Executive Summary

Innovations driving what many refer to as the Fourth Industrial Revolution are as varied as the enterprises affected. Industries and their supply chains are already being revolutionized by several emerging technologies, including 5G networks, artificial intelligence, and advanced robotics, all of which make possible new products and services that are both better and cheaper than current offerings. Unfortunately, not every application of transformational technology is as obviously beneficial to individuals or society as a whole. But rather than panic, regulators will need to step back, and balance costs and benefits rationally.

Amid the economic upheaval caused by Covid-19, technology-driven disruption continues to transform nearly every business at an accelerating pace, from entertainment to shopping to how we work and go to school. Though the crisis may be temporary, many changes in consumer behavior are likely permanent.

Well before the pandemic, however, industries and their supply chains were already being revolutionized by several emerging technologies, including 5G networks, artificial intelligence, and advanced robotics, all of which make possible new products and services that are both better and cheaper than current offerings. That kind of big bang disruption can quickly and repeatedly rewrite the rules of engagement for incumbents and new entrants alike. But is the world changing too fast? And, if so, are governments capable of regulating the pace and trajectory of disruption?

The answers to those questions vary by industry, of course. Thats because the innovations driving what many refer to as the Fourth Industrial Revolution are as varied as the enterprises affected. In my recent book, Pivot to the Future, my co-authors and I identified ten transformative technologies with the greatest potential to generate new value for consumers, which is the only measure of progress that really matters. They are: extended reality, cloud computing, 3D printing, advanced human-computer interactions, quantum computing, edge and fog computing, artificial intelligence, the Internet of Things, blockchain, and smart robotics.

Some of these disruptors, such as blockchain, robotics, 3D printing and the Internet of things, are already in early commercial use. For others, the potential applications may be even more compelling, though the business cases for reaching them are less obvious. Today, for example, only the least risk-adverse investors are funding development in virtual reality, edge computing, and new user interface technologies that interpret and respond to brainwaves.

Complicating both investment and adoption of transformative technologies is the fact that the applications with the biggest potential to change the world will almost certainly be built on unanticipated combinations of several novel and mature innovations. Think of the way ride-sharing services require existing GPS services, mobile networks, and devices, or how video conferencing relies on home broadband networks and high-definition displays. Looking at just a few of the most exciting examples of things to come make clear just how unusual the next generation of disruptive combinations will be, and how widespread their potential impact on business-as-usual:

Unfortunately, not every application of transformational technology is as obviously beneficial to individuals or society as a whole. Every one of the emerging technologies we identified (and plenty of those already in mainstream use) come with potential negative side effects that may, in some cases, outweigh the benefits. Often, these costs are both hard to predict and difficult to measure.

As disruption accelerates, so too does anxiety about its unintended consequences, feeding what futurist Alvin Toffler first referred to half a century ago as Future Shock. Tech boosters and critics alike are increasingly appealing to governments to intervene, both to promote the most promising innovations and, at the same time, to solve messy social and political conflicts aggravated by the technology revolution.

On the plus side, governments continue to support research and development of emerging technologies, serving as trial users of the most novel applications. The White House, for example, recently committed over $1 billion for continued exploration of leading-edge innovation in artificial intelligence and quantum computing. The Federal Communications Commission has just concluded one its most successful auctions yet for mobile radio frequencies, clearing bandwidth once considered useless for commercial use but now seen as central to nationwide 5G deployments. Palantir, a data analytics company that works closely with governments to assess terrorism and other complex risks, has just filed for a public offering that values the start-up at over $40 billion.

At the same time, a regulatory backlash against technology continues to gain momentum, with concerns about surveillance, the digital divide, privacy, and disinformation leading lawmakers to consider restricting or even banning some of the most popular applications. And the increasingly strategic importance of continued innovation to global competitiveness and national security has fueled increasingly nasty trade disputes, including some between the U.S., China, and the European Union.

Together with on-going antitrust inquiries into the competitive behavior of leading technology providers, these negative reactions underscore what author Adam Thierer sees as the growing prevalence of techno-panics generalized fears about personal autonomy, the fate of democratic government, and perhaps even apocalyptic outcomes from letting some emerging technologies run free.

Disruptive innovation is not a panacea, but nor is it a poison. As technology transforms more industries and becomes the dominant driver of the global economy, it is inevitable both that users will grow more ambivalent, and, as a result, that regulators will become more involved. If, as a popular metaphor of the 1990s had it, the digital economy began as a lawless frontier akin to the American West, its no surprise that as settlements grow socially complex and economically powerful, the law will continue to play catch up, likely for better and for worse.

But rather than panic, regulators need to step back, and balance costs and benefits rationally. Thats the only way well achieve the exciting promise of todays transformational technologies, but still avoid the dystopias.

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A Measured Approach to Regulating Fast-Changing Tech - Harvard Business Review