Imperatives for relevance in the Fourth Industrial Revolution

The popular saying used to be that big fish would eat small fish. This has since changed significantly in the light of recent happenings in the global economy; UBER, until recently a relatively unknown company out of Silicon Valley in California employs 160,000 drivers today, and is adding an average of 20,000 drivers every month. This transport services disrupter is now valued at $41b. Another previously obscure company with similar roots, AirBnB, has over 1.5m accommodation on her platform, and is now valued at $25b. Upwork, a platform that connects businesses with freelancers have gone from zero to $1b revenues in just five years and projects to reach $10b in the next 5 years.

The new disrupters are not confined to just North America and Europe. China’s foremost e-commerce business, Alibaba’s recent listing on the New York Stock Exchange broke all records with a valuation of $170b. DiDiKuaidi, a Chinese transport platform is pooling over 8m drivers and serving 10m commuters every day, in a consumer to consumer model.

Here in Nigeria, our own Company CWG Plc, has seen a record uptake of 6m new Accounts on the Diamond Y’ellow Account platform; a mobile banking product that she white labels, and recently launched in conjunction with MTN (the largest Mobile Operator in Africa) and Diamond Bank, targeted at the 60m MTN subscribers in Nigeria.

The new saying today is that fast fish will eat slow fish. Nimble, highly innovative companies are taking advantage of ubiquitous broadband and smartphone penetration to push business models that ride on providing virtual products over a virtual channel, thus pushing transaction velocity to the limit, and securing a bigger slice of the pie in the process. These companies, primarily in the technology industry are rapidly disrupting long standing businesses in a model that would not have been possible as early as a decade ago, and racking up huge valuations in the process. Welcome the Czars of the new sharing economy, also sometimes referred to as the gig economy, or the on-demand economy. WhatsApp, founded in 2009 already handles 10b more messages a day than the SMS global text-messaging system, and was recently acquired by Facebook, another technology behemoth for $19b.

This new business model is simply meeting a pent up demand of consumers. Today’s customers demand to have their products and services delivered to them wherever and whenever, and do not necessarily want to cut a cheque or reach for their wallets to pay. They usually bank online and are less likely to have paid a visit to their banks in the past one month. Disrupters such as Apple seem to have heard them very clearly and are working round the clock to provide a seamless payment solution. ApplePay currently serve users of IOS devices who have registered their credit or debit cards. It is used to pay for goods at shops that have near field communication (NFC) readers. Apple is now developing a peer to peer option, which puts it directly in competition with more established players such as PayPal. It is not only Apple that is circling around PayPal’s lunch. SAMSUNG has a similar product, and Google used to have Google wallet.

It seems that Cloud Computing has finally come of age, as these disrupters typically deliver their platforms over the cloud. Oracle has started offering cloud services including databases. Microsoft’s only growing business is her cloud services. Amazon’s only profitable business is her cloud services, which now includes online database as a service. Our own company, CWG Plc, launched her new subscription based business model christened CWG2.0 on the Cloud Platform. It enables the business to seamlessly scale globally, without having to make any investments in brick and mortar.

The global economy seems to be moving from getting supply from companies, to a crowd sourcing model in a peer to peer way. Regulation of this ‘new normal’ is quite a challenge because regulation is backward looking while innovation is forward looking, so there is always a gap which creates considerable tension. It takes quite some time for regulation to catch up with technology, so there is a period of time where the disrupter seem to be operating in “no man’s land” as far as the law is concerned.

Another major challenge in the new economy is data security. The bigger problem is about governments getting interested wherever there is large amount of data, and seeking to gain access to it, perhaps for tax purposes, security or otherwise.How do the new digital businesses, which typically generate tons of customer data handle this dilemma, given their promise to customers to respect the privacy of their information?A research by the Financial Times shows that the UK government, which is seeking to extend its surveillance powers has paid telecoms companies, including BT, Vodafone, EE and Virgin Media more than £37m for data on customers and their activities since 2008. The recent celebrated case between the FBI and Apple in the US regarding access to a shooter’s iPhone is a further illustration of this point.

There is a lot of concern around the disruptive force of digitalisation and the need for inclusive growth and job creation. The impression is that digitalisation kills jobs through automation. The reality is that for every job lost through digitization, 12 more are created, but you may need retraining and retooling to benefit. In reality, digitization provided a whopping $193b boost to world economic output and created 6m jobs globally in 2011, equivalent to a 1.02% drop in the unemployment rate.

I believe that the fervent clamour for increased minimum pay is misplaced, especially if the workforce is unemployable. A more sustaining discussion will be the training of a marketable workforce, empowered with the right skills of learning how to learn in order to adapt to the fast changing global economic landscape, than the traditional rote learning in our schools that churns out graduates that are untrainable with new skills.

It is very clear that we are at the throes of the Fourth Industrial Revolution, as succinctly captured by Prof. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum in his book, The Fourth Industrial Revolution. Companies and individuals who fail to adapt to the new imperatives of this global revolution should prepare to write their obituaries.

Austin Okere

 

Austin Okere is the Founder of CWG Plc & Entrepreneur in Residence at CBS, New York. Austin Okere is a Fellow of the Institute of Directors of Nigeria, and serves on the World Economic Forum Business Council on Innovation and Intrapreneurship