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Montrose Journal Winter 17
MAKING THE RIGHT CHOICE TO DELIVER TECHNOLOGY’S PROMISE -PHILIP DELVES BROUGHTON
One evening this autumn, a friend parked his new Tesla Model X on his front lawn and we sat back with our children to watch the show. With a click on his remote, the windows slid down, music started pumping out the stereo and the car began to dance. The lights flicked on and off, the falcon wing doors flapped up and down and for several minutes we stared at our electric powered, self-driving friend strut its stuff.
Earlier, we had been for a drive around the narrow country lanes of Northwest Connecticut or rather let the car drive, effortlessly zooming around tight bends, braking for Stop signs while I loomed over the steering wheel waiting to be summoned into action. I never was.
Shortly before Thanksgiving, I spoke to a friend who has dealt with cancer who told me euphorically of the genetic work-up being done on his tumour biopsy, which might lead to an immunotherapy treatment in the years to come.
These long-anticipated revolutions in transport, energy and medicine are no longer the stuff of the future. They are here. And they are accelerating.
Barely had I recovered from my Tesla disco experience than Elon Musk, Tesla’s founder, was introducing his company’s first truck. Long-haul trucking is an obvious target for electric transport. A multi-truck fleet can be sent on its way, stopping fewer times, and with a lower risk of sleep-deprived drivers veering across lanes of traffic. There is a two-part debate about the benefits of all this change. The first part is purely economic. Academics like Robert Gordon of Northwestern University argue it’s all hype, nothing compared to the last industrial revolution, which gave us electricity, cars and planes. Labour productivity in the first world is growing at a slower pace than any time since 1950. Google, Apple and Facebook are producing interesting gizmos, but not fundamental change.
The counter to this is that we’re just getting to the real change. Huge industries are now being upended in profound ways. Self-driving cars, which are imminent, are going to yield huge productivity gains. Last New Year’s Eve, over 2 million people were staying in an AirBnB rental, that’s twice the entire capacity of the world’s largest hotel chain, Marriott-Starwood.
The rise of cloud computing, driven by companies like Amazon, Microsoft and Google is transforming our capacity to store and crunch through data. This is already making shopping more personal, and soon it will have a profound effect on everything from our medical treatment to how we are taxed and served by government. It is also going to offer new ways for every industry to be more productive, as more paperwork is eliminated and basic managerial processes become more streamlined.
Vivek Wadhwa, a professor at Tufts University and author of the recent book “The Driver in the Driverless Car: How Our Technology Choices Will Create the Future”, writes: “Not long ago, Facebook was a dorm-room dating site, mobile phones were for the ultra-rich, drones were multimillion-dollar war machines, and supercomputers were for secret government research. Today, hobbyists can build drones, and poor villagers in India access Facebook accounts on smartphones that have more computing power than supercomputers of yesteryear.”
The second part of the debate about technological change deals with its morality, and hinges on our use of artificial intelligence. Musk has called AI a “fundamental risk to the existence of human civilisation” and a more likely cause of World War Three than North Korea. Stephen Hawking has said its emergence could be the “worst event in the history of our civilisation”. They fear intelligent robots, far more powerful than humans but without our morality.
On the other side are Bill Gates, who likes to call himself an “impatient optimist”, and Mark Zuckerberg. They see the potential for digital tools, including those driven by artificial intelligence, tofferadicate disease, improve education and expand the reach of financial services. Artificial intelligence and self-learning systems, in their view, are ways to improve our output per capita and expand our capabilities.
Satya Nadella, Microsoft’s CEO, insists that humans aren’t helpless in an AI world: “There are still a lot of design decisions that get made, even in a self- learning system, that humans can be accountable for,” he said recently. “Control is a choice. We should try to keep that control.”
A third way to think of this change is in terms of trust. Rachel Botsman, a visiting academic at Oxford’s Said Business School, and author of the new book “Who Can You Trust: How Technology Brought Us Together and Why It Might Drive Us Apart” argues that the real disruption these days is less about technology and more about trust.
