In a recent CNN interview, Elon Musk estimated that Tesla would be able to assemble a completely autonomous car within two to three years. He also predicted that although the technology would be available and possible within that period, it would take another two to three years before regulators would allow these vehicles to operate.
It is fascinating to hear technology gurus like Musk describe the future. Three years may not be too long to wait for us to experience a completely autonomous driving machine. We actually have parts of that autonomous car here in Manila. We can now experience self- parking cars and safety features, such as front and side assists. The future is actually here.
Over the next three years, we may expect to see rapid development in what is now described as Industry 4.0. This is the fourth industrial revolution. It is characterized by the increasing digitization and interconnection of products, value chains and business models. It is expected that this digital transition will lead to a significant transformation of the landscape. Elon Musk’s autonomous car is a part of this transformation.
The first significant driver for the advance of the industrial internet solutions will be in the opportunity to integrate and manage horizontal and vertical value chains. Most companies have digitized their key processes along the value chain. Even the most conservative banks have started implementing financial technology solutions to provide better and innovative services.
Take the case of payments, I recently attended a Swift conference. This was originally the telex-based secure fund transfer system among banks. They are now offering direct payments from banks to corporates through a secure channel that would not have been possible without the recent developments of the internet. This allows a real time and a transparent view of corporate funds flow representing payments and collections between companies. This development greatly improves the way treasurers manage their cash positions.
The second driver of Industry 4.0 will be the digitization and interconnection of products and services, or what is commonly called as the internet-of-things. This will ensure competitiveness and create opportunities that have yet to be defined.
Another major driver and development would be the emerging and often disruptive digital business models that offer significant additional value to customers through tailor-made solutions. These new business models are characterized by a considerable increase in horizontal cooperation across the value chains, as well as the integrated use and analysis of data. This provides a better solution to fulfilling customer expectations. Take the example of ride sharing schemes such as Uber. This is only made possible because you can track available cars and optimize their utilization through the internet. Imagine if these were autonomous cars in the future.
The challenge to corporates in this present future is to decide whether you will want to lead in the dynamic and tumultuous environment of Industry 4.0 like what Elon Musk is doing, adapt to the changes when they come, or simply wait on the sidelines. The challenge is obvious and the rewards could be a winner-take-all grab for the future.
Ronald Goseco is executive vice president (EVP) of the Financial Executives Institute of the Philippines and president of Idi-VW.