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What are we going to do about AI and what’s it going to do about us? Workers and automation: Recommendations (2/2)

You may have noticed that the Script Writers Union and the Screen Actors’ guild of America are on strike [1]. Part of this is their fear that movie producers will be able to replace both with generative AI and Avatars. We used to assume that AI would only take away the repetitive jobs, leading to the value of human endeavour being directed towards the arts and other creative pursuits.

Well, it seems the poets, artists, musicians and videographers are all getting worried about their jobs now too as AI starts to sweep arts competitions [2] and make music in their name [3]. It feels similar to the time that the RCA A&R man looked suspiciously at Spotify before being handed his P45.  

So unlike the lawyers in the previous post who fear that they will no longer be able to “exploit” their juniors to direct concentrated wealth to the partners, the actors and screenwriters fear the opposite – that producers will be able to capture the value because their unique-style and star status lets them earn more than their peers. Two opposite sides of the same coin.

Will this mean we see actors’ sometimes enormous fees also follow a race-to-the-bottom cost curve as those who license their likeness [4] start to suck up the jobs by undercutting the competition (box-office stardom as a passive income stream, anyone)?  We are also seeing large companies like Google [5], Microsoft [6] and Adobe [7] incorporate elements of generative AI into the tools they release. These are no longer esoteric features embedded in the tools used by the professionals who sell creative output; a process that we might call creative-disintermediation. It will do for your graphic designer what Amazon did for your book shop. 

What can you do about this? Well you can’t stop it. Trying will be a bit of a King Canute moment we think. So: 

– Many businesses should try to use GenAI tools to cut costs rapidly in the creation of content. This could include adding more creative content and personal touches to customer interactions; 

– Don’t rely on overcharging for repetitive work. This is likely to be a losing proposition going forward and you should expect juniors undertaking repeatable processes to find ways to automate them (extra warning: here be startups); 

– The apprenticeship model and the assumptions of the elapsed period to become “time served” may change. This might lead to difficulty in hiring junior staff and large lateral career moves that are currently impossible within a normal working life-time; 

– Until AI is “proven in battle” there will be a risk-mitigation premium attached to reassurance from trusted advisors – after all, investment banking still charges a premium; and

– The power of human networks, families, friends and fashionistas will still drive the distribution of power (and wealth) in non-economically rational ways.

[1] https://www.theguardian.com/culture/2023/jul/15/actors-writer-strike-stop-hollywood-what-movies-tv

[2] https://www.nytimes.com/2022/09/02/technology/ai-artificial-intelligence-artists.html

[3] AllttA – Savages (YouTube)

[4] https://uk.news.yahoo.com/michael-douglas-plans-license-name-121838765.html

[5] https://workspace.google.com/solutions/ai/

[6] https://blogs.microsoft.com/blog/2023/03/16/introducing-microsoft-365-copilot-your-copilot-for-work/

[7] https://www.adobe.com/uk/sensei/generative-ai.html

What are we going to do about AI and what’s it going to do about us? Workers and automation (1/2)

With great power comes great unemployment. Or at least, that’s the fear that many have, especially with every new report from a bank [1] or tech company [2], making headlines for predicting the hundreds of millions of jobs that will be lost to automation.

During discussion, our members had mixed views. First, they concluded that the ability of AI to codify skills and then transmit that information far and wide would mean that “know-how” would be rapidly distributed across the globe. But crucially, this isn’t just the spread of familiar ‘know-how’ of the sort we’ve come to use every day, like books, courses and how-to YouTube videos, but also ’know-do’. That might mean packaging years of deep human expertise into an algorithm and then throwing the software into the field to help humans make difficult decisions, or sometimes making decisions for them.

Interpreting patient CT scans is a perfect example. Research teams across the world [3,4,5] are helping to develop algorithms that can spot the signs of cancer more accurately, more consistently and earlier than doctors and other healthcare practitioners working unassisted. And this means earlier, more targeted and effective treatments can be provided, improving patient outcomes and making better use of hospital resources, whilst general-purpose medical assistants accepting mixed data inputs are not far behind [6].

