Digital puts one in three jobs at risk
The best thing the cave people did was leave the cave. Technology helped them take that step. Today the possibilities created by technology continue to be felt in every sphere of business and life. Its artefacts, from fire to forks to Facebook and machine learning algorithms, have catapulted humanity from Stone Age to phone age to drone age. We can now solve some of the world’s most intractable problems and finally make significant progress in reducing our usage of our planet’s capital for our living expenses, as economists encouraged us to do over 100 years ago. But technology’s ability to release humans from much physical drudgery is also the source of much fear and anxiety.
John Maynard Keynes predicted this day would come in his 1930 lecture “Economic possibilities for our
grandchildren”. He suggested then that mankind will solve its most pressing economic problem, one that we have been steadily solving since we walked this planet, namely ‘the struggle for subsistence’. Machines will help us produce enough for our needs. But we open Pandora’s box because, as Keynes argued then, solving the economic problem is coupled to a second problem, namely ‘technological unemployment’— ‘unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’. We are producing more and more (products and services) with less and less need for intervention.
What options are open to us?
Job transition is not new. In the pursuit of higher productivity at lower cost options, jobs have for many years been shed. In recent times, many manufacturing and standard business process intensive jobs were outsourced to countries where labour was cheaper. Those jobs rarely made it back to home soil but at least labour in outsource recipient countries benefitted from the employment opportunities created there. Today, the same phenomenon occurs. But now, the search for labour arbitrage is no longer between physical geographies; today, jobs are lost to the digital world and will, in all probability, never to be done by humans again.
The loss of jobs creates an even bigger problem. Machines do not consume things. Machines do not buy things.
So, while machines can replace human work, they do not drive purchasing power and consumption or GDP as humans do. Humans work. Humans get paid. Humans spend. Humans consume. Society progresses. Humans don’t work. Don’t get paid, can’t spend or consume (much). Society regresses.
While the steady march of progress inevitably spells more and more machine augmentation, allowing humans to
use their time, energy and creativity differently, we are ill prepared for its consequences. Labour is still a major
economic growth driver. Jobs remain the primary mechanism of distributing income and providing humans with
access to the economy. This is especially true in emerging markets—like South Africa—where poverty remains a
problem, rates of unemployment are high and the social security blanket is thin.
There is an answer Instead of being replaced by machines, humans must learn to collaborate with machines to enhance their own productivity and ingenuity. We must learn to ‘run with the machine’.
JOBS AT RISK IN SOUTH AFRICA
South Africa has made good headway in terms of adopting digital, however, the growing maturity of its digital economy has yet to translate into significant growth, especially for labour.
While it scores well in terms of digital competitiveness compared to its emerging market peers (Figure 1) and its demographics—50 percent of the population is under 30 years old—are well suited to the demands of a digitally-driven economy (Figure 2), South Africa’s economy remains weak. Population growth has overtaken GDP growth (Figure 3). Labour and income growth are declining (Figure 4) while unemployment (now at 28 percent), and especially youth unemployment (at 36%), is high. Jobless youth make up 75 percent of the unemployed.
Figure 1: South Africa is ahead in terms of adopting digital
Figure 2: Almost 50 percent of the population is under 30 years old
Figure 3: Population growth has overtaken GDP growth
Figure 4: South Africa – household disposable income and unemployment rate
Until now, digital technologies have been deployed to work alongside people and automation has occurred
only in isolated cases. Now, as digital technologies advance, the threat of automation grows. It will eliminate
a broad swath of jobs across the economy, aggravating the risk of unemployment. And, as digital technologies become ever more sophisticated, more waves of job displacement will almost certainly occur. It is a distressing picture.
To quantify the size of the challenge, Accenture commissioned South Africa-specific research. The result: 35 percent of all jobs in South Africa are currently at risk of total automation— i.e. machines can perform 75 percent of the activities that make up these jobs. The threat is significantly higher in South Africa than in more advanced economies such as Germany (24 percent), and second only to Brazil (46 percent) in this study (Figure 5).
