Name: Industry 4.0 and the Digital Enterprise
Uploaded: 2017-04-13T07:30:28.000Z
Duration: 28 min 2 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Good morning. So by now, you'll all have heard of digitalization

Adverbs of degree

and the way that companies transform their businesses by fully integrating digital technology

Now, digitalizing a business does much more than just putting paper on glass. It weaves

a digital thread through the whole value-chain, giving companies the means to realize innovation

much faster than their competition and to future-proof their businesses in a constantly

But the disruptive nature of digitalization brings with it as much potential pain for

manufacturers that ignore it as it does for opportunity for those that embrace it.

You know, entire markets can really disappear overnight with a single innovation. The classic

example here was the rapid shift from film-based to digital photography driven by an improvement

But actually, the adoption of phone-based cameras was far more dramatic, and this was

because of the paradigm shift that came with using phones. Whereas you used to take photos

to preserve your own memories, you now take them to share with friends and family.

And as digitalization enters the industrial world, we're certain that if our customers

Now, it's a bold statement. But we feel confident about our message because we can go back in

history, we can look at what happened during the previous Industrial Revolutions and we

can put what we're doing today in a bigger context.

Now, we had virtually no progress in human life between the end of the Roman Empire and

the late Middle Ages. Between 1300 and 1700, economic growth was only at 0.2 percent per

year. Something growing at that rate requires 350 years to double; you can see that on the

But since the 1870s, the amount of time that it's taken for the standard of living to double

has been more like 30 years. So what accounts for that incredible change?

Well, actually, it was the discovery, the exploration and even the exploitation of Americas

that showed the Europeans that the pool of resources at their disposal could increase

over time. It seems like an incredibly simple concept, but up until that moment, the Europeans

felt that their pool of resources was fixed. That meant that if I wanted to prosper, you

This discovery, that there were more resources available in the world, gave them trust in

the future. Banks were born, and credit was invented in order to finance those adventures

and enterprises, and this had a knock on effect on industry.

So in 1776, Adam Smith published arguably the most important book of all time regarding

economics, and this was called The Wealth of Nations. He explained why some nations

are poor and how wealthier nations fostered this belief in growth.

They encouraged business owners to reinvest profits back into their business. Instead

of taking it out every year and keeping their businesses the same size, he said, well, once

you and your family have eaten, take those excess profits, reinvest them back in the

company, buy more capital equipment, hire more labor and your company will grow. You'll

create more profits that can be reinvested. The overall pie from which everyone eats is

going to grow, and all of society will benefit.

Within a year of Smith coining the term "capitalism," the world had its first truly global generic

technology for increasing productivity. This was James Watt's steam engine.

It was initially applied in the coal mining industry, not to dig the coal out directly.

In the U.K., the coal mines were flooded with water, so they couldn't access much of the

coal. They used the steam engine to pump the water out, giving them far more access to

They ended up with giant mountains of coal alongside each one of the mines, far too much,

in fact, for the horses to cart away. So, someone had the genius idea of strapping a

steam engine to a wagon, and they invented he railroad. They used this to take the coal

and steam power over the next 100 years throughout Britain, and it became pervasive throughout

By the 1800s, in fact, steam was at the heart of all heavy industry in Britain, and all

Now, I'm going to describe the factory a little bit. At the bottom, buried underground in

fact, you have the engine room; there's a giant steam engine. Because it was burning

coal, you always had a coal stack to let the smoke out. And in the factory itself, all

of the equipment was organized vertically behind the engine room on three, four, five

Now why was this? Because in order to access that power from that single engine, they needed

to be as close as possible to that engine room, and that meant stacking them vertically.

There was a giant pulley with a leather belt, which drove shafts to give power to all of

Here's a picture, actually, of a factory from the 1800s. Isn't it amazing? It's chaotic,

but it's full of energy. Everything's moving. Everything's powered. And you can imagine

the massive leap of productivity that came with all of this free movement.

In fact, that inflection point on that graph, that jump in productivity, was really directly

But for all its impact, this was an imperfect revolution. We all know the effect of burning

coal on the atmosphere. It wasn't a great place to be in the 1800s. And, of course,

the one massive engine that was installed at the heart of these factories represented

a kind of single point of failure. Plus, the leather belts were driving all of the equipment

at the same speed, which isn't great for flexibility.

And, as you can imagine, with all of the equipment tied to the same machine, I wasn't really

able to make really more than one type of product in one factory. So, very little flexibility.

Now, factories don't look like that anymore, and the reason is this little guy. It looks

pretty innocuous, doesn't it? But it had the power to change everything.

It's a model of the very first electrical motor, invented by a friend of ours, Werner

We now a lot about that period because Werner wrote a lot of letters. He wrote letters to

his wife, which is something I don't really understand why didn't he just talk to her?

And, also a lot of letters to his brother, William, who was running Siemens U.K. at the

time. And he wrote him one letter about his electro dynamo:

I believe that this small invention has the power to change everything, to revolutionize

industry, to revolutionize Siemens and to change society for the better.

And he was absolutely correct. What he didn't anticipate was just how long this adaptation

By 1900, four decades - forty years - after his invention, 95 percent of industry was

still steam powered. And the few companies that had actually shifted to electrical power

were swapping out steam motors one-for-one for the electrical motors. They weren't using

the transformational potential of electricity; they were just installing great, big electrical

motors in the place of the steam engines.

Now, this looks like a picture from a steam factory, right? But, it's actually electrical-powered.

It's one of those early adopters of the big electrical engine using the same old leather

belts to drive the equipment. It wasn't until the 1920s that the diffusion

of the technology passed the 50 percent point. Why did it take so long? Well, for the same

reason that our customers don't always buy the technology we pitch immediately, even

if it is awesome. They want to see the technology mature; existing equipment has to be depreciated.