1. OPINION
In a recent re-reading of The Fatal Shore, it
struck me how Robert Hughes spends
considerable time explaining why a supposed
criminal class existed in Great Britain during
the 18th century. He argues that this group
created the main source of convicts transported
to Australia. And, he explains, its emergence
was due to the disruptive technologies of the
first industrial revolution and the resulting
displacement of workers – initially caused by
new steam-powered cotton mills and weaving
machines. These workers were forced, as a last
resort, to turn to capital crimes to provide for
themselves and their families.
The second industrial revolution of the late 19th
century is often recognised with the introduction
of the production line in manufacturing. Its
disruptive technologies included the introduction
of electricity, the internal combustion engine,
the telegraph and radio. Prices deflated as
productivity rapidly increased. Many businesses
failed, but overall demand for workers increased
as consumers slowly evolved the desire for more
material products.
Both these industrial revolutions started with
the coming together of highly disruptive new
technologies, followed by new industries rising
from the creative use of these technologies.
Old industries adapted or failed. As always, the
smaller, nimble companies were quick to adapt,
while often the larger ones failed to recognise the
danger or simply moved too slowly.
So what of the third industrial revolution?
History shows us that before an industrial
revolution occurs, disruptive new technologies
exist and smaller companies rise rapidly to
exploit these technologies in new ways.
The computer has been one of the most
disruptive technologies in history. Productivity
rose rapidly and despite promises to the
contrary, many workers were displaced by
computer systems.
Roles within organisations rapidly changed.
First clerks with ledgers were replaced with far
fewer data-input operators. And now, customers
input their own data via transactional websites.
Facilitated by the rise in computing power
and the dramatic fall in computing costs, the
introduction of the internet has transformed
everything. Interconnectedness has exploded.
Looking back, it is clear to see how computing
power and the internet have changed business
so emphatically. And, they continue to do so. The
pace of change is growing ever more rapid.
Is this the third industrial revolution? Well,
perhaps not quite yet. There is a third factor that
is as disruptive as computers and the internet.
For many years, I regaled (read annoyed) my
business partner with the theory of Emergence
and how slime mould and ant colonies had
demonstrable lessons for the broadcast television
industry, among many. Imagine my delight when,
at Company Directors’ annual conference some
years back, we heard the featured speaker, Ian
Pearson, the futurist for BT in the UK, tell all the
delegates that slime-mould interactions were
providing information on how future networks
and systems would operate.
Scientists were predicting new management
systems based on Emergence Theory and
that these would fundamentally change how
business was structured in the future. At that
time, scientists, futurists and a few interested
souls could see how this change was the result of
computers and internet, but not what the catalyst
would be to bring about the change.
A few short years ago, the catalyst was
created. The iPad. Released in April 2010, there
have been well over 100 million iPads sold and
subsequently many other tablet computers.
The tablet computer and even smartphones
have brought together the elements of
computing power and the internet to transform
them into a combined technology so disruptive
that we are only now beginning to understand
the possible effects.
This can be described as the “single
screen” phenomenon.
Less than three years ago, our main
interaction with the internet was at a work
computer or on a single home computer.
The third industrial
revolution
Graham Burdis explains why directors need to
adopt a “single screen” strategy and prepare their
organisations for the third industrial revolution.
GRAHAM BURDIS MAICD
Director
Burdis Marsh Partners
Nimble companies were
quick to adapt, while the
management of larger ones
failed to recognise the danger
or simply moved too slowly
36 www.companydirectors.com.au

2. Certainly there were laptops and netbooks, but
the experience was clunky and less than satisfying.
Today, most people can, and do, interact
via the internet while at work, travelling and
at home. It is not unusual for users to watch
television while at the same time multitasking
via their own tablet.
This “single screen” is definitely the third
industrial revolution. It has started.
Large established industries are being
hollowed out by small, nimble businesses that
rapidly evolve into large businesses themselves.
With the arrival of “single screen” this change
will rapidly accelerate.
Not even the small, nimble companies can be
completely safe from the effects either.
Consider the humble printed street directory
that resides (or used to) in your car’s glove box. A
very useful, cheap item that generally is at hand
when needed – it is convenient and relatively
easy to use. The rise of computing power and the
fall in the cost of screens, when combined with
satellite location services, resulted in the rapid
rise of “satnav” systems that were initially stand-
alone devices. Then small, innovative companies
quickly built valuable businesses by providing a
better service (turn-by-turn instructions), despite
the relative cost being higher than the printed
version. Even though these companies were
nimble and at the forefront of technology, they
did not immediately foresee the effects of the rise
of the “single screen”.
