10 Principles for Leading the Next Industrial Revolution

But just such a change appears to be happening now. In a great wave of technological change, sensors are spreading through factories and warehouses, software is predicting the need for maintenance before a machine breaks down, power grids and loading docks are becoming intelligent, and custom-designed parts are being produced on demand. The leaders of the next industrial revolution are companies making advances in fields such as robotics, machine learning, digital fabrication (including 3D printing), the Industrial Internet, the Internet of Things (IoT), data analytics and blockchain (a system of decentralized, automated transaction verification). Because these technologies all reinforce the others' impact, they are leading to a new level of proficiency, and to new types of opportunities and challenges for business and for society at large. One key indicator is that conventional boundaries between industries are eroding. It's getting harder to tell the difference between, say, a telecommunications company and an entertainment producer, or between a retail bank and a retail store. The relationships among suppliers, producers, and consumers are also blurring, more rapidly than many business decision makers are prepared for. The foundation of business strategy has long been the classic value chain, which links together raw materials producers, manufacturers, distributors, and (in the end) consumers through a well-established commercial infrastructure characterized by a stable set of transactions. But the rise of digital technology enables individuals to connect outside the value chain and deliver more efficient, effective products and services. This will reduce the importance of economies of scale and conventional divisions of labor. Relationships among companies will be more fluid and the price and cost of goods and services more volatile than they are today.