A few days ago, the first artwork made by an artificial intelligence (AI) program sold at Christie’s for €380,000. Judging from the auction price and media attention the blurry portrait of a man received, the first thought for many was that machines have mastered yet one more skill. Not only can they lift heavy loads, drill holes and beat humans at cerebral games like chess and Go – they have now made an incursion into the human realm of imagination and creation.

It is true that machines will take over ever more tasks currently performed by humans, and they will fundamentally influence the way we think, work, and live. At this point, it appears we are only one step away from Picasso or Einstein being rendered redundant, possibly replaced by Artificial Intelligence

But the truth is that even though machines can create, when they do, it is a pale imitation of human creativity. Let me explain.

The power of human imagination

No matter how fast and far technology advances, machines will always lack the imagination, creativity and judgement of humans. Human imagination produces images and ideas without any immediate input of the senses (or data). Human creativity uses complex cognitive processes yet to be fully understood (and thus hard to imitate). And human judgement is nuanced, not binary.

Humans have always sought answers to their questions solutions to their problems. Creation and innovation are the outcomes of this age-old process, in which humans have excelled. Innovation, which can be defined as a purpose-oriented creation, has played a key role in human evolution and our survival as a species. From flint arrowheads to sophisticated algorithms, our “problem-solving” ability has been used to the benefit of humanity. But because it is human, innovation is not a completely positive, error-free dynamic.

Many innovations in our history share a common duality: they represent enormous potential advancement on one hand, yet yet could just as easily destroy humanity on the other. Think of technologies based on fossil fuels or nuclear energy. That is why we need to apply another human innovation : ethics.

AI is the same – except that, for the first time, a technology seems to be encroaching on what was hitherto considered humanity’s exclusive domain of intellectual thinking and, ultimately, creation and innovation. For many, AI is thus a “Faustian bargain”, giving access to great power to something that puts the whole of humanity at risk. And yes, killer robots could engage targets with no human intervention. Yes, intelligent algorithms have the power to destroy many jobs. But this take on the technology fails to understand the complex and very ambivalent nature of innovation.

Personal AI – coming to your smartphone soon

I believe that AI will not only alter production processes and transform businesses models, but even more fundamentally, it will augment our daily lives. Ten years hence, it will be natural for us to carry our own portable AI. Embedded in a smartphone (or other hardware form), using a private cloud to integrate all relevant information, it will rapidly build a deep understanding of who we are, enabling it to provide us with tightly personalized services. Personal AI will simplify our lives in unimaginable ways, as electricity did in its day. It will be a trusted adviser and protector of our personal data. It will offer services that we really want and not the ones that advertising makes us want. And it will relieve us from many time-consuming tasks like searching, organizing and buying. By handling the “doing part”, portable AI will bequeath us time to spend on things we like, or tasks which require more human intelligence and concentration. Innovation, for instance.

The impact of AI on innovation will thus be twofold. As a powerful tool to analyze data, it will give a huge impetus to science and R&D. And as our personal portable companion, it will give us additional time – time to use our imagination, our creativity and our judgement. It is precisely these qualities of human intelligence that we need to apply today. To ensure AI enhances innovation in the best way possible, it is important to frame the innovation process itself. Our challenge is to find the right balance between tasks performed by machines and those performed by humans; to make clear what part humans stay out of and what part they stay involved in to ensure that they still hold the reins in future.

Five points to tame AI

To find this balance, we need to put five points on our AI agenda.

• First, promote its development. Like every successful technology, AI will thrive, mature and eventually become a commodity available to everyone. The faster this happens, the better.

• Second, regulate its development. We need to define powerful regulatory bodies to ensure AI develops to the benefit of humanity, not for a handful of companies.

• Third, accentuate the positive. The potential benefits of AI outweigh the risks by far, especially when we promote and regulate it well.

• Fourth, be innovative. There will be lots of new inventions to be made and implemented, particularly products and services linked to portable AI.