Fully understanding the risk
For the study, Accenture Research developed an econometric model using labour data from Statistics South
Africa (Stats SA)4 to gain insights beyond just the job categories at risk. To fully understand the risk, it identified
the share of job activities in each category that can be automated.
Human-like (analytical, leadership, social intelligence, creativity) and machine-like activities (routine work,
transactions, manual work) were allocated across professions and adjusted based on local South African statistics, including type of work, skills and tasks, the recent skills evolution in jobs, degree of work automation, work supply demographics and productive structure.
The results clearly show that occupations that allocate more time to human-like activities have a lower probability of automation, while workers involved in occupations such as production, office administration, farming, food preparation, construction, mining, transportation, installation and maintenance are at highest risk.
For South Africa, initial findings show that 35 percent of all jobs in South Africa are currently at risk of total automation. By 2025, this will reduce to 20 percent as workforces evolve with new digital demands across
Figure 5: Jobs with risk of automation by country
Which jobs are at risk?
Both white – and blue-collar jobs are at risk (Figure 6).
The more predictable and repetitive the activities that make up the task, the more likely it is to be replicated by machines … and automated. The jobs of clerks, cashiers, tellers, construction-, mining- and maintenance workers all fall into this category.
The more intensive the use of human-like skills to perform a task, the less likely it is to be automated. Jobs with less than 25 percent of risk of automation will comfortably ‘run with the machine’. Hard-to-automate jobs include tasks like influencing people, teaching people, programming, real-time discussions, advising people, negotiating
and cooperating with co-workers.
Figure 6: Top 10 jobs at risk in South Africa
Clearly, the threat that automation and the growing sophistication of digital technology (e.g., AI) poses to jobs in
South Africa will add considerable stress on an already pressured economy. But there are also answers and a significant incentive to act now. Digital—a growth multiplier Digital technologies will usher in a new economic era—they overcome the physical limitations of capital and labour, exposing new sources of value and growth, increasing efficiency and driving competitiveness. Without these technologies, companies will lose market share and be left behind, and economies will stagnate. The opportunity for South Africa is considerable.
Accenture Research shows that one major digital technology, artificial intelligence (AI), has the potential to boost labour productivity in countries by up to 40 percent by 2035 as innovative technologies enable people to make better use of their time. By embedding AI and making it a factor of production, this research indicates that South Africa could potentially double the size of its economy five years earlier.
To rise to this challenge, South Africa will need to recalibrate its economy and its workforce for digital, developing
an environment in which humans and machines work together to engage with customers, and create entirely new products, services and markets. This will drive demand and consumption within the economy, boosting growth.
The foundations are in place. With a strong digital economy in the making and the right demographics, South
Africa has the tools to stimulate economic growth and reduce the number of jobs at risk. But, to be effective, the key intervention— increasing the pace at which the workforce acquires the skills essential to maximise the benefits of human-machine collaboration—must start now.
The research indicates that at its current rate of learning, South Africa will shift to ‘running-with-the-machine’ activities (those that that require more human-like skills) slower than other developed countries. However, by reallocating skills and doubling the pace at which its workforce acquires relevant skills, South Africa can reshape work and activities such that the share of jobs at risk of being fully automated reduce from 35 percent (5.7 million jobs) to 14 percent (2.5 million jobs) by 2025 (Figure 5). This intervention equates to reducing the risk of automation for an additional one million jobs.
Figure 7: Doubling the pace of learning will reduce jobs at risk of automation in South Africa from 35 percent to 14 percent by 2015
INTRODUCING NEW SKILLS
Human beings have an amazing capacity to learn new skills and adapt to new environments. This is true not only in early life, but throughout our lives. As the nature of work evolves—i.e., becoming more digital and human, cooperative and collaborative, knowledge and taskbased, flexible and fluid—employees and entrepreneurs will need to adapt their mix of skills and knowledge to embrace new challenges and stay relevant.
