on which they are built: improving people’s quality of life, fostering equitable growth and protecting the environment. The 12 UN SDGs that digital solutions can help realize Potential impact of digital solutions in realizing UN SDGs
1.38%
GDP growth generated from a 10% increase in broadband penetration in developing regions.
25 billion
Equivalent number of barrels of oil saved in 2030 – a reduction of 70% on consumption today.
300km3
Volume of water saved in 2030 through reduced consumption.
12.1 gigatons
Volume of CO₂e cut from global emissions annually in 2030.
Source: Accenture / GeSI
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(from Unlocking Digital Value to Society (World Economic Forum)
Invertir en habilidades y mentalidades Investing in skills and mindsets
Sectors need to work together to manage the impact of Fourth Industrial Revolution technologies on work
A significant number of jobs could be affected in the region
Expected shifts mainly from the manufacturing and construction sectors to trade-related services (WEF2016) 3.4 million net jobs could disappear in the region.
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All parts of society are responsible for investing in the skills relevant to the Fourth Industrial Revolution
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Asegurar que la innovaciรณn sea relevante para todos los ciudadanos
Ensure that innovation is relevant to all citizens
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“People are talking to governments on 21st century technology, the government hears them on 20th century technology, and responds with 19th century ideas” – Madeline Albright
Successfully taking advantage of the Fourth Industrial Revolution requires agile governance approaches
Agile governance Human-centred
Inclusive
Sustainable
Adaptive
• • • • •
Responsive, flexible Experiments and prototypes Confidence, courage and cooperation From control to empowerment Build trust
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The Fourth Industrial Revolution
Principles
systems, not technologies empowering, not determining by design, not default values as a feature, not a bug
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Committed to Improving the State of the World