A Two Edged Sword – Africa and the Fourth Industrial Revolution

It could be argued that the Fourth Industrial Revolution (4th IR) is the first ‘revolution’ of its kind that Africa is able to be a true ‘free agent’ with the ability to make important choices and influence its own destiny. Perhaps this is the very reason why the Fourth Industrial Revolution has the most potential of any other historical tectonic shift to change the lives and destiny of ordinary Africans.

During the first two Industrial Revolutions in the 18th and early 20th centuries, Africa was an unwilling player with little or no independence or sovereignty, its territory arbitrarily carved up by colonial powers into artificial states with no due regard to any particular socio economic logic. Firmly held in a colonial vice grip, Africans had little choice but to stand by as the continent’s natural resources were plundered by colonial nations to fuel their own wealth creation. The Third Industrial Revolution largely bypassed Africa as post-independence internal conflict tore apart the strained socio-political fabric and imposed boundaries of its colonial past. The absence of an industrial infrastructure outside of Southern Africa made it a non-event in any case.

Africa in 2019 stands at the cusp of a potential new era of wealth creation and prosperity. To take advantage of this opportunity it will need to break down the mindsets shaped by its colonial past and embrace an interconnected Africa in which the creation of sustained value supersedes narrow sectarian interests. As Klaus Schwab eloquently describes, ‘The Fourth Industrial Revolution is more than just a description of technologically driven change – it is an opportunity to frame a series of public conversations that can help all of us – from technology leaders and policy-makers to citizens from all income groups, nationalities and backgrounds – to understand and guide the way that powerful, emerging and converging technologies influence the world around us.’ (Schwab, 2018)

Much has been written about the fact that the 4th IR provides Africa with an opportunity to leapfrog the absence of legacy systems and infrastructure to build a leading edge technology-enabled foundation for sustained economic growth. This much is certainly true. Mobile technology, connected by the Internet of Things and coupled with 3D printing will allow for shorter production runs in production units close to market. Africa’s youthful demographic markets provides opportunities for demand creation and consumption on an unparalleled level. But all of this optimism and potential means nothing unless we heed Klaus Schwab’s call and embrace a new mental model that moves beyond the limited view held by most politicians today. This opportunity too will go down in history as wasted if we do not face up to a number of realities and put in place key foundational elements.

To embrace the future we need to recognise the injustice of our past and never forget to learn from the lessons it provides. This means using public resources to invest disproportionately in new technology infrastructure and skills in communities that did not enjoy past socio-economic benefits. The reality however is that redressing the injustices of the past cannot be achieved through a simplistic redistribution of a finite ‘cake’ of resources and wealth. All that leads to is conflict, defensiveness and resistance. The real conversation is how we can take this historical opportunity to bake a bigger cake of unparalleled size and quality. A cake able to sustain and nourish future generations in their quest for economic opportunity, equity and a better life. To do this we will need to have exactly the public conversations that Klaus Schwab refers to. A public conversation that moves towards a common picture of future success that benefits all – with clear legal safeguards to ensure that its bounty does not accrue only to those with access to capital or political patronage. Dialogue shapes ideas and perceptions and has the power to inspire change. Dialogue however needs to be infused with the power of the potential of the future and requires new mental models and mindsets open to new, creative, value-accretive thinking.

The 4th IR describes a fundamental shift that goes beyond technology to describe transformations in every aspect of the systems that surround us. This systemic change includes everything that guides and determines our behaviour including goals, norms, values, expectations and institutions. It includes the way we govern, inform and communicate and create economic value. Ramirez & Mannervik argue that even our notion of strategy has to change in a 4thIR networked world. We need to move beyond the value chain thinking that characterised strategy in the 20th century towards one of value creating systems (as lived out by AirBnB, Uber and others) with patterns of purposeful interactivity that benefit all networked partners. Africa, with strong collective cultural values, should be fertile ground for this kind of thinking. They argue that ‘if the key to creating value is to design and co-create offerings that mobilise others (who may have the role in the interaction of customer or supplier or partner or employee or investor etc) to co-create value, then the key source of success is to conceive the Value Creating System and make it work.’ (Ramirez & Mannervik, 2016). To do justice to these ways of thinking, we will all need to rethink and dynamically reconfigure our commercial ecosystems with the perspective of how can we all benefit and in turn drive our own commercial aspirations in a systemic way. Could a rising tide lift all of our ships and provide new and unique sources of competitive advantage – in a uniquely African context?

Klaus Schwab argues that there are four key principles useful in defining a new mindset around the 4thIR; The first is analogous to the work of Ramirez & Mannervik and call for seeing systems, not technologies as the primary form of focus to provide an ‘advantageous vantage point’ for considering the technological innovations of the 4thIR.  To do this leaders will need to see the broader landscape and ‘connect the dots’ to develop unique forms of insight and foresight. This foresight allows for the dynamics of the 4th IR to be best understood by considering the trends and connections across emerging technologies, how they relate to one another and, ultimately how they will merge to cumulatively impact our world.

