An explosion of disruption

Machine learning and digital disruption is exploding all around us. And it’s already being deployed at a business near you. 

The AI Day 2018 in March highlighted “the phenomenal advances in AI and the explosion of machine learning that is seeing AI technologies move beyond experimentation to be leveraged for practical applications in every domain,” according to AI Forum New Zealand’s Ben Reid in the lead up to the event.

“From Siri, Cortana and Google Assistant on your smartphone to the intelligent computer vision that enables Amazon’s new cashierless grocery stores, there are plenty of examples of AI making our lives easier and more productive,” he said.

One example of AI that stood out at the forum was Microsoft’s new ‘Seeing AI’ which is enabling people with low vision to hear information about the world around them.

Microsoft laid out how the app demonstrates the potential for AI to empower people with disabilities by capturing images of the users’ surroundings and describing what is happening. It can read signs and menus to the user, recognise products through barcodes, interprete handwriting, count currency and describe scenes in the vicinity.

So with this type of technology emerging at breakneck speed, how are organisations grappling with its onslaught?

A global report by Accenture, the Disruptability Index Report, says that companies are spending increasing amounts of money each year trying to drive disruption (rather than end up its victim) by identifying the next big market breakthrough.

The research found that more than 40 percent of companies across 20 industries are highly susceptible to future disruption.

However, Accenture says there is nothing to fear if you can get under the surface of disruption.

What disruptors are really doing when they upend industries is “releasing new forms of value, value that was ready to be unlocked as a result of technological progress, combined with other external changes.”

Accenture says that once you dissect disruption into its key components, you can understand and address its risks with confidence and that it’s not impossible to predict as it follows an understandable pattern. “The starting point for business leaders is to understand where in this pattern their industry is positioned, and why that is the case.

“Next, they must gauge the likely speed of change by measuring how susceptible their industry is to future disruption. 

“By understanding the intersection between the current level of disruption and susceptibility to future disruption, leaders can predict where opportunities will come from for their business,” the report says (see Accenture.com).

And it’s certainly beginning to be addressed at Government level in New Zealand, too. The May Budget saw Finance Minister Grant Robertson announce an inquiry that the Productivity Commission will undertake on techno-logical change, disruption and the future of work. 

At the leadership level there’s a growing understanding of what digital disruption and AI might mean for business. 

The fourth Directors’ Risk Survey Report by Marsh and the Institute of Directors in May noted that cyber risk was now seen as the number one external risk and the number one emerging risk.

That report highlights that in addition to cyber, businesses are now faced with a new array of emerging risks from disruptive technologies. “Artificial intelligence, blockchain and robotics are all set to interrupt and/or revolutionise the way we do things… these innovations bring with them a new set of risks from a governance and societal perspective.

“In fact, the 2018 World Economic Forum Global Risks Report highlighted the need to manage this technological change saying that the ‘speed of disruption is destabilising’, with artificial intelligence in particular presenting risks based on its decision-making powers with security and safety consequences,” the report says.

Kirsten Patterson, CEO at the Institute of Directors, told Management that the risk survey highlights that cyber risks are top of mind for directors, although only 30 percent of directors say their company has effective plans in place to deal with a cyber breach.

In turn, an IoD Director Sentiment Survey last year, which involved 934 of its members, found that just 30 percent felt their board had the right digital capability to lead their organisation into a digital future, which was a decline on a year earlier. Patterson believes this decline shows greater awareness amongst directors of the depth of the issues involved and hence they feel less confident in their own knowledge.

Disruptive technology also means more concern around supply chain risk and with so many SMEs, who are perhaps not fully cyber-capable, in some supply chains this can mean the risks are greater. 

She also points to an emerging trend for greater cyber transparency in any supply chain. Offshore there have been examples of organisations with good cyber protection but their processes were foiled by someone else in the supply chain allowing access to their systems.

These issues were highlighted at the National Association of Corporate Directors’ Global Cyber Forum which she attended in April, where it became clear that the time of greatest cyber risk is around mergers and acquisitions. 

But do directors and leaders really understand disruption and the risks involved in any business? Patterson says what they are seeing coming through in their Director Sentiment Report means directors have identified the breadth and depth of the issue and that it’s top of mind around every boardroom. “Hardly any organisation is not being impacted by this. Not that long ago the discussion was around whether to have a web presence and the discussion now is all about AI.” Directors are having to upskill and lead at a time when the technology is moving at an exponential rate.

“All directors should be curious and digitally connected to be able to keep up, challenge and ask questions – you don’t need coding experience to do that. But you need to be able to ask intelligent questions – the skill is being able to distill and translate between organisations. 

“People worry about directors being on too many boards, but I worry about too few. The best directors are curating information and sharing that across different boards.” 

She says one of the concerns for New Zealand around AI is whether we are keeping up with developments from external international providers.

“In the board room how do we set the boundaries around how AI is used. How do we protect around an issue that is coming at a faster and faster rate?

“The big challenge with AI is that we are regulating for tomorrow and it traverses all countries. How do we ensure AI developments globally, that come into the country from offshore is within some framework that is acceptable to us?”   M

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