• And fifth, let’s call AI what it is supposed to be: human augmented intelligence. The term AI misleads by suggesting threatening scenarios of machine takeover and implying rivalry between artificial and human intelligence. On the contrary, the goal is that each should complement each other.

Innovation will always remain a human question. If we use our truly human skills and imagine, creatively design, judge, and implement the right environment, we can significantly alter the level of innovation. With the powerful help of machines, but as humans.

About the author:

Charles-Edouard Bouée, is CEO of Roland Berger, and author of Light Footprint Management: Leadership in Times of Change (Bloomsbury 2013) and Confucius et les Automates (Grasset, 2014)

This article is one in a series related to the 10th Global Peter Drucker Forum, with the theme management. the human dimension, taking place on November 29 & 30, 2018 in Vienna, Austria #GPDF18

This article first appeared in LinkedIn Pulse

AI: More than a new technology

AI, in its core definition, is not just a buzzword. As was the internet in its time, AI is much more than a new technology and will reshape both our daily habits and the world as we know it. The reason for this is that AI is the science of self-learning software algorithms that execute tasks otherwise typically performed by humans. AI does not generate insight or predictions but can be used to make critical decisions. It thus touches upon the essence of human life and capabilities for the first time in the history of mankind.

In public debate, there is currently widespread anxiety about AI and significant fears of what is to come. These include various nightmare scenarios, in which intelligent machines take control of humans or we all become useless and live in an automatized and sanitized world. However, on the contrary, AI could certainly be a catalyst for increasing human prosperity and even contribute to a more equal world if we are able to foster its development according to our fundamental societal values.

The development of personal, portable AI or AI as a commodity

AI will soon become commoditized and democratized, just as electricity was in its time. Today we use computers, smartphones, other connected devices, and, mostly, apps. Whilst access to internet technologies has constantly improved over the past decades, very few people are able to program these and generate income by intelligently exploiting consumer data, which, in theory, is not theirs. GAFA (Google, Amazon, Facebook and Apple) and the Chinese BAT (Baidu, Alibaba and Tencent,) are among the most prominent players in these fields.

Tomorrow’s world would be different with the emergence of relatively simple, portable AI devices, which might not necessarily be connected to each other by the internet, but would feature completely new protocols and peer-to-peer technologies. This will significantly re-empower consumers.

Because it is decentralized, portable AI will be available for the masses within a decade or so. Its use will be intuitive; just as driving a car is today. Portable AI will also be less expensive than motorized vehicles, given its relatively low material costs. Most of all, it will be personal and neutral –not sponsored by Amazon or Google but invented by a completely different enterprise, whose business model will not be based on the collection and exploitation of user data.

Someone told me that the smartphone was the remote control of our lives. With portable AI devices, we will almost certainly move back to take control over our lives again, since these will feature a personalized and impenetrable environment with comprehensive yet completely private information about us; their unique users.

AI as a game changer

Like all disruptive innovations, AI has the power to potentially open up the game for greater equality and inclusive prosperity. There are three examples in which AI is particularly promising: consumer power, the fight against monopolies and empowerment through work.

Firstly, traditional companies will regain direct access to consumers. Money will be spent on actual goods and services again, rather than on third-party commissions to data owners. Where taxis are ordered today via platforms like Uber, tomorrow my personal AI assistant will connect to those of the nearest taxi drivers around me. The assistant will reliably check the accident rates and ratings of the taxi drivers, make an informed decision, order the taxi and pay the full fare to the chosen driver. This also means that web-based interfaces designed for humans will progressively disappear, leaving the space for information in binary form for machine use. This is something that companies and traditional industries are already able to prepare for now.

Secondly, current monopolies will be shaken up. At the moment, the GAFAs and BATs of this world seem to be on a never-ending winning streak. Yet, with world data doubling every day and the development of devices less and less dependent on data input, GAFA and BAT will most likely lose their current status. Machine learning is one of the first forms of AI, and something that the GAFAs make use of. But it is not the only form. Just as a child does not need to be shown hundreds of cats in order to learn what a cat actually is, machines will be able to reason quickly. It will thus be sufficient to show them an image once or twice in order for them to know what to make of it. Hence, there is a big chance that today’s digital giants will be disrupted by completely new players, just as they themselves disrupted Cisco, Microsoft and Nokia only 10 years ago.

