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Fourth Industrial Revolution "Vision of New Industrial Structure" - Japan's strategies for taking the lead in the Fourth Industrial Revolution - Interim Report by New Industrial Structure Committee April 27th, 2016 METI "Japan Revitalization Strategy" Revised in 2015 (Decided at the Cabinet Meeting on June 30th, 2015) Innovation in IoT, Big Data and AI has been advancing more rapidly and impactfully than ever. It is crucial to have vision common to both the public and the private so that the private sector can make proper investment and as such the government can promptly take measures to make or modify rules that will facilitate such investment. In this regard the study should focus on (ⅰ) how and when the reform should be performed for IoT/Big Data/AI (i.e. the reform of industrial structure, employment structure, and economic and social system), (ⅱ) potential business opportunity, (ⅲ) task that the public and the private should engage in (e.g. regulatory and institutional reform, R&D/equipment/investment in human resource), clarifying timeframes for each task. The study has been so far implemented for the formulation of "Vision of New Industrial Structure" (in August 2015) by “New Industrial Structure Committee” (chaired by Motoshige Ito, professor of Tokyo University) set up within "Industrial Structure Council" in joint work with the relevant government ministries and agencies. The interim report was issued on April 27th, 2016. Relevant government ministries and agencies The Cabinet Office; the Fair Trade Commission; the Financial Services Agency; the Ministry of Internal Affairs and Communications; the Ministry of Finance; the Ministry of Education, Culture, Sports, Science and Technology; the Ministry of Health, Labor and Welfare; the Ministry of Agriculture, Forestry and Fisheries; and the Ministry of Land, Infrastructure, Transport and Tourism. METI 1 Table of Contents １. What is happening now? ２. Japan's basic strategy ３. Changes in society and conversion of industrial structures through the revolution ４. Changes in employment structures through the revolution ５. Estimates involving industrial and employment structures ６. Japan's specific strategy i. Developing environments for promoting data utilization (establishing data platforms, creating data distribution markets, promoting utilization of personal data, developing security-related technology and ecosystems that produce skilled human resources, ideal approaches to intellectual property policies in the revolution and ideal approaches to competition policies that address the revolution) ii. Fostering and securing human resources, improving flexibility in employment systems (establishing an educational system that meets new needs, securing human resources with a global mindset, promoting increased participation of more various sources of labor, increasing the flexibility of labor markets and employment systems) iii. Accelerating innovation and technology development (“Society 5.0”) (establishing an open innovation system, developing innovation bases from which Japan will lead the rest of the world / establishing national projects therefor / accelerating social implementation thereof, e.g., AI, strategically promoting the management of intellectual property and international standardization) iv. Fortifying financial functions (Fortifying equity finance toward the supply of risk capital, encouraging investment in intangible assets to address the revolution, further enhancing the functions of finance and settlement, positioning FinTech at the core) v. Facilitating smooth conversion of industrial and employment structures (establishing a governance system in which business owners are able to swiftly and boldly make decisions, developing systems and environments in which business owners are able to revitalize and reorganize business in a swift and flexible manner) vi. Disseminating the outcomes of the revolution to SMEs and local economies (establishing platforms on which IoT and other new technologies are introduced to and utilized within SMEs and communities) vii. Further enhancing economic and social systems to address the revolution (ideal approaches to regulatory reform so as to address the revolution, improving administrative services through the utilization of data, enhancing the development of business overseas through strategic collaboration and cooperation between industries, ensuring the outcomes of the revolution permeate society) METI 2 １． What is happening now? METI 3 What is happening now? (ⅰ) - Technological breakthroughs - All business and information available to society in the “real world” can be freely controlled through digitized networks. (IoT) Large volumes of data can be analyzed to create additional value. (Big Data) Self-learning machines can analyze data and situations more rapidly and objectively than human beings. (Artificial intelligence: AI) Automation can be applied to more diversified and complicated tasks. (Robotics) → That which was previously impossible is now possible for society. Hence the potential dramatic changes in industrial and employment structures. Improved processing Increased volume of data Discontinuous progress of AI capability AI technology can enhance Exponential progress can Data volumes worldwide can discontinuous progress be seen with performance be doubled every two years. with the support of deep of hardware . learning etc. METI 4 What is happening now? (ⅱ) - Fourth Industrial Revolution - These technological breakthroughs includes the changes below: ① Shift from mass production/uniform services to customized production/services based on individual needs (customized medical treatment, immediate custom-made clothing, educational service depending on individual understanding) ② Free matching of society’s unused potential assets with needs of individuals (Uber, Airbnb, etc.) ③ Support or replacement for human labor, recognition/learning capability (automated driving, manufacturing/management, delivery by drone) ④ Creation of new services、shift to after-market services for products and goods (from simple sales of equipment to added services of operation/security/insurance using sensor data), significant efficiency improvement throughout the entire supply chain with data sharing (integration of production equipment and logistics/delivery/payment systems) ⑤ Technology used in the revolution is common foundational technology for innovation across all industries, and allows for addressing new needs (genome editing technology × biodata=new drug discovery, new type of farm product, bioenergy, etc.) First Industrial Second Industrial Third Industrial Forth Industrial Revolution Revolution Revolution Revolution Autonomous optimization (AI thinks Harness fossil fuel Energy innovation Automation on its own, takes optimal action energy (electricity, internal (Computer) based on a large volumes of data. (by steam engine) combustion engine) METI 5 Global strategy by leading overseas players Range of cloud services expanding, Ensuring the protection of their manufacturing including information not only on the Internet industry know-how in which they specialize, and globally developing business using technology From Internet but also from real life From real world (From Internet to real world) to their advantage to the real world (From real world to Internet) to Internet (ii) Accumulating data in cloud servers, processed with Standardizing manufacturing systems established in Germany and exporting them overseas artificial intelligence (i) Sharing data related to factories and products around the world between companies, factories, and even machines GE Google Siemens Amazon Bosch Facebook IBM etc. Intel (iii) Giving optimum instructions to factories etc. (i) Collecting data related to factories and (iii) Optimally controlling factories products around the world Examples from (ii) Accumulating and processing data with the manufacturing high-performance manufacturing facilities at hand sector Equipment for factories is shifting toward affordable devices Maintaining value of high-performance equipment that receive instructions from the cloud and execute them. in factories, which is Germany’s strength Source: FY 2014 Measures to Promote Manufacturing Technology METI 6 Companies aiming to create new society with data (ⅰ) Changes taking place for human roles and work Robot Taxi Aerosense, ALSOK, SECOM exMedio Realization of unmanned Use of drones in construction Use of AI for dermatological taxi service management of buildings, etc. diagnosis support system Aiming to realize a futuristic, unmanned taxi service using automated driving system Drone photography of construction sites They developed free support service for technology which detects vehicle from above increase safety by allowing diagnosis of dermatological disease called surroundings and more. Services are work on high-rise building sites to be "Hifumiru" which operates with the help of expected to be available within specific checked with designs kept on Cloud photographs of afflicted body parts and section between the airport and Tokyo. services. medical patient interviews with affiliated Also it is expected that this technology will dermatologists over smartphones. contribute to retention of public transport networks including buses where there is a problematic lack of drivers. <taking photograph of building materials from above> Change how people move and live Eliminate risky work AI to assist with doctor's diagnosis ○ Challenge ○ Challenge ○ Challenge ・Provide statutory measures for
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