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4 min read

Industry 5.0 vs 4.0 - What has changed?

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Although changes are governed by various factors, rapid industry evolution never stops. Whether internally or externally induced, urgent or long-term, these changes dictate the rhythm for organizations, and they need to be able to adapt fast for the sake of success.

Today, trends are pointing towards the importance of digital transformation which requires businesses to employ cutting-edge technological advancements. It is the so called Fourth Industrial Revolution – or Industry 4.0 – that has been pushing leaders to transform their existing practices and currently we are seeing the rise of Industry 5.0, the next phase of this digital makeover.

According to experts of the innovation field, the latter is the enhanced but continued version of the previous phase, but what are the differences between the two phases? What does it mean for organisations?

Let’s explore these questions through an overview of Industry 4.0 and Industry 5.0 and see their implications for the future of businesses!


The Promise of Industry 4.0


Having gained prominence in the early 2020s, this phase of Industrial Revolution is easily recognizable by its main focus on the presence of machinery and automation in different industries. As IndustriALL explains, Industry 4.0 ‘is about the use of advanced technology to leverage productivity and efficiency in industries’ - such technologies are ‘artificial intelligence (AI), robotics, the internet of things, the use of sensors, and automation of systems’.

All these are not necessarily limited to the industrial sector – Industry 4.0 is transforming business practices as well. For them, it means that marketing and sales processes are set to become highly automated and heavily data-driven. Thanks to the automation and data exchange promoted by the principles of Industry 4.0, organizations where these practices are implemented experience significant improvement in productivity and efficiency, while greatly enhancing their agility and increasing their profitability too.

With the help of these elements, businesses that successfully implement the principles of Industry 4.0 and adapt the practices of it have seen tremendous results in terms of their various KPIs - as seen on Image 1 below.

KPI improvements

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McKinsey’s report clearly indicates that the implementation of Industry 4.0 means great benefits. However, most companies did not manage to embark on this journey just yet and while industries such as automotives are leading the revolution – many lag behind. Nonetheless, the next step of the revolution is here, and it brings about a whole new perspective to Industry 4.0 and it’s ready to transform businesses.


The Vision of Industry 5.0


As opposed to the previous phase, Industry 5.0 takes a sharp turn and directs attention to the human element. We may consider it an enhanced next version of Industry 4.0 – while Industry 5.0 complements the efforts of the former on, it also ‘reflects a shift from a focus on economic value to a focus on societal value, and a shift in focus from welfare to wellbeing’ (Forbes).

Compared to Industry 4.0, Industry 5.0 is…

  • Dedicated to both customer and employee experience
  • acknowledging social and economic challenges
  • putting great attention on human well-being and sustainability
  • providing ‘a vision of industry that aims beyond efficiency and productivity as the sole goals’ (European Commission)

… while relying on the technological advancements of Industry 4.0 at the same time.

The beauty of Industry 5.0 is that it offers all the benefits of its former version and brings on new advantages as well.

  • For the Employee
    • Liberated from repetitive and mundane workload
    • Improved work-safety with the help of robotics
    • Less mental pressure
    • Diverse and inclusive environment
  • For the Enterprise
    • enhanced talent attraction and retention
    • strengthened industry resilience and competitiveness
    • energy and resource saving
    • cost-efficiency, cost optimization
    • sustainability
    • more personalized and customer centric product

All these result in a great balance between man and machine, allowing for a greater experience for worker, company and customer alike. These exact notions are what businesses need if they want to keep up with the changes of the economic turmoil around them and although the principles of Industry 5.0 are still relatively new to sectors apart from automotives for example, we will definitely see them gaining serious momentum among other industries in the upcoming months.

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