This is great news for both advanced hospitals in developed countries as well as less fortunate areas. Advances like these help to rapidly level the playing field from a healthcare standpoint, increase overall capacity and fill skills gaps in the workforce (and do them faster and more accurately), and ultimately drive down costs.

While this will sound like be good news if you are sick, or buying services, it’s rather less good if you were the person that used to do the job. There is a well-rehearsed argument that this will free up people from menial tasks and provide them with more fulfilling roles. Inter-generationally this might be true, but if you’re a 50 year old radiologist you’re probably a bit miffed at the prospect.

The network members also pointed out that there is a succession and apprenticeship problem. Many of the skilled workers at the pinnacle of their careers – the ones freed up from the menial tasks mentioned above – got that way by working their way up through a system. The repetitive work forms the basis of the training. Not only that, there will be a problem with the vesting process in, say, a legal firm. The monetary benefits of employing large numbers of trainees at low cost and charging out their time at full rates (so you can reap the profit) may be a model open to destructive competitive forces unleashed by AI.

Meaning, we may start to see the pyramids crumble.

Sources

[1] https://www.goldmansachs.com/intelligence/pages/generative-ai-could-raise-global-gdp-by-7-percent.html 

[2] https://arxiv.org/abs/2303.10130 

[3] https://www.royalmarsden.nhs.uk/news-and-events/news/ai-could-help-doctors-diagnose-lung-cancer-earlier

[4] https://ascopubs.org/doi/full/10.1200/JCO.22.01345

[5] https://www.fiercebiotech.com/medtech/google-s-cancer-spotting-ai-outperforms-radiologists-reading-lung-ct-scans 

[6] https://www.linkedin.com/posts/vivek-natarajan-a3670118_medicine-is-a-multimodal-discipline-absolutely-activity-7090202293710557184-Vtie/

What are we going to do about AI and what’s it going to do about us?

What are we going to do about AI?  It’s all over the press and I wouldn’t be surprised if ChatGPT is named the New York Times person of the year. ChatGPT, however, is far more modest. When asked to predict who might be named, it doesn’t speculate much, and instead reminds me of Capt. Kirk asking Dr. Spok a cheeky question about kissing Lt. Uhura: 

“As an AI language model, I don’t have the ability to predict or determine who will be named the New York Times Person of the Year for 2023 or any other year. The selection process for the Person of the Year is conducted by the editorial staff of the New York Times, and it typically recognizes individuals or groups who have had a significant impact, influence, or prominence during the year.

While AI and technology have the potential to shape and influence society in various ways, it is difficult to speculate on the specific likelihood of ChatGPT being chosen as the New York Times Person of the Year. Factors such as societal impact, cultural relevance, and the achievements of individuals or groups involved in AI development and application would likely be considered in the selection process. Ultimately, it would be up to the New York Times to decide who they believe deserves the title for that particular year.” 

Despite me trying to ignore AI and thinking that it was all just a bit of a new name for regression analysis, I have been quite shocked at how clever the generative results appear to be. So in Q2, after finally accepting we might be part of the ‘99% of people who are using ChatGPT all wrong’, we decided to ask a number of members of the Bestem Network to consider what the implications of AI could be and what the heck we can do to prepare.  The conclusion was that we should consider five areas in the immediate future: 

  • The impact of AI on industries and their workers; 
  • The interplay between climate change and AI; 
  • The implications for cybersecurity as AI becomes more important;  
  • AI and the battle for truth; and 
  • The impact of AI on wider society. 

Over the next few weeks we will publish four posts summarising our findings. Without spoiling the surprise, whilst humanity has faced plenty of disruptive phase shifts in the past, from ice ages to plagues and empires collapsing, it looks increasingly like this one could determine our long-term future. And to make it work, we’re also going to need to invent a whole new level of international collaboration, one that makes our existing nuclear proliferation treaties look amateur. 

2020 closing thoughts

Well what a year it’s been. I have been spending a lot of time at home this year and the Bestem Network members have not been able to meet for most of this year which is unfortunate. Interestingly I dug out last year’s notes from the dinner (link) and they tell an interesting tale of how we were thinking then.

This year the network came together virtually to share experiences at the start of the pandemic. We kept up this approach and, with network members at AGM Transitions, we turned this into a book (link). It’s been a year of finding new ways to do business.