For business leaders to play a leading role in the transformational potential of the 4th IR, they must also factor into the way they strategise, the interconnected relationships amongst a broader set of stakeholders who influence the success of their businesses. There is the potential to use 4th IR technologies, coupled with a social and environmental impact mindset, to better understand what to do. Whether it is building differentiated products, exploring new marketplaces, securing a sustainable, efficient supply chain, attracting and retaining diverse talent or transforming regulatory relationships with government agencies, business leaders will have the potential to embrace new enablers. The challenge will be to find new ways to create models for driving transformative change that at the same time as creating and distributing economic value, also result in positive social impact. One of the biggest forces impacting climate change is the changing nature of land use. As we utilise more land for economic benefit how do we design-in environmental safeguards and restore ecologically the impact on the environment? How do we use technology as a basis for gathering data in such a way that all stakeholders – landowners, municipalities, conservation agencies, citizen scientists and scientific communities – have a common, deep database to inform thinking and decisions around land use, with artificial intelligence and predictive analytics guiding a complex array of scenarios?

The reality is that it is not technology that will bring about positive change in the lives of citizens, it is systems, information and purposeful inquiry that, when intentionally designed and, of course, appropriately enabled by technology, will deliver well-being in the form of better solutions for business models and environmental issues, health care and education. The old standards of political will, commercial innovation, focused investment and collaboration will still be mission-critical for success.

MIT Sloane reminds us in an article, ‘The Myths and Realities of Business Ecosystems’ that the term ecosystem is used 13 times more today than it was a decade ago. They confirm that ‘Ecosystems are attractive partly because of the new possibilities they create for products and services spanning traditional boundaries – often using digital platforms, APIs, internet of things technology, and new tools for gathering and analysis.’ This is equally true across both commercial and public sector entities. Yet, once again, mindsets hold us back from true step changes in value delivery. (Fuller, Jacobides & Reeves, 2019)

If Africa is to successfully embrace the potential of the 4th IR, education will need to reshape itself to deliver new forms of pedagogy, content and educational outcomes. The reality is that, once the preserve of the state, education is now an interconnected web of pedagogic innovators, NGOs, academics, private schools and institutions and on-line resources. Yet most of this latent, potential value is ignored by public sector educators as they struggle to maintain the illusion of their monopoly on real learning and continue to produce Victorian era classrooms, albeit now connected to the internet. Where is their embracing of the overall system so that the best possible resources, competencies, leading practice and thinking can be brought to bear? How could a new reconfigured educational ecosystem, with leadership energy and direction from public sector members and true 4th IR thinking allow for real step changes in African education, providing the digital and other foundational competencies for tomorrows success?

Maybe it is just too difficult or overwhelming to work from a position of leadership and influence than to revert to institutionalised command and control. As Schwab maintains it is empowering, not determining, that is the true currency of successful change. As he concludes, ‘It is tempting to think that technological change is impossible to control or direct and there is nothing we can do about technologies being able to influence behaviour. We should instead value human decision making and agency, designing systems that harness new technologies to give people more choice, opportunities, freedom and control over their lives.’

But to do this effectively our leaders too will need to develop new skills. The first and possibly most important is to think systemically and ‘see’ systems in the way they intentionally design products, solutions and new sources of value. Perhaps all of our political, public sector and commercial leaders could benefit from an intensive course of systems and human-centred design thinking?  The reality is that it is only by mapping out and understanding the deeply interconnected dynamics of any particular ecosystem and then innovatively exploring the potential, plausible futures of that ecosystem, that sustainable strategy can be crafted. The old strategic tools of vision and mission may be too limiting if not hardwired to an evolving ecosystem.

Africa has long suffered from the ills of poor governance, oppressive political systems and a failure to safeguard human rights. These are important systemic elements that have to be overcome to build the strong, beneficial economies and social systems that lie at the heart of the promise of the 4th IR. Yet, surprisingly, when we think about technology, we don’t often think about whether or not it is applied for good or bad ends. We believe that it is essentially neutral in its application. Yet, as Schwab contends, values should be seen as an integral feature of technology, not a bug! Technology, whether we see it or not has values baked into it, from original conception and ideation all the way through to deployment. From the prejudices of designers captured within AI algorithms to the ubiquitous influence of social media, values show up everywhere.