As smartphones incorporated satellite
navigation technologies (some even developed by
the satnav companies) and navigation software
within their handsets, the sales of stand-alone
satnav units slumped. Users could simply use
their phones and the catch cry was “why have
another screen?” And the service was essentially
free. The satnav companies are now trying to
sell their mapping services and software to
phone companies and tablet manufacturers.
And the “single screen” users now use their
iPads or smartphones for in-car navigation, boat
navigation and even on the golf course.
Among the long-established industries, the
stories are eerily similar.
Some notable recent examples are the rise
of Seek, carsales.com.au and realestate.com.
au. These businesses have grown rapidly into
multibillion dollar enterprises by doing precisely
what Henry Ford did. They have produced a
much cheaper, better product and made it
available to a much larger group of customers.
They have achieved a far lower cost of production
from enormous productivity gains. And the losers
in this revolution are the large, established, slow
adopters. Here, read Fairfax and News.
This occurred just before “single screen”
started, but the effects will be become more rapid
as customers utilise the services on their phone
or tablet.
A possible outcome is that a totally new type
of news service arises to provide “single screen”
apps. And this is an outcome predicted years
earlier by those “slime-mould” interactions.
The media companies have reacted by
developing their own solutions, but have not yet
solved the business model quandary.
Perversely, some have decided to reduce the
amount and quality of news reporting they do,
which, on the face of it, is their basic reason to
exist. Like the 18th century cotton mills of North
England, they may well be forcing their former
workers to become their competitors in a new
“single screen” world.
The same effects are being felt in industries
such as retail, finance, insurance, education,
energy, agriculture, transport, communications,
entertainment, media and many more.
Is it that boards and the executives of
companies fail to see the risks and opportunities?
They probably see the risks, but fail to gauge
the size and speed of the change. The board of
Fairfax must have seen the writing on the wall,
but failed to move decisively or quickly enough.
News successfully invested in non-newspaper
products such as TV and film. But that may not
be enough.
This may be the real issue. Large
organisations are unable to move their
bureaucratic processes anywhere as
quickly as required. The executive ranks
are effectively blocked by self-interest, as is
senior management.
It would be a courageous CEO that suggested
a total re-structuring of the business that cut
out layers of management and bureaucracy. And
it would be an equally courageous board that
adopted such a strategy.
This is seen in the current changes affecting
the insurance industry. Newcomers are
establishing operations in cheaper regional
areas and effectively, their company consists
of a computer system and a call centre. The
overheads and bureaucracy are low and the
productivity is high.
Compare that with a traditional insurance
company with a city office building, bulging
executive ranks, floors of marketing teams and
actuaries. Not productivity central.
The new players have switched from capex
(capital expenditure) to opex (operating
expenditure).
The usual, long-tried solution of the large
firm to this dilemma is to purchase the small
newcomers, with the result that the new players
acquire capital to repeat their entrepreneurial
attacks, albeit in a new industry due to restraint
clauses in sales agreements.
For boards, it provides challenges the like of
which appear to have been faced only every 100
years or so.
For large companies, how do you de-risk the
effects of the third industrial revolution?
Even identifying the risks may be difficult
given the filtering of information that occurs as it
slowly flows upwards into board papers.
For small companies, the challenge would
appear to be in how the opportunity is identified.
But beware the satnav effect.
The third industrial revolution is with us.
It is happening rapidly, and like the satnav
experience above, may actually be felt as waves
of change.
We have probably seen the first wave, which
was the rise in computing power when combined
with the internet. The second wave is “single
screen” and will ultimately create the greatest
disruption to industry that we have ever seen.
The third wave looks to be 3D printing. And
there will be further waves.
Directors need to adopt a “single screen”
strategy and ensure their organisations are as
ready as they can be.
Preparations need to be made. Action needs
to be taken. Speed to market rapidly improved.
Identify the components that can be rolled out
now. Start simply and ensure the organisation is
positioned to participate rather than lumber on
as a follower later.
This ‘single screen’ is
definitely the third industrial
revolution. It has started
37Company Director | AUGUST 2013