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AC­CEN­TURE CTO PAUL DAUGHERTY, AND HEAD OF IT AND IN­NO­VA­TION JIM WIL­SON, DIS­CUSS WHY AI ISN’T THE FIRST TIME BUSI­NESSES HAVE HAD TO FACE WIDESCALE CHANGE

IN THEIR NEW BOOK, HU­MAN+MA­CHINE, AC­CEN­TURE’S TOP TECH­NOL­OGY MINDS SAY THE EMER­GENCE OF AI ISN’T THE FIRST WIDE­SPREAD TRANS­FOR­MA­TIVE EVENT THE WORLD OF BUSI­NESS IS HAV­ING TO FACE. IN FACT, IT’S THE THIRD IN JUST OVER 100 YEARS

The key to un­der­stand­ing the AI’s cur­rent and fu­ture im­pact is its trans­for­ma­tion of busi­ness pro­cesses.

A wide­spread mis­con­cep­tion is that AI sys­tems, in­clud­ing ad­vanced ro­bot­ics and dig­i­tal bots, will grad­u­ally re­place hu­mans in one in­dus­try af­ter an­other. Self-driv­ing ve­hi­cles, for ex­am­ple, will one day re­place taxi, de­liv­ery, and truck driv­ers. That may be true for cer­tain jobs, but what we’ve found in our re­search is that, al­though AI can be de­ployed to au­to­mate cer­tain func­tions, the tech­nol­ogy’s greater power is com­ple­ment­ing and aug­ment­ing hu­man ca­pa­bil­i­ties.

In claims pro­cess­ing, for ex­am­ple, AI isn’t re­plac­ing the need for hu­mans; in­stead, it’s do­ing the te­dious grant work, col­lect­ing data and do­ing a pre­lim­i­nary anal­y­sis, free­ing hu­man claim pro­ces­sors to fo­cus on re­solv­ing com­plex cases. In essence, ma­chines are do­ing what they do best; per­form­ing repet­i­tive tasks, analysing huge data sets, and han­dling rou­tine cases. And hu­mans are do­ing what they do best; re­solv­ing am­bigu­ous in­for­ma­tion, ex­er­cis­ing judg­ment in dif­fi­cult cases, and deal­ing with dis­sat­is­fied cus­tomers. The kind of emerg­ing sym­bio­sis be­tween man and ma­chine is un­lock­ing what we have called the third wave of busi­ness trans­for­ma­tion.

To see how we got here, it helps to un­der­stand some his­tor­i­cal con­text.

The first wave of busi­ness trans­for­ma­tion in­volved stan­dard­ised pro­cesses. This era was ush­ered in by Henry Ford, who de­con­structed the man­u­fac­ture of au­to­mo­biles so that they could be made on an as­sem­bly line. Each of these steps in that over­all process could then be mea­sured, op­ti­mised, and stan­dard­ised to achieve con­sid­er­able gains in ef­fi­cien­cies.

The sec­ond wave con­sisted of au­to­mated process. This era emerged in the 1970s and peaked in the 1990s with the busi­ness process reengi­neer­ing (BPR) move­ment, thanks to the ad­vances in the in­for­ma­tion tech­nol­ogy (IT): desk­top com­put­ers, large data bases, and soft­ware the au­to­mated var­i­ous back-of­fice tasks. Among other com­pa­nies, re­tail­ers like Wal­mart rode this wave to be­come world­wide pow­er­houses. Other firms were able to rein­vent them­selves. UPS, for ex­am­ple, trans­formed it­self from a pack­age-de­liv­ery ser­vice to a global lo­gis­tics com­pany.

Now, the third wave in­volves adap­tive pro­cesses. This third era, which builds on the pre­vi­ous two, will be more dra­matic than the ear­lier rev­o­lu­tions en­abled by as­sem­bly lines and dig­i­tal com­put­ers, and will usher in en­tirely new, in­no­va­tive ways of do­ing busi­ness. The lead­ing firms in many in­dus­tries are now reimag­in­ing their pro­cesses to be more flex­i­ble, faster, and adapt­able to the be­hav­iours, pref­er­ences, and need of their work­ers at a given mo­ment. This adap­tive ca­pa­bil­ity is be­ing driven by real-time data rather than by an a pri­ori se­quence of steps. The para­dox is that al­though these pro­cesses are not stan­dard­ised or rou­tine, they can re­peat­edly de­liver bet­ter out­comes. In fact, lead­ing or­gan­i­sa­tions have been able to bring to mar­ket in­di­vid­u­alised prod­ucts and ser­vices (as op­posed to the mass-pro­duced goods of the past), as well as de­liver prof­itable out­comes.

Think like Waze

To help il­lus­trate the pro­found dif­fer­ence be­tween the process think­ing and the new, con­sider the his­tory of GPS nav­i­ga­tion.

