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

NZ Business - - FROM THE EDITORS -

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 Ac­cen­

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 tech­no­log­i­cal 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?”

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