When people lived in small communities, trust was local. Over time, we learned to trust institutions, governments and companies. Today, Botsman argues, trust has been distributed. We trust reviewers on Amazon more than consumer reports publications. We follow TripAdvisor comments instead of reading a Fodor’s guide. The downside of this is that we create social echo chambers in which we gravitate to the like-minded, rather than listen to the authoritative.
The upside, in theory at least, is transparency and inclusion. By examining people’s social trails, governments can become more personal in how they deliver services. Fintech start-ups can rate people’s credit-worthiness by their social media activity or how they use their phone. This is enabling millions of people in Africa and Latin America, previously excluded from the banking system, to access basic financial products. Ms. Botsman is also optimistic about the blockchain, or distributed ledger technology, which is designed to eliminate middlemen and make transactions of all kinds more visible and easily verifiable. This should speed up and drive down the cost of the sprawling and antiquated settlements process which underpins so much of the financial system. It should also streamline contracts and supply chains for all kinds of industries. The blockchain, in Ms Botsman’s opinion, is roughly where the internet was in 1993, with similar potential to enhance our productivity.
Another positive spin on this world of distributed trust comes from Mike Bloomberg. He has argued recently that in order to tackle major challenges like climate change, we don’t need to rely solely on our biggest institutions or our very highest levels of government. There is a lot that can be done by individuals, by companies and by city and local government. The falling cost of alternative sources of energy, for example, may have been catalysed by government incentives, but it has assumed its own momentum, driven by innovation and customer demand. Industrial efficiency, leading to lower emissions, serves the corporate bottom line as much as environmental goals.
There remain, of course, significant social issues. Automation will have an effect on jobs. In multiple industries around the world, robots are spreading rapidly through factories and warehouses, and even service industries like food and beverage. Global sales of robots rose by 18% in 2016. They are becoming more flexible and require less and less human supervision, as increasingly they can touch, feel, see and think.
Plenty of academics see this as nothing but social disaster. A 2013 study by Carl Frey and Michael Osborne of Oxford University predicted that in the next two decades, nearly half of jobs in the US could be replaced by robots and automated technology. Transportation, logistics, office management and production jobs will be the first to go. In less developed countries, it’s even worse. Last year, the World Bank predicted that around two-thirds of jobs in these countries could be replaced by machines.
Which begs the question, what will everyone do? Probably what they did during previous industrial revolutions: give up back-breaking, mind-numbing, life-shortening work in exchange for more comfortable ways to earn a living.
One of the most extraordinary phenomena of our age is the near unlimited sources of capital the biggest companies have to probe the future. Amazon, Google, Microsoft, Apple, Facebook all have billions of dollars at their disposal to find ways to improve the lives of their consumers. That doesn’t take into account venture capital money, corporate cash, or the falling cost of innovation courtesy of ever cheaper, and more powerful computer processing.
Nor does it reckon with the distribution of the world’s innovative and intellectual muscle. The answers to the first world’s problems are increasingly likely to come from Beijing or Bangalore these days as from the United States. There are now technology hubs in cities across Europe, from Oxford to Barcelona all developing locally flavoured engines for the commercialisation and dissemination of new products and services. The more these gain in economic influence, the more governments will adapt with policy and regulation that gives them the room to grow, without jeopardising already stable markets. The proliferation of fintech “sandboxes” where companies can experiment with new business models alongside the existing financial system is just one example of how this can work.
It comes back to Wadhwa’s image of the driver of the driverless car. Delivering on technology’s mighty promise today depends not on human’s abandoning themselves to its power, but making ever more sophisticated choices about how to modulate and guide it. If we get that right, then the pessimists will have to find something else to be gloomy about.
The writer, a managing director at Banco Santander, is author of ‘What They Teach You at Harvard Business School’.
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