Lastly, the emergence of powerful AI will probably mean the end of work as we know it. We will see a difficult transformation period, in which the eradication of jobs caused by digital technologies will become a major issue for politics and the economy. However, if we prepare and adapt in a clever way, we might then enter a new golden age of work. When all repetitive tasks are performed by intelligent machines or devices, autonomy, creativity and empathy will become the core competencies required for any job, regardless of the level of qualification. Hairdressers, nannies and actors will be just as in demand as psychologists, engineers, neuro-scientists and CEOs. In their essence, jobs are a service rendered, for which others are willing to pay, and, ideally, something that brings some intrinsic satisfaction and recognition to those that execute them. The possibility of having robots take over parts of our daily tasks means that the nature of work will certainly change. Its role in a well-functioning society will probably not.

How to best prepare for the AI era

If we want to preserve our values, our current work and life ethics and quality of life, we will have to prepare for the new AI era, because, as stated by Tancredi Falconeri in “The Leopard” by Giuseppe Tomasi di Lampedus in1958, “If we want things to stay as they are, things will have to change”.

It is vital that we, instead of leaving the field open to others, positively encourage the development of AI in our societies with intelligent investments in education, infrastructure and funding. The good news is that the majority of today’s most advanced AI experts do not want to work for Google and the like, but rather wish to conduct their research independently and create new businesses on their own. They are not all located in Silicon Valley or Shenzhen but can be found in hubs all over the world. Yet, we must be very careful not to drive these experts into the arms of today’s internet giants by neglecting their specific needs in terms of financial support, resource availability and freedom to operate.

We must start to envision the future and the world we want to live in to actively shape it. Regulatory frameworks will be necessary if we do not want to risk leaving the world to machines one day, or, to the happy few manipulating them.

Clearly limiting the use of machines and, at the same time, granting access to new technologies to all citizens will be vital for the future and wellbeing of our modern societies. This is what we must tackle today, and should discuss at #GPDF17.

About the author:

Charles-Edouard Bouée is the global CEO of Roland Berger and specializes in disruptive innovation, new technologies and digital transformation. His latest work, “La Chute de l’Empire humain”, a fiction story about artificial intelligence, was published in March 2017. He also sits on the HBS Alumni Board and other business and community organizations.

There are various changes to our current environment that, at least partly, explain these developments.

First, technological progress over the past few years has been huge in all areas of life: This development is fueled by more and more abundant capital, following the decision to pump more money into our economies in an attempt to resolve the global economic crisis of 2008-2009. Investment has become cheap and tech innovation has become the new Holy Grail. The first unicorns emerged in 2009. Since then, their number has climbed to over 180 worldwide, with a total valuation of more than USD 740 billion[3].

This is the ‘acceleration of times’ as described by the German philosopher Hartmut Rosa, since one can today borrow for almost nothing and become rich quickly. The possibilities to create new things seem endless.

Second, digitization and new forms of telecommunications make the world a huge (virtual) marketplace where the internet serves as a platform to exchange all kinds of products and services rapidly and non-bureaucratically. Transaction costs have become negative in many circumstances – i.e., it is very often cheaper to look for a particular service outside your organization than inside, with people even working free of charge in certain cases.

Lastly, the new technologies and tools allow consumers to increasingly take control – over authorities and corporates – because they have constant access to everything (e.g., via their smartphone, the ‘remote control of our lives’) and usually fewer constraints. Thus, we are slowly moving from a B2B & B2C to a C2B & C2C environment. This goes hand in hand with the rise of the generations Y and Z who have learnt to travel the world and want to be free and independent above all. As a consequence, the social contract is changing, too.

