Industry 4.0 is as much a matter of administration as production

Over the past 250 years, the Industrial Revolution has passed through three main phases and is now in the midst of a fourth. With the first phase, individual work transitioned into more specialized and optimized forms with the support of mechanics and steam power. In the next phase, above all, electricity and production were added according to the assembly line principle. We know this from school, but what we must not forget is that in parallel with the industrial development, the forms of administration, control/management and organization also developed.

Even the early phases of the Industrial Revolution brought significant changes not only to those who worked in manufacturing, but to society at large and the way we live our lives. During this time we see, for example, the emergence of the bureaucratic principles and the transfer of capital and influence from nobility and royalty to merchants, industrialists and states.

The third phase of the industrial revolution started in the 1950s. Then computerization was gradually introduced in both production and administration. During this period, among other things, manufacturing robots were developed that could perform monotonous and dangerous work steps. But even if the emerging digital technology developed production and logistics, computerization had perhaps an even greater impact on the administration in society. For example, it enabled production in all parts of the world, but it also meant that municipalities and state administration gradually developed new organizations and working methods based on enhanced ability to handle information.

The seed of the fourth phase of the industrial revolution, Industry 4.0, was planted with the interconnection of computers via the Internet. Thus gradually arose the ability to quickly communicate large amounts of information, not only locally but globally. What ultimately constituted the breaking point between the third and fourth phases was not least the ability for real-time data, communication between machines (IoT), a higher degree of digital products and services, and applied artificial intelligence (AI). Even though the phase is thus called Industry 4.0 so it is primarily about information and digital capacity.

The concept Industry 4.0 serves well to bring together primarily those actors who see themselves in various ways as having a connection to product development, production and logistics. But it risks alienating businesses that primarily work with services or information management of various kinds. If we had rather talked about one digital revolution I think we might have seen an even more dynamic development in service production and administration linked to the ongoing development phase.

When we as consultants today talk about "integration between man and machine", it does not automatically bring to mind administrative processes such as follow-up and planning - even though that may be exactly what we are talking about. We see that this is a very large part of Industry 4.0 - changing from the organization of "people with tools" to "augmented organizations", that is, seamless integration between the company's employees and its digital capabilities of various kinds. We go from people creating value with the help of tools, to the tools themselves creating value in symbiosis with the people in the business. Rather than a question of how people can be replaced, it is about what people can achieve when the organization has been augmented with (in some contexts) superhuman abilities. It is a digital revolution in all industries – far from just in industry.

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