Did you build resilience?

Those that listened to Capt. Mike Paterson’s talk at the network dinner in 2015 (before Trump and before Brexit) might recall his sage advice:

Change is happening faster than ever fueled by: high-speed communications; close trade links; and cross-border
investment. Rising inequality, climate change and cyber-development combine with politically/ideologically motivated ‘real’ and ‘Maskirovka’ type conflict. With increased change comes increased risk and, whilst we are accomplished at compiling risk registers, scenario planning better helps us to understand and to respond quickly.


Business leaders must ask: How do we build resilience? How to make risk based decisions to drive behaviours?

Read the whole report here

Business has been changing for a while

About seven years ago I started to sense that traditional business approaches weren’t working as they used to. I started to investigate what might be going on and uncovered work by people far smarter than me. They were starting to conclude that society was heading for a 4th Industrial revolution. I wrote about some of my influences in this post which I published almost 5 years ago. https://bestemnetwork.com/2016/03/29/innovation-and-productivity-with-4th-industrial-revolution/

At that time, I was a Non-Exec director on the board of an oil and gas technology company. I guided the excutives to pivot part of that company and pursue oilfield digitalisation. This included a mail-out to COO’s of oil companies setting out the case for digitalisation by assembling the works of leading writers. I urged them to make the case that it was too important to be something led by IT. This was now to become the backbone of an operational transformation.

I recall there was division among the owners of this company, I was almost laughed out of the room by one who, despite the evidence, was unable to acknowledge that the world would change and was convinced there was no such thing as digitalisation in the oil field. His view was that IT should remain in charge of anything computers and leave operations to operations people. It was not an isolated view in the industry.

My post on digital disruption of the oil and gas industry (link) from three years ago was this year’s most-read post on the blog, with hundreds of visitors each week. When I published it, it seemed no-one was interested.

The case for flexible innovation

After covid, perhaps the case has been made for investing in flexibility and contingency (as advocated by Capt. Paterson) even if the business case is based on a balance of probabilities and not a black-and-white P&L. I urge you not to be so stuck in the present and the current “rules of the game” that you believe the future will not be radically different. It may.

Perhaps look at the wise words of Patrick von Pattay from 2017. (Pattrick has been the hero of the year for his company.)

Just because we have not yet identified the potential disruption does not mean to me that there cannot be any. It just means that we haven’t thought hard enough. If it were an obvious change then it wouldn’t be so disruptive as we’d all have the ability to respond. A disruptive threat, by its very nature, is likely to come from left field.

https://bestemnetwork.com/2017/11/27/interview-with-patrick-von-pattay/

To me it’s clear we are heading along a 4th Industrial Revolution path. It is a transition and, as with all transitions, it will take longer to get where we are going than we expect, but we will go a lot further than we can imagine.

What will happen in 2021?

COVID-19. First, we scrambled to keep going, waiting for things to return to normal. Then we started to talk about the New Normal, and The Great Reset. People talk about this year accelerating change. I don’t think that captures it. It makes it sound like we’ve just gone a bit faster along a normal path. We’ve seen step changes, fleeting moments of opportunity grabbed, and old models fail.

I am putting together a post for the new year highlighting some of the trends that the network is telling me about. I think these will play out well in the coming period for those that take the heading from the course they set . It will be a jouney of rapid discovery, the answers are not final even if the direction is clear.

Overall though, it’s obvious that to be successful we will all need to innovate and to try new products, services, customers, partners and ways of working – no one has this covered yet, but some people are finding new and interesting ways to respond to the changing world.

You could wait and see if you finally get the opportunity to try the 2020 strategy you made last year – or you can get up, shake off the dust, scratch your head and figure out a way to commercialise the innovations that your team have been making.

For a hint of the changes to come, have a read of this post from 2019: https://bestemnetwork.com/2019/06/17/london-tech-week/

The future is coming, how you choose to prepare and respond is up to you. The choice is yours.

Responding to the Crisis: Leader’s Handbooks

What should we be doing right now?