All of this leads to two interesting phenomena: 1) the emergence of ‘forever startuppers’, people who create and create again – regardless of whether they fail or succeed with their projects – rather than become employed; and 2) the development of so-called ‘rented execs’, independent contractors who move among organizations to provide their often specialized expertise. Both are fueled by the currently changing ecosystem – it’s cheaper for corporates, provides more flexibility and freedom for individuals, is less of a hassle and energy waste for both sides, and investors are hungry for new projects.

All of this can be easily explained by the concept of fear and greed, the main motivators that drive people in an increasingly VUCA world. Either you are greedy to make it and thus willing to take risks as an entrepreneur – or you fear to lose your job very soon to a robot and thus change out of necessity.

It implies new challenges and has consequences for all of us. Organizations of all sorts work together with individuals in networks and in alliances. Trust has become the new currency. Individuals themselves must become more creative, solution-oriented and take over the decision-making jobs. As a consequence of their newly acquired freedom and independence, they will also have to deal with increasing solitude and pressure to perform. Businesses must create a new sense of belonging for their non-employed staff and partners as part of the ‘Light Footprint Approach’ that implies an advanced organization, full use of technology and a more entrepreneurial corporate culture. Lastly, there are huge challenges for governments, too, ranging from employment market regulation to accommodate new mobility and flexibility needs, to the reorganization of social security and the transformation of their own administration in order to better serve the new demand.

In summary, we are making big progress towards the entrepreneurial society. However, this doesn’t automatically mean that we have solved all our economic problems.

In fact, we have created a large gap between the ‘ordinary’ people and the few ‘insiders’ who are becoming millionaires or even billionaires. This disparity is likely to grow further in the near future, and it will raise many questions of social inequality and justice for which we will have to find suitable answers. For instance, we will have to deal with massive waves of unemployment as technological innovations in hardware and software will require fewer staff – and the people who will be the most affected are those who are currently trying to save their money.

Hence, if we want to avoid what could potentially be serious consequences for our economies and people, it is time that we accept the change and start to actively shape our future by partly reversing the current trends.

For a start, interest rates must rise again. Therefore, we need the economic reforms which make this possible. We must also put a price on the use of private data; we need to manage new cybersecurity risks and define norms and standards for the use of artificial intelligence.

Lastly, we should put the focus of our attention back on the human being. This means that we have to ask ourselves more often: do we really need this new technological innovation? Will it help us lead a better life? Or are we just pushing it for the sake of creating something new and fascinating?

Joseph Schumpeter once qualified the entrepreneur as the representative of the ‘real economy’ – as opposed to the financial sector, which is supposed to provide support but not dominate the markets. My query, which I would like to put up for discussion at the Forum, is: are today’s (tech) entrepreneurs as real as they should be?

In this respect, I believe that each of them should be able to answer one crucial question: are you dead or are you alive? This means asking yourself if you will actually be able to reach the breakeven point with the amount of cash you currently own – or if you will need fresh money to continue. Having observed the scene closely for quite a while now, I suppose that many of the new start-ups currently aren’t truly “alive”…

About the author:

Charles-Edouard Bouée is the global CEO of Roland Berger and also responsible for the firm’s Asia business. He specializes in reorganization, post-merger projects and corporate improvement programs, disruptive innovations, new technologies and digital transformation.

[1] Source: Roland Berger, 2016

[2] Source: EY, 2016

[3] Source: TechCrunch, October 2016

Technological change isn’t just about technology: Insights from Mad Men

It is a fact: all major changes in the workplace happened through new technological devices. The American television series Mad Men illustrates some great examples. The show documents in an extremely precise way how office life evolved from the early 1960s through the mid-1970s. In season 2, a new device enters Sterling Cooper’s offices: a Xerox 914 copy machine, which became available on the US market in 1959. The secretaries all gather around the imposing machine. The office manager states it will significantly simplify their lives. She is also concerned about the size of the machine: “It’s much bigger than they said it was. I think it needs an office.”

In season 7, another iconic device arrives at Sterling Cooper’s: the IBM System/360 supercomputer. It is 1969, and the management of Sterling Cooper expects this investment to increase the value proposition for the client through data and analytics. This time it is not the secretaries’ work that is transformed, but the executives’. Their advice to the client should now be based on data analysis and not only on their creative intuition.

