Digital Transformation — A look back Part II

We pick up from the end of the first Industrial Revolution which has already forced huge changes in the European and American industry as seen in the first part of our article.

You can find the First article in this two part article Here !

We gallop through the ensuing stages of Industrialization and Transformation of businesses and economy with every innovation and technology breakthroughs in this concluding installment of the two part article.

The second half of the 19th century saw the industrial revolution gaining speed. More and more industries now started to take advantage of the steam engine. Rail lines were growing all over Europe and America.

But factories still had their two main constraints. One was to be located close to a source of water, power to run the engines. The other was in the design of the factory floor where there was still a dependency on the main shaft running across the length of the production flow with other appendages being connected to it.

Industry 2.0 : The power of Electricity

These constraints all got removed in the mid-1880s when the Second Industrial Revolution started and Thomas Alva Edison lit up the first electric bulb. Suddenly with this new electrical system, those older constraints vanished. You could now have a factory anywhere, even in the hinterlands and all you needed was to connect it to an electrical power source. The other constraints of the production floor design also vanished as now you could have different motors running on electricity and thus the factory could now be designed in separate units as was required.

More innovations in this field sped up the course of revolutionizing business, economy and the industrial process tenfold. Streets started to get lit up, electricity reached homes and production now can carry on into the night. Along with it, two very distinct inventions created indelible footprints in the history of time. Telegraph had already been discovered a few decades earlier, Alexander Graham Bell invented the Telephone and patented the same in 1876 while Marconi discovered Radio Waves in the 1890s. With these few inventions, suddenly the world could transmit voice messages and data through electric signals. It brought the world close. One could send messages across the Atlantic from England to the US and business increased in velocity.

The General Electric Company and General Motors came into being and stamped their footprints across the motor coach and electric industries. New machines, new motors began to be invented with all these new technological breakthroughs. Transportation started to become easier with motor coaches developing with time in their efficiencies. Towns and cities became more interconnected, businesses spread across regions and countries, and thus trade and economy flourished in the early 20th century. The Wright brothers also came up with the first model of the aero plane in the first decade of the 20th century. But the First World War brought a setback from 1914 to 1919.

First World War and the Great Depression

After the end of the First World War, the new companies started to push business back and they were the early startups of the 20th century. Now with all these inventions, technology companies of those years took a new approach to woo businesses. They would package their offering in such a way that they would send new motors and machines to replace the existing business technologies. Along with the new motors, they used to send a team of engineers to the businesses, who would install and implement the technology and train the factory users to operate those machines.

But businesses were slow to pick up these new changes. They were slow to invest in the new technologies as the businesses were mostly driven by an older generation who were slow to adapt to the changes happening all around them.

The 1930s saw the Great Depression. Worldwide businesses slowed, and soon we saw a depression all across the industrialized economies. Trade slowed, business slowed and production slowed with a fall in demand. These led not only to depression but also to deflation. The perception was that prices were falling which led to a spiral of lower demand, lower sales, lower production, lower money circulation and lower growth.

Most of the European and American economy suffered. And as it happened, these brought hardships for the people, confusion, and political upheavals. It was under these situations that Germany saw the rise of Adolf Hitler. From a currency exchange rate of 1 Russian Ruble to 4 Deutschmarks at the end of the 1920s, within the next 10 years the conversion rate shot to an unbelievable 1 Russian Ruble equalling 75000 Deutschemarks. The Deutschemark was not worth the paper it was printed on.

Second World War

It was then, during these turbulent times that Hitler, who had started as a leftist socialist activist turned full right and grabbed the political power in Germany and became the Fuhrer of the Nazi party. In September 1941 he declared War with Poland, and in a couple of days England and France jumped into the fight supporting Poland. Soon the majority of the industrialized nations took sides and the whole world halted to a standstill — we had the Second World War. Japan and Germany along with Italy and a couple of other countries formed the Axis while UK, USA, France Formed the Allies. Russia joined the Allies towards the end and finally brought Hitler to his knees to end the second World War.

Post World War II

After the Second World War ended in May 1945 businesses started to build up again. The whole of Japan worked 12 years a day for eight long years, every one of them, to rebuild their nation. SImilarly business , economy and industries were seen to rebuild in the major European nations and the Americas.Production lines started to become automated; new methods and frameworks in the form of Lean Kanban — a modern methodology that targets to improve project efficiency, team communication, and continuous flow of product delivery- began to take shape to bring the technologies of scale, JIT methodology to remove wastage and increase efficiency of production rose in importance.

The 1950s and 60s saw the whole world rejoicing the end of the war and putting on their best foot forward to develop businesses, industries and technologies.

By then 70% of Europe’s Gold has moved to US who had provided support to the European Allied nations by selling arms and technology while the countries fought it out amongst themselves during WW-II.

Latest technology breakthroughs lead to the start of the age of Mass Production, all factories started becoming more conscious of their internal processes and efficiencies to drives profits and ROIs. This was the first stage of Transformation after WW2. The customers were left at the mercy of the industries, industrialists dominating the scene and providing products which they thought should be best for consumers.

