30 Aug 2018
Where is AI taking us?
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In the second part of our series on artificial intelligence and the impact of transformative technologies, Ed van der Sande, Managing Partner Odgers Berndtson Amsterdam and Head of the Tech & Services Practice, interviewed Elfried Klarenbeek, Co-founder of Harver and independent digital innovation strategist, about exponential technologies and how to navigate the digital revolution.
How is the digital revolution shaping our world?
We are currently in the midst of the third industrial revolution and on the cusp of a fourth. Each revolution has been caused by a major technological innovation so powerful it’s been able to change the whole of society. First, the steam engine, then electricity, then the microprocessor.
Now half of the earth’s population is online, and 36% of us have a smartphone through which we view the world. As a result, we increasingly demand that the companies we do business with meet us online too.
One thing is certain: the future will not be what we expect it to look like. We are not used to thinking in terms of exponential change. It is incomprehensible. As a result, many companies underestimate the impact of the digital revolution.
How is the corporate landscape evolving?
Everything that can be digitised is becoming digitised. This is what we call ‘digital transformation’. In addition, there is something called the ‘platform revolution’. This refers to the fact that the way companies relate to their clients is changing. Companies don’t just sell a product, they are platforms. They connect clients and suppliers.
Platforms nowadays have the ability to grow very fast. This is called ‘big bang adoption’. WhatsApp, with just 19 employees, grew into a US$1 billion business in just four years. This is the pace we are talking about. Look at Amazon, when a company secures a good position in the online market, it can become very dominant. In just five years, banks and oil producers have been dwarfed by these platform companies, which are now the largest in the world. This is the new normal.
Which digital innovations are you most excited about?
The growth in computing power is staggering. In 2010, you could buy you a computer with the knowledge of an insect for US$100. By 2023, you will be able to buy a computer with the capacity of a human brain for US$1,000. The iPhone 12 will have as much computing power as your brain has. By 2050, you will be able to buy a computer with as much computing power as all the people on earth put together, for US$1,000.
Google’s new AI taught itself how to play chess in four hours and after that, it was able to beat the world’s best chess computer. All that we know in the world about chess was learned and perfected in four hours!
How is this growth in computing power being applied?
A big trend at the moment is cognitive computing. IBM is taking this to the next level: its Watson supercomputer assimilates one million books per second. The next-generation Watson is called CELIA, which stands for Cognitive Environments Laboratory Intelligent Assistant. You can say, ‘perform an analysis of all potential takeover targets’ and CELIA will respond with something like, ‘these 80 companies would make good acquisitions, and here’s why.’ These kinds of questions used to take a team of people a month to answer. CELIA can do it in minutes. That level of computing power lends itself to all kinds of services and innovations.
There are now AI applications helping doctors, and the practice of law is being influenced by AI too. The world’s largest money management firm, Blackrock, has fired some of its traders in favour of AI for stock picking. Computers can win debating competitions. AI even sits on the board of a venture capital firm.
These are all things that were formerly thought of as very human endeavours. Within five years, all of the important decisions taken by a company will be supported by cognitive technologies. We already have companies that operate completely on algorithms without human input.
How are AI and other digital innovations interacting to create exponential technological transformation?
There are at least twenty digital domains that all affect one another. Artificial intelligence affects nanotechnology and biotech. Virtual reality enables us to use information derived from these other domains in new ways. Cloud computing, combined with AI, will speed up technological innovation. Robots will be able to learn something and then upload their learning to the cloud so that other robots can quickly assimilate that knowledge.
Personally, I think AI and blockchain technology have the most potential to transform our world. AI is crawling into everything. It is becoming like electricity. It will become integrated into more products and services without you even knowing that it’s there. And the transformative power of Blockchain, in my opinion, is really being underestimated, offering wholly new structures of business, transactions and ownership that have the potential to change the nature of how we do business entirely.
For example, you sell me bananas. If during transport, the temperature of these bananas gets below a certain threshold, then the price of our agreement changes. Using blockchain, all business transactions can be made flexible, depending on circumstances. Algorithms can be connected to it, and those algorithms can connect to the Internet of Things (IoT). Everything in the world has the potential to become transparent and measurable, and we can use that data to fuel further smart contracts.
This is starting to sound a bit like science fiction…
Elon Musk says that if we want to keep up with AI, we will need to add an extra layer of AI to our brains. His brain-AI interface prototype, Neuralink, is expected to be finished in four years. This may sound like science fiction, but if you had said ten years ago that there would be self-driving cars, everyone would have said you were crazy.
The next 1,000 start-ups will incorporate AI into existing business models and this will advance very quickly. Everything that can be disrupted will be disrupted.
Isn’t investing in technological innovation expensive?
Yes, but companies are making the investment because they see great potential.
For an extreme example, the Amazon Echo smart speaker, which integrates with Amazon’s intelligent personal assistant service Alexa, is not a big money maker, but Amazon has 5,000 people working on this technology. There are not many companies that are able to spend that much money on something that generates so little income.
Companies that spend heavily on these kinds of technological developments are creating a decisive lead for themselves in the digital revolution. In the future, they will be able to apply that technology to other products and services. It’s worth bearing in mind that Amazon’s goal is not to make the world a better place, it’s to achieve commercial success.
Should that worry us?
Some people are afraid of these developments and others say, ‘this is the best thing that ever happened to us’. I think both reactions are correct. You have to take both sides of the story into account. Those like Bill Gates and Microsoft that say AI gives us the keys to solve our biggest challenges, like climate change, or large ecological problems. Or the camp of Elon Musk and his kind. who say ‘AI, that’s a Pandora’s Box of problems, it can be weaponised’. That is what’s dualistic about this situation. That is what makes the leadership theme interesting because this demands of leaders and companies to make the right choices and take their own responsibility.
In general, I’m very positive about the future. I think we are going in the right direction.
Thank you, Elfried. You have painted a fascinating and, occasionally scary, vision of the future. Clearly this will have implications for leadership as we enter a world of intelligent machines and AI-powered decision-making. I look forward to hearing your views in the next part of this interview.
In the third and final article in this series, Ed van der Sande continues his conversation with Elfried Klarenbeek, co-founder of Harver and an independent digital innovation strategist, about digital transformation and leadership.
Read the first article of this series in which we asked Maarten de Ricke, Professor of Machine Technology at the University of Amsterdam, how exactly does AI learn and what can it already do better than us?