In addition to a big data analysis of in-demand skill trends, a review of skill frameworks and a landscape
scan of 1,000 workforce development programmes, Accenture interviewed experts from a wide variety of fields, from neuroscience and corporate learning to education and workforce development. We then used these insights to help identify and categorise both the universal skill families and the underlying cognitive capabilities needed for inclusion in the digital economy. We call the resulting taxonomy ‘New Skills Now,’ and the six skills families that underpin it are: Learn to Earn, Build Tech Know-How, Apply We’Q, Create and Solve, Cultivate a Growth Mindset and Specialise for Work (Figure 8).
Figure 8: The New Skills Now Taxonomy, Accenture
RESPONSIVE, RESPONSIBLE AND RESPONSE-ABLED LEADERSHIP IS CRUCIAL
If our challenge is securing economic growth for South Africans through the provision of access to, and participation in the economy without compromisingglobal competitiveness and the productivity that comes from digital technologies, multi-stakeholder leadership and collaboration is our collective crisis.
To avoid any stakeholder feeling coerced into investing into longer-term shared economic growth while
potentially compromising short-term efficiency gains, a new model of co-operation is needed. Such a model will
involve multiple ecosystem stakeholders and will shift the current paradigm from doing well or doing good to doing well and doing good.
A clear collaborative multi-stakeholder approach is needed.
Government needs to be at the forefront of creating opportunities for its citizens to access digital technologies
across areas such as infrastructure, connectivity, skills, incentives, policy frameworks and regulation. It must also set policy to regulate action across areas where the digital revolution is likely to have the most impact. Key areas will include eCommerce, cybersecurity, digital healthcare, the creation of a digital society (e.g., regulate more stringently the cost of data, which is in enabler), driving the acquisition of digital skills, and service provision.
South Africa talked about The Social Plan14 in the late nineties and early 2000s when retrenchments were rife.
Attempts to implement it were not very successful. Today an opportunity exists to revisit the concept of a Social
Plan and re-design it to take advantage of technology advances, as well as expand it to reach across more than one generation in a family or community.
Corporate South Africa
Large corporates have pivotal roles to play in attaining South Africa’s shared economic future. In addition to
preparing their organisations to take advantage of the benefits of digital technologies, businesses should also work at using technology to enhance growth beyond achieving efficiencies.
Corporates can allay fears of job losses by committing to:
- Creating job alternatives through reskilling initiatives
- Communicating transparently and honestly and engaging with employees and other stakeholders
- Taking all impacted parties along on the journey
Organised labour needs to accept that digital technologies bring the potential for economic growth and global
competitiveness. The course of the digital revolution cannot be changed but it can be smartly managed.
The United Association of South Africa (UASA) talks about South Africa’s future workforce needing to align its skillset to keep pace with developments. Organised labour plays an important role in preparing the next generation of workers to contribute meaningfully to inclusive growth and economic transformation.
Institutions of Learning
Institutions of learning have to pivot too.
According to Edgar Morin, the French philosopher and sociologist15, we need new systems of learning for both what and how we learn across organisations, governments, non-governmental organisations and institutions of
research and education. Morin argues that the education of the future should be such that ‘we are better able to
grasp realities and problems which are ever more global, transversal, polydisciplinary and planetary’.
Prof. Tshilidzi Marwala, Vice-Chancellor and Principal of the University of Johannesburg talks about multidisciplinary education being the way to go in preparing for the workforce of the future. He states that we will need graduates who are innovative, internationally oriented and have strong problem solving capabilities. Scientists need to have soft skills and social science and humanities students will need to have technical skills.
Industry associations need to lead the discussions, keep abreast of research, do
research of their own and continue to drive engagement and conversation on
matters of change.