And it was in these times of production superiority dominating the business, that Henry Ford said about his Ford motors and his Cars production — “You can have your car any colour you like, as long as it is black”. The Ford production of cars and automobiles were then dominating the US markets and he was more or less the undisputed leader.

The age of Consumers and consumer networks were still far away. And then towards the end of the 60s, humankind took a giant step. We reached the Moon.

INDUSTRY 3.0: Beginning of Computers and Automation

In the beginning of the 1970s we saw the advent of computers into businesses. This marked the start of the Third Industrial Revolution. New technologies began to make way into businesses in the form of computation, algorithm and electric data processing leading to further automation of existing businesses. Spreadsheets took away older methods of accounting, processes began to be logically built and branched, and large businesses began investing into technology. IBM proved itself as one of the leaders in this field.

Keeping technology aside , lets focus on the changes entering the business landscape during these times, which looks very significant change. After most businesses had started automating their factory and production floors, the focus had moved to supply chain and distribution networks. It was during these years between the 1970s and the 1980s, that most big companies began a process of expansion into the heartlands of their geographies and a period of consolidation. Thus every store you would walk into the US and western economies , you would see a bottle of coca cola or a can of Heinz baked beans or a packet of Marlborough’s. They were everywhere, across all towns and cities across every supermarket as well as Mom and Pop stores. Larger FMCGs began to dominate the markets and take up a national as well as international presence across countries. The age of the Multinationals had come.

During these years, computers made way into the factories and heavy industries. Computers began to be connected with machines and shop floors to further automate processes, moving away from manual systems and drive efficiency. The age of Automation had arrived.

INDUSTRY 4.0: Age of Data, Systems and Digitization

The focus of the businesses and ecosystems also changed. After gaining the shop floor automation and establishing brands through a large network of dealer and retail networks, businesses shifted focus to service. They advantages of growing a sense of trust, faith and loyalty of customers created differences between brands. Businesses started having a dedicted service team and changed their focus to customers and understanding their needs.

The fourth industrial revolution came as Desktop Computers came into being and by the mid ’90s Microsoft released its portable desktops. Suddenly one could use images, audios and videos with a computers program and platform. Every business now started to digitize its internal operations. Emails became popular with Hotmail and the World Wide Web was born. The internet wave caught everyone in its web. And businesses started to become digitized. Data became the most important item of value for a business.

The dotcom bubbled and burst proving that only having websites does not resolve business issues. Businesses had processes and data everywhere. The missing link was that data was lying in silos across different functions and departments of the business. Data was separately held by manufacturing, productions, distribution, finance, HR and CRM systems within large organizations. This was the rise of Enterprise Solutions — lead by SAP and then Oracle. For ERP consultants the main challenge was to integrate different functions across business and lead to a seamless data transaction bringing together data silos. Photography became digital; along with Music and Movies. The world became digitized. IBM had just invented their Watson.

INDUSTRY 5.0 Machines Mimicking Humans

We are now in this latest phase of Industry 5.0. Mobile phones are a necessity in every civilized society. Businesses are done in the click of a couple of taps across your mobile screen. We have seen WhatsApp messaging, which has revolutionized peer to peer messaging across mobiles and tabs. Music, movies, video clips, advertising, messages, news and images are sent in a second across countries. It has become a powerful medium of influence to engage, inform and educate millions.

We have seen social media and social platforms penetrate into every facet of our lives and industry. We are seeing huge disruptions being caused by new business models taking leverage of new technology breakthroughs.Among all these we are noticing a very clear change. This phase started with the rise of social networking, and then we had the prominence of artificial intelligence and now robots. Robots are making way in factories, shops, stores and office operations. We may soon have an army of robots and that is a ‘Clear and Present Danger’ to society.

We now see Robotic process automation being securely built and automated messaging systems responding to users queries for many businesses. Artificial intelligence has started dominating businesses, social platforms, finance, technology and industrialization processes. With time the AI component of business has become more accurate in analysis, and predictive models are being built and relied upon with AI components.

Now most websites also have a chat bot built into their web interfaces, many stores have a counter for the automated query systems. The use of artificial intelligence has now invaded the science of medicine and surgery. And among all these, the latest concept to hit us is the Metaverse.

The Metaverse looks like the next giant change that is going to influence humankind like never before. We will all be integrated with our digital avatar, and in future the digital avatars will be having a society of their own, travelling together, shopping together and enjoying their social meets.

The coming years will be swift and crazy. Things will happen at a whirlwind speed. NFTs, Bitcoins, Metaverse will dominate this decade and the next. All these are a new transformation and a new beginning –

It is the dawn of the Age of the Humanoids.

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Samit Bhattacharya is a Technology professional and a Thought leader with over 18 years of IT consulting experience in enterprise solutions and Business Consulting, and also has another 9 years of Sales — Marketing domain knowledge.

Samit is available for Strategic and Digital Transformation consulting roles to help organizations overcome digital barriers in increasing their Process Efficiencies, ROIs and develop newer Business Models.