If Facebook had explored the values underpinning social connectivity and had made more decisions based upon what is in the best interest of people, democracy and positive connections, they may well not have to have endured the public pillorying they recently received or be struggling to counter the defections of many young people who consider it to be the platform of manipulation and the ill-conceived choice of their parents’ generation. If African leaders truly want to learn from the disasters and societal powder-kegs of corruption, dictatorial rule and sectarian conflict, more reflections on the role of values in designing systems of government and public sector procurement may be extremely useful. 4thIR technology such as BlockChain, Predictive Analytics and Artificial Intelligence, if applied in a values-positive manner, could go a long way to protecting citizens from abuse. Conversely, they become powerful weapons for oppression and abuse.

It is not only systems and design thinking that are key competencies required of African leadership in the era shaped by the 4th IR. There also needs to be a new way of thinking about the future as the range of forces potentially impacting on future scenarios grows in complexity, uncertainty and volatility. The explicit role of leaders and leadership is to see further into the future than others and to make key decisions about resource allocation to both embrace the potential of the future as well as address its potential challenges and risks. Harold Goddijn, CEO of TomTom NV, comments in a recent Deloitte article on leadership;

‘Deciphering what’s happening in abstract from the hype, understanding what the underlying developments are and how they’re going to affect your business next year and in three years, or in five years – these are probably the hardest things to read.  At the same time, we’re always busy changing and adapting and moving along with the trends, and sometimes leading these trends.  It doesn’t feel like it’s out of control, but the level of uncertainty and the level of ambiguity you need to deal with is going up.’ (Renjen, 2019)

Deloitte in their recent article, How Leaders are Navigating the Fourth Industrial Revolution, see a range of four different leadership types emerging. All of these have relevance to the way African leaders consider the potential challenges and opportunities offered up by the 4th IR. The common characteristic is their ability to envision the future and to invest presciently in the technology and people required for future success. These archetypal leaders include:

1. Social Supers: These leaders have worked out how to do well by doing good, how to generate new revenue streams by innovating products, services and solutions to be more socially or environmentally conscious. Social Supers believe the initiatives that benefit society, with a strong positive values-based foundation usually contribute to sustained profitability. These initiatives usually lie at the core of their business models. Social Supers exhibit deep rigor around the systemic nature of decision-making and work hard to prepare their workforces for the 4th IR.

2. Data-Driven Decisives: There are always leaders who are more driven by quantitative processes and deep data analytics. They have clear decision-making processes and use this analytical focus to drive data-driven insights. Interestingly, they are usually the ones to capitalize on the opportunities of the 4thIR. Data-Driven Decisives are more likely to invest in disruptive technologies, focus on the ethics of new technology, and to train employees to optimise the relevancy of the skills required for the 4th IR.

3. Disruption Drivers: Leaders who invest in technologies to compete effectively in current and future markets and make important technology investments to do so are termed Disruption Drivers. These leaders are confident and assured that they can compete in the 4th IR and are prepared to capitalize on its opportunities. They usually take a more holistic approach to data informed decision-making.

4. Talent Champions: There are also leaders who have seen the future some time ago and have already started the journey to prepare their people for the future. These are the Talent Champions. They believe they have identified the competencies, knowledge and mindsets required for future success, have designed their organisations to take advantage of the contingent nature of future employment and invest to make their organisation designs ‘fit for purpose’ in the 4th IR.

These leaders share a common set of characteristics – a positive commitment to doing good, with a clear vision or preferred future inspiring their way forward. They take a long-term view to investments in both people and technology – and their organizations appear to be growing faster (more than 5% annually) than their competitors. To succeed sustainably in the 4th IR, leaders will need to find the ‘sweet spot’ that lies at the nexus between these styles. This will be the key to accelerated, sustained momentum and positive change that benefits not only the leader’s own organisation but the whole of society.

The reality is that Africa requires a new social contract to balance the potential negative and positive consequences of the 4th IR. There is no doubt that there will be disruptive pressure placed on labour markets as new technologies impact on value creation and disrupt both industries and business models. The WEF Future of Jobs Report 2018 tells us that in the churn of the 4th IR maelstrom, 75 million jobs are expected to be displaced in the period to 2022, whilst another 133 million are expected to be created across key developed and emerging economies. (World Economic Forum. The Future of Jobs Report, 2018)

This displacement, augmentation and innovative creation of new jobs is unprecedented in its scale, depth and breadth and will require a totally new societal ecosystem view and approach to job transitions. Most jobs that are not simply redundant will change dramatically due to automation, requiring significant investments in the retraining of employees and in their psychological adjustment to a new workplace reality.  It is estimated that at least 54% of all employees will require reskilling and upskilling by 2022.