It’s an economic emergency. Every company is having to rethink what they do and how they operate. Together with AGM Transitions we’ve asked our networks to share their recent experiences. We’ve written three guides:

COVID – Responding to the crisis – Leaders Handbook

COVID – The Transformation Handbook

COVID – Remote Working Handbook

What happened?

Since I published my post on March 9th the world turned upside down. Covid-19 is a “big one”, certainly when considering the economic impact of the measures taken to stop its spread.

Couple that with the shocks to both supply and demand in the oil world and members of the Bestem Network have been left slightly shell shocked.

What will happen next?

We are starting to understand where we are – but we’re battling to understand where we will need to go.

As Gordon Ballard said in the FT on Saturday: “In the past, activity decreased then picked up again — each time, we saw it come back,” he said. “Now it’s not entirely clear if things just come back as normal. Everything has changed.” [Link]

For some context however I should point out that even with 30% drop in oil demand we are now only at the level that was normal in 1996 [Link]

What have I been up to?

Alongside my hour’s cycling, home cooking, housework and playing with electronics:

  • Looking after my clients
  • Contributing my skills to my community to innovate systems to support neighbours in need; and
  • Working out what we have to do to come out of this ready for the next phase.

Stay Safe, together we will get through this.

 

Spreadsheets are so 2008!

VisiCalc – the first spreadsheet https://en.wikipedia.org/wiki/VisiCalc

A few weeks ago, at a talk I was giving at a Finding Petroleum conference (link), I quipped that the Oil and Gas industry has been run on spreadsheets for over 30 years. Someone in the audience joked back during the questions afterwards that I wasn’t quite right, it was actually Powerpoint! They had a point, but here’s the reason I think spreadsheets have been the reason for the 20 years of progress between 1980 and 2000 and why they are not the right tool for the next revolution*.

Here is a chart of the FTSE 100 index between 1978 and 2017.

There was a period of about 20 years of near exponential growth between 1980 and 2000. I think there is a strong case to be made that this was thanks to the arrival of the spreadsheet. The first spreadsheet, VisiCalc, was released on the Apple platform in 1979. The first version of Excel came out in 1985 but it wasn’t until the release of Windows 3.1 in 1992 that things really took off.

So why are they responsible for this growth?

Because now we had a tool that allowed us to do much more complex analysis of things. Everyone could build their own model of the world in a spreadsheet and optimise it. Goal Seek let us “solve for X”. Now we could model the past and use it to predict the future – hooray, and off we merrily went. We got really good at planning and offline analysis and developed a centralised Command and Control approach:

  • We better modelled and understood what was happening
  • Data was sent back for offline analysis & understanding
  • Then we sent the instructions back

That was great, but I believe this way of working came to an end with the Dotcom crash in March 2000, 19 years ago today as I write this. The spreadsheets had got too big and our faith in the models we built was misplaced. It’s easy to make errors in formulas but is is very difficult to audit a spreadsheet someone else has built.  Complex spreadsheets make it look like we know what’s going on, and the person with the most convincing argument (best spreadsheet) at the time wins. But it doesn’t mean the answer on the spreadsheet is what will actually happen!  

Every model comes with implicit assumptions and what is not in the model is just as important as what is.

The world has changed. There is now a distrust of centralised decision making and a rebellion against command and control.

Spreadsheets are a great tool and will always be around, but I think we need to change our thinking in order to advance again. We need to move away from the old command and control style. 

We must recognise that we don’t actually know the future and we can’t define exactly what we want/need up front.

We must recognise that we don’t actually know the future and we can’t define exactly what we want or need up front. We have to take small steps, get knowledge, fail fast and learn quickly.

Oh, and why did I pick 2008? Well that was the financial crisis caused by a lot of people doing stuff based on models (most probably on spreadsheets) that they didn’t actually understand.

——

* This is based on a presentation I wrote with Gareth Davies in 2017 and presented at the Digital Energy forum in Aberdeen on 14-March (link).

BAgain

BA has had another IT disaster, it appears to be becoming a habit.

