Amongst a number of proponents of the concept of “Waves of Innovation” one finds a number of Marxist and Soviet economists and thinkers. One of these is the Soviet economist Nikolai Kondratieff, who was the first to bring these observations to international attention in his book ‘Major Economic Cycles’ (1925), alongside other works written in the same decade.
Since the early part of last century, technological progress has marched forward at sharp rate, albeit with the so called “waves” coming hard and fast as a north easterly storm on the coast. After a surge in innovation in the field of information technology dating back to the 1970s, with the emergence of the first “personal” device – the PC and stretching well into the early years of this century, we seem poised on what could become a very big wave. Some economists have posited the idea that we are about to embark on the “Fourth Industrial Revolution”.
Personally, I don’t think it will be just an industrial one, but will have huge long term societal impact and implications.
I am referring to the rise of Artificial Intelligence (AI). For the past few decades of wide scale diffusion of information technology, companies invested in automating routine and repetitive tasks. In the past two decades, as market access has been liberalised and globalisation has facilitated free trade, businesses have found themselves competing on an international scale often with companies far larger than them. This drove companies to think how they could “globalise” cost efficiently by taking to the online world and differentiating on customer service with a strong degree of personalisation. This latter trend has driven the CRM (customer relationship management) wave and continues to do so today.
Fundamentally though, many companies have not undergone the transformation which may be required, to see them survive, as the Fourth Industrial Revolution begins. Largely, for companies it has been a case of bolting on “band-aid” type of technology investments.
Will this be enough as the dawn of the age of AI glimmers in the distance?
AI has been with us for a long time. Alan Turing, the father of computing, dreamt of a thinking or intelligent machine. AI was already an active area of research in the 1960s and by the 1980s was an area of considerable academic interest, but still very much not in the mainstream of what was going on in the industry.
Over time a number of developments, independently brought about the ingredients: ever powerful computer processors and miniaturisation led to a situation that today most of us, carry around a considerable amount of computing power in our pockets and on our wrists.
The widespread deployment of networks and bandwidth followed by the huge growth in available data sets in the public domain put in place some of the final missing parts of the puzzle for AI. Combining all these elements with “learning” algorithms (also commonly referred to as deep learning AI) brought about situations that these voracious programmes are enabling computers to handle far more complex and non-routine tasks.
The standard mantra that technological change would indeed destroy some jobs but in the process create new ones higher up the skill chain is very likely to break.
The writing is on the wall; reports of financial institutions going completely virtual are NOT vastly exaggerated. Whether blue collar or white collar – AI is colour blind in this respect.
So in business terms, this is leading to a new “arms race”. This is not the incremental improvement that most companies are used to making. Also, in a rare paradox, by combing big data and deep learning, AI threatens many technology companies themselves.
What does it mean for you as a business leader/owner?
First off, choose wisely! I am referring to the selection of who you choose to partner with in terms of your plans to prepare for the Fourth Industrial Revolution.
You ought to be looking at the long term and seeing how to leverage tech/change experts in areas which you most probably don’t have in-house. You ought to be focusing less on buying a product – than on choosing to work with someone with the right vision and strategy in terms of where they are going with their own business.
A good sign of being in discussion with the right sort of partner, is if they have their own survival strategy for this new age.
You need to have access to people who have more than just technical prowess – ideally they have the right mix of approach, experience as well as technology with an acute understanding of how to graft emerging tech with business.
Once you’ve made a choice of strategic partner, you have to work hard on the relationship. The traditional arm’s length of supplier / customer will not stand the test. Build close relationships and virtual teams which span your collective human capital. This also means you need to have the right people on your side of the table – managers need to be savvy, risk takers and ideally with a visionary streak too – but they also crucially need to be team players.
This is a tall order, I know. Some of what I have proposed may not sit comfortably with our culture of not trusting “outsiders” with the intimate nature of our business. But do you have a choice? Either hire everyone you think you need or watch paralysed the wave as it comes gradually towards your shore.