Advances in technology have changed the nature of work since time immemorial. In the times of the first Industrial Revolution, things got worse before they got better. In Britain, the Luddites, a group of skilled artisans (textile workers and weavers) destroyed machinery in textile mills as a form of protest against machines taking their jobs. Out of that era came secondary and tertiary education, the minimum wage, bans on child labour and major public health advances, from vaccinations to sanitation. It was both the best of times and the worst of times as Dickens wrote. It’s time to change again.
The adjustments we require in this era will be equally large and will additionally require both economic focus and political attention. We’ve seen the harsh beginnings of this in the United States, with Brexit in Europe, with the ‘Arab Spring’ and, in South Africa, with Marikana and the “fees must fall” protests. Anger about inequality and social and economic exclusion is brewing under the surface.
While Luddites still live among us, we have to resolve the jobs debate in a way that does not impact our competitiveness. Keeping machines at bay would, as University of Oxford professor Luciano Floridi indicates, “damage technological innovation and fail to improve the human condition”.
This period of ‘maladjustment’, where new uses for labour are still somewhat illusory, is temporary.There are many questions. Will there be enough jobs to fill our time? Will working for money be replaced by working for meaning? In the future, will jobs be fewer and work weeks shorter, and will jobs be shared? The answers are already apparent. We will find new jobs. We will not only do things differently, we will do different things. New industries will emerge. But the future trajectory of countries will, by and large, be determined by how they ensure economic access for all to build a consumer class with the purchasing power to spend on the goods and services that businesses produce with the aid of machines.
By Musa Kalenga
Let us begin with the great debate that rages on is about singularity. Singularity is the hypothetical point in the future when technological growth becomes uncontrollable and irreversible, resulting in unfathomable changes to human civilization. It is worth noting that singularity (just like electricity) will not happen all at once or over night. There will be a wave of adoption across the globe and over time it will become as pervasive and normal as electricity has become.
As we approach singularity, an important question is, at which point should we panic as Africans? In my head I have a picture. It is an extremely vivid picture of what the world will be like when there will no longer be a line between human capability and computing power as we know it. I have also reflected on many conversations with different people in commerce, technology, humanities and the sciences and I realize that when others think about the fast approaching future, many have a similar picture in their heads as I do.
To be practical about where we are as a continent, we need to reflect on some key realities that will not change. For instance, at this point, we are in the eye of the mobile storm. We live in a mobile era where these devices are extensions of our bodies. The mobile era has created an eternal bridge between the internet era and the information era. The internet is driving an explosion of data and services that feed the distribution and availability of information. We also have phenomenal social, economic and structural problems that we NEED to solve as a continent. According to the Human Development Index by the UNDP Africa is still the lowest ranking continent regarding factors like healthy long living, Quality of education and knowledge acquisition and standard of living.
There is an irony of having extremely important problems to solve at the same time as we are entering the 4th industrial revolution, the era where virtually anything is possible. This irony is that the overwhelming volume of problems to fix can create a crippling inertia about where exactly to begin. The temptation is to try and boil the ocean and solve EVERYTHING and we know this is not impossible, nor is it sustainable, so let us focus on three core problems and we can match the technology to provide a sustainable, impactful solution in the fourth industrial revolution.
Land Rights . The Berlin Conference in 1884-85 also known as the Congo conference left Africa in a state of geographic ruin and land rights were used to segregate and colonize our continent. It was a game being played around Africans and one may argue that the game continues to be played.Property rights are the most fundamental institution in any economy and society. They determine who makes decisions about valuable resources and who captures the economic gains from those decisions; they mold the distribution of income, wealth, and political influence; they set time horizons and investment incentives; and they define who will take part in markets. These attributes are well recognized among economists for spurring economic growth. Now, if we consider for a moment that since 1848 Africans have not been able to participate, what would the impact on land reform be if we were to use technology like the BlockChain ? It means that we would be able to reverse and amend a secure log of historic and present land allocations and transactions that can be traced back from a lineage perspective. Not only does this start to fix the wrongs of the past, it begins a systematic process of restoring dignity to Africans by re-allocating ancestral land.
