Are we there yet? (or road-bock ahead – let’s take another route)

What a period of unpleasant surprises we’ve had recently. In my view they are a combination of causes and effects of the 4th Industrial Revolution. Global warming concerns are driving decarbonisation which is driving energy transition which is driving new technology adoption and resulting in the 4th Industrial Revolution by the back door. It’s not smooth and gradual – external shocks are accelerating and decelerating the process. Not everyone’s happy about it.

There have been a series of large shocks to the economic system. The system that prevailed from 1979 until 2008 no longer functions. The word crisis has been overused. It has not been a single crisis but a series of lurches during a sustained dismantling of a globalised integrated approach that was fuelled by logic and data in what will be seen as a politcally benign period.

I am not going to detail all the main drivers and the minor and major shocks but it’s quite a list. One that includes drivers like digitalisation and information transparency, speculations such as the CDO market (and probably bitcoin), and unplannable events such as Icelandic volcanoes, pandemics, Brexit and a war in Europe.

Almost 10 years ago I started the Bestem journey in pursuit of understanding and helping others cope with the 4th Industrial Age. If you had asked, I would have explained how I believed the rise in technological capability would inevitably result in its adoption. Increased efficiency and the “rise of the machines” would lead to changes to working patterns and force changes in the way wealth was distributed.

You can imagine how disappointed I am that, even with solid business cases in place, companies I talked to resolutely couldn’t have cared less. Certainly not enough to implement change. They were doing just fine thank you and there were more important things to spend their time on. Admittedly I was talking to Oil and Gas operators who exist in a quasi-monopolistic position (where they rarely feel the pressure to compete with each other) but the story was similar in many established industries. Taxi drivers and Hotels were disrupted by Uber and AirBnB – but they were victims of an information revolution rather than an industrial one. If anything, their systems became less efficient, but the profit-distribution changed.

A couple of years ago, I realised that the economic case for solar had dramatically improved. Semi-conductor technology and electrical efficiency had also experienced a step-change improvement. I was sold on the case for energy transition where electrical systems replaced chemical ones based on traditional economic drivers. Of course, I argued, in certain applications where portability of high-density energy was required (air travel etc.) there really were not many alternatives to gasoline available. So, my view was that energy growth would be taken care of through electricity but that fossil fuels would remain the baseload for a while to come.

Then I saw the data on climate change and decarbonisation. I did my research, I read Bill Gate’s book, I watched the BBC series on the obfuscation operations conducted by Big Oil and re-watched Al-Gore’s inconvenient truth from 25 years ago.

I still speak to oil companies that see compliance with environmental legislation and emissions reductions as some form of cost to be managed. It really isn’t. Protecting the atmosphere (or as Al Gore put it, the layer of varnish on top of the globe on your desk – yes it is that thin, and the only thing that makes life possible) is extremely important. It should be our number one priority, it’s a matter of morals not profits. It should be a matter of regulation.

Add to that the evident issues of energy geo-politics and how “western” civilisation and values seem increasingly at odds with the behaviour of “strong-men” leaders who control fossil deposits, and it seems clear that independent, non-centralised, distributed generation and consumption adds resilience that can withstand shocks and provide stable, reliable and fairly priced energy.

We are on the cusp of change in many industries forced by energy scarcity, emissions reduction, supply chain re-configuration, demographics, and work-force expectations. There will be no choice but to adapt to these new configurations, some of which will be underpinned by legislation and international sanctions.

Of course, if you are setting about re-configuring an industry it will inevitably use new information and digital technologies, it will use AI and it will use 3D printing. You might not choose to swap your perfectly functional old system with a slightly better new one, but if you must change anyway then of course you will replace with systems that use the new technologies. These new technologies will be more efficient and will lead to different employment mechanisms and the distribution of wealth.

It’s the same outcome I’ve been banging on about, but it will take a different route.

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Gareth Davies

Innovation Expert with 30+ years of experience living and working across the world. I apply an engineering approach to helping companies innovate and achieve commercial success.

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