The Fourth Industrial Revolution

24 July 2017

The boundaries between physical, digital and biological worlds are breaking down — giving way to a new world of computer based business known as cyber-physical systems. These cyber-physical systems are characterized by the merging of physical, digital, and biological realms in profound ways. Artificial intelligence (AI) serves as the primary catalyst of this transformation.

Klaus Schwab, Chairman and Founder of the World Economic Forum wrote:

We are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. In its scale, scope and complexity … the fourth industrial revolution is unlike anything humankind has experienced before.


We have all heard this kind of hyperbole before. So why should this matter and what are local companies doing to address the issues?

Beyond hyperbole

It matters because we have already seen our lives changed by these tools in the most dramatic fashion. The last presidential election in the USA was directed affected by the use of AI.

These tools were used in identifying and directly addressing those electors who were undecided or felt strongly about key issues. These powerful compute engines, combined with good old-fashioned phone calls and door knocks, meant voters were either encouraged to vote by “people like them” who knocked on the door (e.g. young mum talking to young mum) or to not vote through messages directed directly to them about the futility of “rigged” elections.

Leveraging AI in the New Zealand Business Context

Politics and business are uneasy bedfellows so I will get back to the brief. How do Kiwi companies respond to international and local competitors who already understand and are leveraging artificial intelligence and bringing it to our competitive landscape?

Let’s start with energy. It is one of the most fundamental parts of any business. Most of us just focus on getting a cheap price for electricity or gas and then move on to running the enterprise day to day.

This approach just won’t work when machines are making the micro-decisions that can mean success and failure.

International Competition

Consider some of our major New Zealand computer companies. They are in a life or death struggle with public cloud providers like Microsoft, Amazon and Google. These gigantic multinationals have access to all the tools mentioned above and even deliver them “as a service” to companies everywhere. Competing with organisations like this is not just a question of having good people or getting the best price for inputs. It is about innovation and very, very careful monitoring of all the inputs and outputs, including energy.

One of the most brutally competitive battlegrounds is over the provision of data centre services to the business market. In the past ten years companies like Datacom and Spark have invested hundreds of millions of dollars in state of the art datacentres. These datacentres require huge amounts of energy to keep them running.

New Zealand’s advantage

New Zealand has a natural advantage because over 80% of our energy is created via renewable means. In the years ahead this advantage will become a cost and strategic advantage.

As the forth industrial revolution unfolds New Zealand’s energy advantage that will drive our strategic advantage in data centres. Don’t believe me? Microsoft recently announced that a key new measure for its Azure data centres was energy inputs to data outputs. Thus Microsoft has directly linked energy usage as a means to define its compute power efficiency in terms of services delivered.

So what are our Kiwi companies doing to compete on this stage? Both Datacom and Spark use tools like artificial intelligence to monitor, control and measure their energy inputs. Historically it was simply a case of installing a few sub meters and a cost calculator (macro energy measurements). Today these companies aim to measure and monitor right down to the lightbulb (micro monitoring). The rise of the internet of things has made this ability to micro monitor even greater. As new data centres and factories are being built across the country, architects are being required to include in their plans, tools and products that embed internet of things, artificial intelligence and micro monitoring in the very fabric of the design.

Companies building factories in this country that do not think of micro monitoring of energy use as a strategic tool should be reminded that in the last few decades we exported more manufacturing jobs overseas than we created in all of IT. Ignorance of the strategic possibilities of micro energy monitoring is wilful blindness in a world where the Fourth Industrial Revolution is not only upon us,  it is rapidly transforming the competitive landscape we work in.