President's Message
Ma. Victoria C. Españo Message from the President:

Ma. Victoria C. Españo


PRESIDENT’S MESSAGE

Year 2018 is indeed a special year for FINEX: it marks our 50th anniversary as a leading organization of finance professionals. Through the able leadership of our past presidents and the multitude of members who have actively participated in and supported our different initiatives, we have made significant achievements in supporting the professional development of finance executives,

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The 4 th Industrial Revolution – Are we ready?
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By REYNALDO C. LUGTUBy REYNALDO C. LUGTU

Manila Times(FINEX FILES)
October 6, 2017

The 4 th Industrial Revolution – Are we ready?

FINEX Files is a rotating column of members of the Financial Executives Institute of the Philippines appearing every Friday in Manila Times, business column section.

One thing is clear – the fusion of different technologies in the digital, physical, and biological worlds is disrupting businesses and organizations the world over. Commonly referred to these days as the 4 th Industrial Revolution or 4IR, most of the speakers including myself as one of the panelists, in the recently concluded Digital Strategies for Development Forum 2017 held in the Asian Development Bank agreed in unison that this is having a profound impact on the way we live, learn, work, and relate to each other.

In fact, the World Economic Forum (WEF) cautioned that the scale, scope, and complexity of this technological revolution “will be unlike anything humankind has experienced before”. “We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society”, the WEF further avers.

How the 4IR evolved started with the First Industrial Revolution which took place from the 18th to 19th centuries in Europe and America, wherein the development of mechanical production, railroads, and steam engine paved the way to the growth of iron and textile industries.

The Second Industrial Revolution, which took place between 1870 and 1914, was a period of advancement in electrical power that led to breakthrough inventions and innovations such as the telephone, light bulb, phonograph, and mass production.

The Digital Revolution heralded the advent of the Third Industrial Revolution which started during the 1980s and led by advancements in electronics, computers, automated production; and later, developments in the internet and information and communication technology. The WEF distinctly outlined three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a fourth. Firstly, the speed of breakthroughs in the 4IR is exponential rather than a linear pace, as seen in developments in artificial intelligence (AI), biotech and nanotech, big data, virtual and augmented reality, and so on. Secondly, the scope of disruption is expansive that it impacts almost every industry in every country. Lastly, the breadth and depth of these transformations affect the entire systems of operations, customer engagement, product systems, and governance.

Clearly, the 4IR has the potential to improve quality of life and raise income levels for people the world over. Already, we are seeing great improvements in how consumers transact with companies and consume products and services such as music, travel, transportation, and so on. Organizations which undertook digital transformation to accelerate their business activities, processes, competencies, and models by fully leveraging on digital technologies have reported huge gains in productivity, customer engagement, and ultimately profits. On a macro level, the 4IR will bring down transportation and communication costs, make logistics and global supply chains more effective, and drive down the of trade will, which will lead to opening of new markets and ultimately economic growth.

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

Like the other revolutions that preceded, the 4IR has potential downsides and challenges. One is the threat of displacement of labor due to AI. A specific example is the potential of AI to wipe out the 900,000 call center jobs in the Philippines in 3 to 5 years. Organizations which lag in digital transformation will suffer business declines, if not, outright closure, such as the recent casualty with Toys R Us.

So, the provocative question now is – is our country ready for the 4IR? We haven’t even fully capitalized on the Third Industrial Revolution, the here comes the Fourth! Internet is still costly and relatively spotty and slow, our educational system and workforce are unprepared, and many organizations lag in their digital transformation initiatives. The answer is no, we are not ready. But this is an urgent wake up call to all sectors to organize, gather up, and prepare for this coming tidal wave of change.

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. The author may be emailed at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . The author is the President of The Engage Philippines and Hungry Workhorse, and Co- Founder of Caucus Inc. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University. He is also an Adjunct Faculty of the Asian Institute of Management

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