Winning in the 4th Industrial Revolution

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RONALD S. GOSECO

The Financial Executives Institute of the Philippines (FINEX) will be holding the 3rd Ayala–FINEX Summit on September 20 from 2:00 p.m. to 7:00 p.m. at the New World Ballroom in Makati. The theme of the summit will be: The CFO –Catalyst and Strategist in the 4th Industrial Revolution. The impact of this revolution will be discussed.

In a previous article, we described the evolution of the various industrial revolutions. We also described how the shifts and disruptions will provide us with great opportunities but will expose us to greater risks. We presented a picture of greater efficiencies in the way we manage our assets and the way we connect our supply chain. The challenge for all of us is how we can emerge as winners and benefit from all these developments.

The Summit will also capture some of the emerging trends that KPMG recently covered in a recent report on infrastructure. The report concludes that around the world, uncertainty is rife. That political agendas and social expectations are changing, power is shifting and technology is disrupting everything.

The report showed that traditional lines between energy, infrastructure and technology continue to blur and intersect each other. These sectors will rapidly grow and their growth will be interdependent of each other. Governments will strive to implement a low carbon transportation agenda, and at the same time, shift energy generation to renewables. This will be a balancing act of addressing both supply and demand in a world of growing population.

A clear example is the recent China pronouncement that it would shift 20 percent of its transport requirements to electric vehicles by 2025. This comes on the heels of a similar pronouncement by the French of their 2040 targets.

The way we respond in the Philippines to this growing demand for energy, transportation and technology will be critical to our success as a nation. Developing these areas will determine economic growth and social inclusivity.

Over the past years, both technology and consumer behavior have been merging. The changes related to this have turned common wisdom and marketing approaches on their head. Consider the changes in how millennials in the developed world, or even here, interact with transportation infrastructure. They no longer see the need to own cars. Think Uber and Grab. When they use a personal vehicle, it is often shared. They have real time traffic and navigation apps, such as Waze, to select their routes. Environmental impact influences the transportation decision as much as costs and convenience.

In the Philippines, this trend is playing somewhat differently. Rising affluence and a rapidly expanding middle class has triggered a 20 percent annual growth in auto sales. It has also led to massive demand in air travel. The question is how long this trend will last.

Across the globe, governments are considering how new technologies – renewable generation, energy storage, autonomous cars and others, will influence infrastructure. Everyone is taking note of the need to embrace technology like blockchain in Fintech, sharing economy and open data, to ensure that these growth enablers will play a positive role in future employment and wealth growth.

These rapid technological changes are also creating growing concern over the risk that current investment in capital goods could become technologically obsolete before the end of their anticipated life. It is expected that the impact of technology will widen and deepen. The widening will come from the discovery and application of new technologies and increased collaboration between asset owners and consumers. The deepening will be driven by the owners themselves as they strive to achieve greater efficiency and value.

The Summit will try to answer some of the questions so we could all come out as winners … or rather, that we could be part of the select few who would emerge as winners in this new economy.

Ronald Goseco is currently executive vice president of FINEX and president of IDI-VW.

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