Quote from today’s FT

Neither the customer emails nor the airline’s public statements to date have offered any explanation for how BA managed to lose such vital information. Some critics of the airline have asked whether its parent IAG has focused too much on cost-cutting and failed to invest sufficiently in technology. This is its second big problem in two years — last May, BA’s global IT system crashed grounding more than 700 flights and leaving 75,000 passengers stranded. To be fair, the two problems are almost certainly unrelated except as part of a general window into BA’s IT. An airline spokesman insisted, “This was a sophisticated criminal act. We are investing more in cyber security than ever before and will continue to do so.”

The article can be found here: https://www.ft.com/content/a301f46a-b4df-11e8-bbc3-ccd7de085ffe

Just as a reminder, here are the pieces that I published last year [link] [link]

The fourth industrial revolution demands investment in information technology in order to reap the benefits of efficiency, BA has been trying to cost-cut its way to success. It will be left behind if it doesn’t get with the programme.

Image credit: https://edition.cnn.com/videos/travel/2015/09/08/las-vegas-british-airways-plane-catches-fire-hampton-beeper-erin.cnn

 

 

BA – Blinking Awful?

I haven’t posted for a while as I’ve been very busy working with clients on industry 4 projects, but the recent IT outage for British Airways (BA) requires a response. (for more information on the BA IT outage follow this [link])

In August 2016, I examined the cost of the IT outage to DELTA airlines [link]. I calculated that this must have cost DELTA at least $60m [correction:  with related costs the post says it would be $100m]. In the wake of the BA story the FT published an article over the weekend [link] looking at the top 5 IT outages. They tell us that DELTA believed that it cost them at least $100m.

We’ll wait and see what effect that BA outage has on their revenues – but IAG (the owner for BA) declared a profit of about £2Bln for 2016, so there is a chance that this will have the possibility to knock 10% off the earnings for 2017.

Now – in an eerily similar set of circumstances to Delta – the company had recently outsourced their IT and they experienced a “power surge” and the back-up system didn’t work.

The following seem likely to me:

  1. The digitisation of business has happened and is accelerating, IT systems are not peripheral to operations they are now crucial.
  2. The creation, management and care of these systems are critical, but it appears that there is no-one on the senior leadership team who is on the case.
  3. The focus on “business cases” for IT investment don’t consider the transformation of current business operations, nor the risk of “not investing”

This posts talks about the need to prepare non-linear business cases [link].

The Oil and Gas industry (and others) are becoming rapidly digitised and will require different investment decisions around IT. It is no longer appropriate to concentrate on cutting costs, driving standardisation and outsourcing the activities. In operations “IT” is now critical to business success. This means good investment decisions drive competitive advantage and loss of IT capability can cripple the business.

Business-case for non-linear world

I wrote recently about the Delta data meltdown and how the investment in technology had not been made sensibly. I’ve seen this in a number of organisations – where status-quo seems cheaper than updating. It’s an argument that would not be made for safety or passenger comforts but appears to be OK for back-office IT systems.

The world has moved on and it now relies on data as a core asset and capability. With the 4th industrial revolution this is only going to become more reliant on data and understanding how to make risk-based investment decisions will be key.

InfoWorld report that Cloud technologies could have made even a traditional business-case work [Link]

Here is my post about DELTA [Link]

This is what Delta’s CEO had to say [Link]:

“it’s not clear the priorities in our investment have been in the right place. It has caused us to ask a lot of questions which candidly we don’t have a lot of answers for.”

 

New industrial revolution

Bill gates was quoted in Forbes today predicting a new industrial revolution. [link]. This is in his review of Robert Gordon’s new book. I agree with Bill and if you’d like to know more about the Robert Gordon (old school, grey hair, suit and tie – 1945-1980 view of business) and the post-internet view of progress have a read of my primer here [link].

Bill gates points out three key examples as Robotics, A cure for Alzheimers and Material science. I like the way he boils it down so simply. I was influenced by books in my youth including Alvin Toffler’s future shock which I read 30 years ago, it was already a classic then [link] (Poor Alvin died last month), books by Robert Beckman [link],  Edward de Bono[Link] and James Dale Davidson [Link].

I think there are two books that anyone should read if they want to prepare for the next big trends:

Industries of the Future, Alex Ross [Link]

Second Machine Age, Brynjolfsson & McAfee [Link]

Image by Kyle Bean