Following the great industrial revolutions of mechanisation, mass production and automation, the advanced economies are now deep into a fourth industrial revolution. Widely known as Industry 4.0, its impact can be seen in the evercloser integration of the digital and the physical.
Industry 5.0 versus Muda and wastefulness


Klaus Schwab, Chairman of the World Economic Forum (WEF), wrote about the arrival of a fourth industrial revolution in his 2015 article, and Industry 4.0 became the theme for WEF’s Davos conference the following year. German technology strategists had been using the term for a few years, and the Davos event brought it to a global audience. In his article, Schwab highlighted the “velocity, scope and systems impact” that makes Industry 4.0 a step-change from before.

But from our perspective in 2021, confronted by the vast and uncertain effects of the COVID-19 pandemic, the speed of change in Industry 4.0 starts to look a little quaint.

The global response to the pandemic accelerated many existing trends and pushed some into overdrive. As marketing expert Scott Galloway points out, it took Apple computers 42 years to reach a one trillion dollar valuation. Yet between March and August 2020 Apple’s value rocketed from $1 trillion to $2 trillion. During those same 20 weeks, Tesla became the world’s most valuable automotive firm with a market capitalization not only greater than that of Toyota, Volkswagen, Daimler or Honda, but greater than all of them combined. That kind of market action reminds me of the ‘irrational exuberance’ of the dot com boom just over twenty years ago. But then again, the internet did change everything.


Today, we look for long-term value creation in Industry 4.0’s transformation of manufacturing, particularly through the rise of the smart factory. Several important variables need to be in play to allow both the emergent and the smart aspects of Industry 4.0 to appear. Data-driven automation provides the bedrock of the smart factory. Along with the rapid adoption of networked machine-to-machine communication, it has enabled important innovations such as the use of autonomous robots in production processes.

Sophisticated data analysis offers smart factories better problem management through real-time decision making and accurate predictive maintenance. Prevention is better than cure for machines, as much as it is for people. And it’s from the convergence of people with machines and processes that we start to see entirely new properties emerging.



But before we turn to cyber-physical systems and the advances in technology that have made them possible, it’s worth taking a moment to recall the roots of cybernetics in human relations. After all, that’s why Norbert Wiener called his famous cybernetics book The Human Use of Human Beings. In January 2021, the European Commission published a research and innovation paper calling for a fifth industrial revolution based on an approach to Industry 4.0 that will align its technological capabilities with a “sustainable, humancentric and resilient” agenda.

In other words, the next industrial revolution has already arrived. We have entered the world of Industry 5.0. The paper’s authors refer to the famous image of Charlie Chaplin from his masterpiece Modern Times, made in 1936 during the mass production era of Industry 2.0. Here we see the unhappy human worker trapped between the giant cogs of the machine he is there to serve. For the Commission, the promise of Industry 5.0 is that it will continue to focus on innovation, while at the same time create social change “beyond jobs and growth”.


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