A challenge is that businesses by their very nature and spurred by the perverse incentives of analysts, shareholders and stock markets are short-term in their thinking, with most indicating that training will focus on the adaptation and retention of their highperforming employees. This implies that the reality of lay-offs and under-skilled unemployed is not just a scaremongering tactic on the part of 4th IR pessimists and that the burden for dealing with this issue will sit with ill equipped and under-resourced governments struggling with the complexity of service delivery on so many different fronts. Based on past experience, the prognosis for government to deal with this reality is unfortunately bleak. Once again, a systemic view needs to be taken, embracing the views and contributions of different parts of society who may potentially contribute to successful transitions. Economic, labour and education policy will all need to change in a focused, holistic and interconnected way to ensure that the whole of society is able to offer up humancentred solutions relevant to the 4th IR. Thankfully NEDLAC is starting to connect these dots. Whether or not they are able to move beyond the talk to positive action is however debateable. 

The burning platform underpinning this much needed debate and call to action is clear. The World Economic Forum is clear regarding the fact that Sub-Saharan Africa doesn’t make optimal use of its human capital potential and is under-prepared for the impending disruption to economies and, in particular, the jobs and skills of employees. It’s Human Capital Index, which measures how countries and economies optimize human capital through education and life-time skills development shows that Sub-Saharan Africa currently only benefits from 55% of its full human capital potential, compared to a global average of 65%. The overall range however shows that some African countries are doing better than others.  Mauritius, Ghana and South Africa score from 67 to 63% whilst countries like Mali, Nigeria and Chad score in a range from 49 to 44%.   Whilst in the past it may have been argued that a number of African economies are relatively less exposed to technologically-driven labour market disruptions, this is no longer the case. The following illustration drawn from the report shows how capacity and exposure coincide. South Africa, situated in a quadrant of both low capacity and high exposure is potentially very vulnerable. (World Economic Forum. The Future of Jobs and Skills in Africa. Preparing the Region for the Fourth Industrial Revolution, 2017)

Africa’s capacity to adapt and exposure to the future of jobs

The much vaunted potential demographic dividend in Africa is a potential two edged sword. On the one hand is the potential economic miracle of an estimated 15 to 20 million increasingly well-educated young people expected to join the African workforce every year for the next three decades. On the other hand creating the enabling environment to support viable, sustainable quality jobs to leverage this opportunity is one of Sub-Saharan Africa’s most defining challenges in coming years. Job creation in a stable environment is never a simple challenge. Positioning it within a context of a dynamic range of other socio-economic and demographic challenges affecting the region creates quite another level of challenge. Technology’s disruptive impact on labour markets, the new types of jobs required in wholly new occupations combined with new ways of organizing and coordinating work as well as the re-tooling of existing workers’ capabilities in technologically augmented jobs sets up a challenge of monumental proportions. Whilst it may be argued that the market will naturally find an answer to this challenge in the same way as it has in the past, it is also true that an opportunity identified and acted upon in a purposeful way optimises the potential for positive outcomes.

The alternative worst-case scenario is dystopian to the extreme. A flood of well educated, highly aspirational young people into labour markets that cannot accommodate them is a recipe for social unrest and conflict on an unparalleled scale. If opportunities in home countries cannot be found it is likely that large scale migration will accelerate. The targets of this migration are likely to be the industrialised countries of Europe and on a smaller scale South Africa itself. If this is so, the so-called refugee crisis of the past decade may in fact be dwarfed by a migration tsunami in times to come. Beset by their own economic and social challenges, it is unlikely European nations will welcome this migration tsunami with open arms. The irony is that this potential wave of migration may in fact be an economic panacea for South Africa in the likely event that it is unable to generate its own technology-enabled workforce. The flip side however is that increased xenophobia and the unrealised aspirations of its own citizens may be a lethal powder-keg that could rip the fragile fabric of South African society even wider open than ever before.

It would counterproductive to conclude on this dystopian vision. The reality is that we do stand at a crossroads. The future is in our hands as a society with opportunities to shape, cultivate and deliver upon. To take the right road will require us to come together in an ecosystem that engages honestly and robustly with itself. The ecosystem will require leadership with the right levels of fortitude, courage, resources and a collaborative capability to embrace different perspectives, needs and interests. It will also require us to invest heavily in skills and deliver high quality infrastructure on a scale never achieved in the past. Public investment in the infrastructure Africa so desperately requires will need to take place in a transparent, ethical manner using technology to accelerate decision making and implementation as the window of opportunity rapidly closes. The demographic dividend means that the future market will be there – our challenge will be to leverage 3D printing, the Internet of Things, predictive analytics and big data to build highly efficient supply chains capable of creating value at point of consumption – so that local communities benefit from the job creation their consumption fuels.

All of this is possible. We have seen drone based technology increase crop yields, payments systems like M-Pesa leapfrog traditional banks and the emergence of a wide range of digital applications tailored to Africa’s requirements. Now all we require is political and commercial will, unfettered imagination and creativity, mechanisms for dialogue that deliver real actionable results as well as the ability of leaders to take a wider ecosystem view. Surely that is not too much to ask for?