Innovation is never limited to a substitution of human labor for a machine. Each time, the content, the organization, the relationships between workers – the very meaning of work – are transformed. Mad Men‘s protagonist, the marketing genius Don Draper, is skeptical of the computer. He is keenly aware of what his creative art could lose in such a change. As for the secretaries, their number decreases gradually throughout the show, and by the last season the secretarial pool no longer exists. There is neither smug technological optimism nor critical pessimism in Mad Men. But what comes across clearly is the recognition that work is changing, and that skills and organizations have evolved in response to major social and technological changes that took place within a decade.

A major shift in workplaces, with upsides and downsides

Digitization represents the major evolution that the workplace will have to undergo in the 21st century. Like the changes that came before, it relies on technological devices: big data, cloud computing, 3-D printing, advanced robotics and the Internet of Things. But digitization is more than just a change of tools. Daily practices, offices’ organization, reporting relationships, information sharing, customer interaction, and even competition are also thereby transformed.

At the company level, it is quite clear that digital maturity is synonymous with stronger economic growth and a higher level of well-being for employees. In a study conducted jointly with Google Europe, Roland Berger assessed the digital maturity of French companies, looking into three distinct dimensions: equipment, practices and uses, and organization and skills. It appears that more digitally mature companies experience revenue growth six times higher than their less mature counterparts. Beyond the financial impact, employees feel more at ease in their company, with a 50% higher index of well-being at work.

Nevertheless, we should be careful not to overestimate the boon of digital transformation. At the micro-level, the most competitive companies, which attract the most qualified and highly adaptable employees, are also those that embrace the digital era with greater ease. Mature digital organizations are characterized by a flexible, less hierarchical culture where employees enjoy a real autonomy and the possibility to express their creativity. No wonder these workplaces are exciting and fulfilling!

But if we consider the macro-level, the picture is more nuanced. The possibilities opened up by connected, more efficient production and new business models are, for sure, highly promising. A study conducted by Roland Berger with the Bundesverband der Deutschen Industrie (Federation of German Industries, or BDI) found that, if Europe harnessed digitization, by 2025, the continent could see its manufacturing industry add gross value of 1.25 trillion euros. Yet the risks are equally dramatic: from missing out on digital transformation, European industries could suffer potential losses of up to 605 billion euros in the same period.

Effects of digitization on employment should not be underestimated. In 2013, Carl Benedikt Frey and Michael A. Osborne from Oxford University calculated that about 47% of American jobs could disappear by 2020 due to digitization. Roland Berger applied its methodology to the French labor market and estimated that 42% of French jobs could be at risk. Not surprisingly, low-skilled jobs are threatened, but even intermediate jobs could also be affected. These include administrative or middle management functions, which have historically provided jobs for the middle class. As with all major economic transformations, digitization creates winners and losers.

Taking the dividend of digitization, and sharing the costs

With digitization, our societies are on the verge of a radical transformation. And the workplace is, as always, a powerful “sounding box” of this transformation. Becoming a true digital organization is not just about becoming tech-savvy. It means embracing a new culture and mindset. A digital company is no longer a physical place that brings together hierarchically-organized workers. It is an ecosystem where talents are developed, where innovation is done through networks. It’s a long road ahead for many companies before they can adapt to this new game. But they must, as adapting has become crucial to success: digitization now lies at the heart of competitiveness.

But transforming our organizations into digital ones places additional responsibility on managers, in terms of anticipating changes in skills, adapting our training policies, and empowering our staff – in other words, ensuring that digitization makes, within our companies, more winners than losers. This is, of course, a major policy issue. But digitization won’t be possible without the awareness and determination of employers. Let us rise to the challenge.

About the author:

Charles-Edouard Bouée, is CEO of Roland Berger, and author of Light Footprint Management: Leadership in Times of Change (Bloomsbury 2013) and Confucius et les Automates (Grasset, 2014)