How Will Industry 5.0 Change Your Business Strategy?

How Will Industry 5.0 Change Your Business Strategy?

Industry 4.0, triggered by IT advancements, is described as the utilisation of automation, robotics, big data analytics, smart systems, virtualisation, AI, machine learning, and the Internet of Things, among other things. 

Thanks to technology, manufacturers will be able to function more efficiently and sustainably than ever before. While many manufacturers are still pursuing Industry 4.0 as the “next big thing”, Industry 5.0 is already on its way. 

In case you are still wondering what it is or how it will affect your business strategy, here is a quick recap.


What Is Industry 5.0?

What Is Industry 5.0?

Industry 5.0 is a relatively new concept developed by the European Union (EU). It replaces productivity and efficiency as the sole goals with the notion that industry plays an important role to societal benefits. 

According to the EU, Industry 5.0 “places the wellbeing of workers at the centre of the production process and uses new technologies to provide prosperity beyond jobs and growth while respecting the production limits of the planet.” 

Industry 5.0 complements Industry 4.0 by “supporting the transition to a human-centric, resilient, and sustainable European industry through research and innovation” (original emphasis).

In simple words, at its core, the focus of Industry 5.0 is a shift from concentrating on economic to societal value, and a switch from welfare to wellbeing.

The notion that corporations should prioritise societal wellbeing over profits and growth is nothing new. Corporate Social Responsibility (CSR), Environmental, Social and Governance (ESG), and the Triple Bottom Line (TBL) are just a few examples of this concept. However, it is unprecedented for the industry to centre people and the environment over profits and development in its very definition. 


How Does Industry 5.0 Affect Your Business Strategy?

How Does Industry 5.0 Affect Your Business Strategy?

Unlike Industry 4.0 that only applies to “industry”, Industry 5.0 involves every sector and business. To consider the implication of Industry 5.0 for your business strategy, you must take a broad and general perspective that applies to all businesses. 

Industry 5.0, as outlined in this infographic from the European Commission, has three primary pillars: human-centric, resilient, and sustainable. Every business strategy is expected to be influenced by all three of them.



In contrast to the usual approach of seeing people as means (human resources, for example) rather than as ends, a human-centric strategy emphasises talents, diversity, and empowerment of people. It thus requires you to rethink your perspective from organisations serving people to people serving organisations.

Comparing with obtaining and retaining customers, many businesses are gradually facing more radical challenge in finding, serving, and retaining employees. Business strategy will have to address this trend if it continues, and Industry 5.0 is designed to do just that.

The current trend of strategy is still to focus on gaining a competitive advantage and providing unique value to customers. Whereas in the future, if you want to become truly human-oriented, you must focus on gaining a competitive advantage and providing unique value to employees.



According to the European Commission, a resilient strategy is “agile and resilient with flexible and adaptable technology.” Because of Covid-19, global shortages of materials, and the war in Ukraine, you would not disagree that resilience is crucial, both now and in the future.

Businesses are already aware that agility and flexibility are important, but they do not necessarily result in resilience. The driving forces of business right now still are efficiency and profit maximization. Lean initiatives may cause companies to become less efficient and more flexible, which, in turn, may lead to the opposite result.

Industry 5.0 aiming at creating anti-fragile organisations, which can react and learn from any crisis in a timely and systematic manner, preserving stable and durable performance, will necessitate a fundamental shift in strategy away from focusing on growth, profit, and efficiency to focusing on establishing organisations.



Climate change is what motivates people to adopt the concept of sustainability. 

Sustainability, as defined by the European Commission, refers to a strategy that respects planetary boundaries and encourages sustainability. Companies should comply with the Triple Bottom Line and all 17 Sustainable Development Goals, for example.

So far, corporate sustainability efforts have mainly focused on reducing or minimizing the damage to our planet. 

Sustainable business strategy, under IR5.0, goes further and requires more than what has already been done. A sustainable company will focus on enhancing its favourable impact instead of minimising its negative impact. 

Therefore. Industry 5.0 companies are a part of the answer, not a part of the problem.


What’s the Next Thing to Expect?

The above three pillars under the EU’s Industry 5.0 framework provides a picture of what future development may look like.

To date, Industry 5.0 hasn’t gotten a lot of traction yet, companies are still heavily invested in Industry 4.0 or earlier versions. Sustainability, however, has begun to gain a lot of traction recently. 

The Industry 5.0 vision is either appealing or alarming, depending on who you ask. Despite our current problems and difficulties, Industry 5.0 appears to be a popular solution. 

It is also likely to be accepted in a variety of ways. As organisations and societies become more human-centric, resilient, and sustainable, we may see solutions emerge.


>>> Find out 8 Steps to Prepare Manufacturing Company for Industry 4.0
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