Basic Needs as a driver of the Next Industrial Revolution

Technological Progress — brought to you by the Little Ice Age

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The term “4th Industrial Revolution” has been making rounds for a couple of years now. Examples of successful digital transformation efforts exist in many industries already, but which of them have a shot at claiming the title of the “Next Industrial Revolution” when the dust settles?

Granted, this is the type of question that requires a magic 8-ball, so we shall follow the wisdom which says: “If you want to know the future, look at the past”. More specifically, let’s examine the history of the previous industrial revolutions before we try to foretell the next one.

The Mother of All Industrial Revolutions

The original Industrial Revolution started in 18th century, and it was a historic event of utmost significance — it brought about the end of feudalism and introduced the era of technological progress. It was later followed by a second industrial revolution (after the end of Opium Wars) generally attributed to the use of electricity, and the third one (after the end of WWII) tied to development of digital computers.

One could argue however, that the 2nd and 3rd installments don’t deserve a title of “revolution” because they didn’t produce anywhere near the scale of transformation compared to the first revolution. Indeed, the same model of technological growth has been in play for the last 3 centuries, and it’s still continuing today.

At the same time, the underlying innovation of the original Industrial Revolution was easily dwarfed by the increasingly sophisticated technologies that came in its wake. Then what was it that made the original Industrial Revolution so impactful?

Technologies are necessary but not sufficient

Sure, technologies are important in the Industrial era, being the vehicle of growth. However, technologies alone cannot trigger an industrial revolution. Many impressive inventions either had to lay dormant awaiting their prime time, or even failed to be supported by market at all. Here are a few examples:

• Most of Leonardo da Vinci’s inventions were clearly ahead of his time, such as this flying machine. There simply weren’t enough CEOs in 15th century who needed to land their helicopter atop a skyscraper every morning.
• Electricity was scientifically discovered in the year 1600, but it had to warm the bench for over 2 centuries before it became one of the primary drivers of 2nd industrial revolution.
• A more modern example is Concorde supersonic passenger jet that got cancelled after a quarter century in service. While affluent customers appreciated the convenience, there weren’t enough of them to support growth of the service.

So if having technologies is not sufficient for enabling industrial revolution, then what else is needed?

Success factors of the original Industrial Revolution

It was a confluence of several factors that contributed to the original “revolutionary situation” (to paraphrase a classic):

1. Urgency. By 18th century, Europe was in the thick of the Little Ice Age. Northern regions were hit especially hard by the cold climate — simply unable to grow enough food. One possible solution was to trade with warmer regions of Southern Europe for food. However, the North didn’t have much to offer for trade, because traditional Mid-eval technologies based on manual labor had low productivity, and they couldn’t yield enough surplus output to enable the food trade. Therefore developing new technologies with higher productivity and output was a matter of life and death.
2. Opportunity. The first industry that was disrupted during the Industrial Revolution was textile. As a result, consumers got new clothing products that were of better quality and lower in price. Now, let’s remember that clothing is one of the three foundational elements in the Basic Needs Hierarchy, and products in the Basic Needs categories are always in high demand. So clothing was the perfect choice of a “revolutionary” product because it maximized the chances of commercial success and lowered the investment risks.
3. Means. Speaking about investments, it took extraordinary amount of capital to “kickstart this project”. Britain took on over £800 million of extra government debt over the course of the 18th century, largely to finance the Industrial Revolution. This amount was in excess of 250% of Britain’s Gross National Product at peak — a level of sovereign debt that has not been repeated in history ever since. Of course, this kind of borrowing is all but impossible in present day — it was an interest-only loan that never had to be repaid (British Consol bonds were fully redeemed/refinanced after 264 years). But just indulge your imagination for a moment: what would be the consequences if USA decided to invest $50 trillion into development of new technologies today?

And so the circle closes: one of the Basic Needs (food) poses a problem, and another one (clothing) acts as a solution. Here the history teaches us a lesson about Basic Needs being a powerful agent of change.

Basic Needs as a catalyst of industrial revolution

This is not to say that technological progress can’t happen without the Basic Needs element. For example, SpaceX’s answer to the “survival of the species” challenge is development of interplanetary travel technology, which is not one of the Basic Needs last time I checked. Then again, Elon Musk is so unique in his ways that it’s hard to consider him a precedent for anything.

But all other things being equal, innovations targeted at addressing Basic Needs will have a better chance of success due to higher demand and more inelastic nature of that demand for products and services in the Basic Needs categories. And we’ll need every little bit of extra chance for the next wave of technological innovations to become successful, because the markets are highly saturated with advanced technologies already.

Back to present time

Armed with this understanding, let’s scroll forward to present day, where we can witness similar factors that enabled the original industrial revolution:

• Urgency: global economy is plagued by frequent recessions; social tensions are at an all-time high; plus, environmental and climate issues are front-and-center again!
• Opportunity: there are still a lot of unmet Basic Needs in the world. And even in the USA — the leader of developed world — there are 42 million people struggling for food. A similar number of people can’t afford housing.
• Means: there is over-abundance of investment capacity, and it is struggling to find desired ROI.

This is the same pattern of conditions that triggered the original Industrial Revolution, which indicates that our current situation is also ripe for a very meaningful transformation. Based on our learnings from the previous section we should look for opportunities to address Basic Needs using emerging technologies, in order to maximize chances of successful outcome of the upcoming technological revolution.

Modern ways of meeting Basic Needs

Naturally, the ways of meeting Basic Needs in 21st century would look very different from 18th century. After all, current technological capabilities are much higher, and so are consumers’ expectations. Below are a few examples of how modern innovations meet the Basic Needs in a forward-looking fashion. These examples are not exhaustive by any means, they are meant to only illustrate the idea. But they are very much real-world examples that are inspired by some of the recent projects I had exposure to.

1. Smart Food. First basic need is food, and it already played a key role in the original Industrial Revolution — that of an urgent motivator. This time we have an opportunity to address this Basic Need directly, and we can get smarter about agriculture: improving crop yield, making food more affordable, more healthy/natural food, indoor farming, better treatment of animals, less environmental impact of agriculture, etc. In addition to Smart Agriculture there are other angles to smart food: food distribution, healthy eating, quality of food/water, and I would be remiss if I didn’t mention 3D-printed food here.
2. Smart Shelter. Shelter is another basic need, and it’s a multi-faceted one: “shelter” is not just a roof over your head anymore. Correspondingly, Smart Shelter umbrella covers smart technologies in many areas such as: construction, architecture, civil engineering, energy efficiency, lighting, home automation, building maintenance, elevators, HVAC, water, living/working spaces, real estate, parking, smart cities, to name a few.
3. Smart Safety. One level up in the Basic Needs pyramid is “safety and protection”. These are the smart trends in this category: public safety, personal and family safety, school and campus safety, workplace safety, smart technologies for emergency responders. Additionally, there are a number of smart technologies that may incorporate safety as an unadvertised “dual-purpose”.

Conclusion

The next industrial revolution will be driven by innovations that can deliver overwhelming value to consumers, and the Basic Needs give us a strong hint on where that kind of value may be found. Emerging technologies such as Artificial Intelligence, and Internet of Things will help meet the Basic Needs through sophisticated offerings that modern consumers expect.

About the author: Andre Podnozov is a Cloud Architect working in the “Internet of Things” space. He helps companies of all sizes and industries in accelerating their IoT projects to market. You can reach him on LinkedIn at www.linkedin.com/in/andrepodnozov.