The first on­line maps were largely just a ver­sion of their pa­per coun­ter­parts. But soon, GPS nav­i­ga­tion de­vices changed how we used maps, giv­ing us di­rec­tions af­ter en­ter­ing a des­ti­na­tion. Even that, though, was still a fairly static process. Now, mo­bile map apps like Waze are tak­ing ad­van­tage of real-time user data-about driv­ers’ lo­ca­tions and speed and well as crowd-

sourced in­for­ma­tion about traf­fic jams, ac­ci­dents and other ob­struc­tions to cre­ate the per­fect map in real time. All that data en­ables the sys­tems to up­date di­rec­tions en­route so that, if nec­es­sary, it can reroute driv­ers mid­course to min­imise any pos­si­ble de­lays. Whereas the old ap­proach with GPS sim­ply digi­tised a static pa­per-map route, Waze has com­bined AI al­go­rithms and real-time data to cre­ate liv­ing, dy­namic, op­ti­mised maps that can get peo­ple to their des­ti­na­tions as quickly as pos­si­ble.

Busi­ness ap­proaches that use AI merely for au­tomat­ing ex­ist­ing static pro­cesses are like the early GPS nav­i­ga­tion de­vices, whereas the cur­rent era of sym­bio­sis col­lab­o­ra­tion be­tween hu­mans and ma­chines are like Waze in that those tra­di­tional pro­cesses are be­ing com­pletely reimag­ined.

Fill­ing the “Miss­ing Mid­dle”

Un­for­tu­nately, pop­u­lar cul­ture has long pro­moted a man-ver­sus-ma­chine view – think of movies such as 2001: A Space Odyssey and the Ter­mi­na­tor se­ries. The idea of in­tel­li­gent ma­chines as a po­ten­tial threat to mankind has a long his­tory and has re­sulted in many ex­ec­u­tives adopt­ing a some­what sim­i­lar per­spec­tive, think­ing ex­clu­sively of ma­chines as threat­en­ing to re­place hu­mans. But that view is not only woe­fully mis­guided, it’s also per­ni­ciously short­sighted.

The sim­ple truth is that ma­chines are not tak­ing over the world, nor are they ob­vi­at­ing the need for hu­mans in the work­place. In this cur­rent era of busi­ness process trans­for­ma­tion, AI sys­tems are not a whole­sale re­plac­ing us, rather, they are am­pli­fy­ing are skills and col­lab­o­rat­ing with us to achieve pro­duc­tiv­ity gains that have pre­vi­ously not been pos­si­ble.

The third wave has cre­ated a huge, dy­namic, and di­verse space in which hu­mans and ma­chines col­lab­o­rate to at­tain or­ders-of-mag­ni­tude in­creases in busi­ness per­for­mance. We call this the “miss­ing mid­dle” – “miss­ing” be­cause al­most no one talks about it, and only a small frac­tion of com­pa­nies are work­ing to fill this cru­cial gap (see the il­lus­tra­tion below).

In the miss­ing mid­dle, hu­mans work with smart ma­chines to ex­ploit what each party does best. Hu­mans, for ex­am­ple, are needed to de­velop, train, and man­age var­i­ous AI ap­pli­ca­tions. In do­ing so, they are en­abling those sys­tems to func­tion as true col­lab­o­ra­tive part­ners. For their part, ma­chines in the miss­ing mid­dle are help­ing peo­ple to punch above their weight, pro­vid­ing them with su­per hu­man ca­pa­bil­i­ties, such as the abil­ity to process and an­a­lyse co­pi­ous amounts of data from myr­iad sources in real time. Ma­chines are aug­ment­ing hu­man ca­pa­bil­i­ties.

In the miss­ing mid­dle, hu­mans and ma­chines aren’t ad­ver­saries, fight­ing for each other’s jobs. In­stead, they are sym­bi­otic part­ners, each push­ing the other to higher lev­els of per­for­mance. More­over, in the miss­ing mid­dle, com­pa­nies can reimag­ine their busi­ness pro­cesses to take ad­van­tage of col­lab­o­ra­tive teams of hu­mans work­ing along­side ma­chines. It’s not just dig­i­tal com­pa­nies that are ex­ploit­ing the miss­ing mid­dle. Rio Tinto, the global min­ing con­glom­er­ate, is a case in point. The com­pany is us­ing AI to man­age its vast fleet of ma­chin­ery – au­tonomous drills, ex­ca­va­tors, earth movers, and so on – from a cen­tral con­trol fa­cil­ity. This has freed hu­man op­er­ates from work­ing in dan­ger­ous min­ing con­di­tions and also en­abled Rio Tinto’s team of data anal­y­sis to an­a­lyse in­for­ma­tion from sen­sors on the re­mote equip­ment to un­cover valu­able in­sights for help­ing the firm man­age its fleet more ef­fi­ciently and safely.

Hu­man + Ma­chine: Reimag­in­ing Work in the Age of AI is co-au­thored by Paul Daugherty, Ac­cen­ture’s chief tech­nol­ogy & in­no­va­tion of­fi­cer, and Jim Wil­son, man­ag­ing di­rec­tor of in­for­ma­tion tech­nol­ogy and busi­ness re­search at Ac­cen­ture Re­search

“THE FIRST WAVE OF BUSI­NESS TRANS­FOR­MA­TION IN­VOLVED STAN­DARD­ISED PRO­CESSES. THIS ERA WAS USH­ERED IN BY HENRY FORD, WHO DE­CON­STRUCTED THE MAN­U­FAC­TURE OF AU­TO­MO­BILES SO THAT THEY COULD BE MADE ON AN AS­SEM­BLY LINE”

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