Genetic Engineering . Africa has endured wars and human atrocities that have altered the genetic make up of many generations of Africans forever. This is true to the extent that there is even a phrase that refers to the “ African Gene ”. According to an article by Michael White , he states “Our genetic make-up is the result of history. Historical events that influenced the patterns of migration and mating among our ancestors are reflected in our DNA — in our genetic relationships with each other and in our genetic risks for disease. This means that, to understand how genes affect our biology, geneticists often find it important to tease out how historical drivers of demographic change shaped present-day genetics.” Now, for a second, just Imagine technology like CRISPR that was able to start reversing some of these genetic mutations that began in the age of slavery. Now, such an extreme solution is important, but I also acknowledge that there are other, more fundamental challenges with delivering even basic health care.
Quality Data Availability – The data gap is a systemic but crucial problem that we need to find solutions for. According to and article by Donatien Beguy (Head of Statistics and Surveys Unit (SSU), African Population and Health Research Center) “Data, and especially data of good quality, are essential for national governments and institutions to accurately plan, fund and evaluate development activities.” It is difficult to comprehend that in a continent with such a young, connected population we cannot make use of mobile devices to solve the problem of data availability. Imagine if we could create a network of Micro Data Collection Businesses the same as the vendors that sell airtime vouchers. The creation of a decentralized network of vendors collecting data on the bottom of the pyramid consumers not only solves an important gap in quality data availability, it also allows economic opportunity.
To keep finding solutions in Africa, we have to approach problem solving from First principles and if we break down a problem into smaller more specific components, it is easier to solve for the bigger problem. It will not be technology alone that will allow us to respond to the fourth industrial revolution.
It will be a combination of empathetic leaders, keen problem solvers and astute technologists that will collectively unlock value. In my very optimistic view, there is no need to run for the hills because human beings still have a critical part to play in the fourth industrial revolution. Our ability to use common sense to reason, empathy to feel and creativity to explore still makes us very valuable in the fourth industrial revolution.
Blockchain’s ability to securely expand an AI implementation’s access to data across organizations will drive a whole new set of insights and value.
Artificial Intelligence (AI) could change the world more than any other advancement since the Industrial Revolution; fundamentally reinventing how businesses compete, grow, and succeed. However, each AI system, and each algorithm within, is dependent upon training and acting upon trustworthy data to which it has access; typically limited to the organization implementing it. Simultaneously, blockchain is redefining business processes and systems of record, enabling secure and confident access to shared data between organizations and increased trust and confidence in the data. Together, AI and blockchain will enable organizations to exceed their current boundaries and gain access to significant amounts of trapped value.
Blockchain: the perfect partner for AI data
As surely as steam powered the Industrial Revolution, the ample flow of accurate data will drive artificial intelligence systems.
Leading business innovators recognize data’s central role inharnessing AI’s value, though many feel constrained by the relatively meager flows of trusted information they can currently draw upon to feed their systems. That’s why the leading technology firms have invested billions to acquire data-focused companies and their capabilities. The power of AI depends on the access to, magnitude, and quality of the data it can process.
So, while AI redefines the systems of business engagement, blockchain is recalibrating the systems of record. Together, they will remap organizational boundaries, moving them from siloed verticals with complex processes to operate efficiently across horizontals, and, in the process, releasing large amounts of currently trapped value.
Meeting the challenge; capturing the opportunity
AI systems are dramatically changing the nature of services and experiences for consumers. The current phase of the scaled use of AI has focused on the value and services individual organizations can deliver to people. This “internal application focus” results from the natural commercial emphasis of individual businesses attempting to drive profit and growth. Companies usually start with what they can do and control and the data they store in their systems. Rarely can a single organization comprehensively meet a consumer’s holistic needs, and most current AI implementation efforts reflect that limitation.
Take the example of a family relocating to a new home; one of the most basic aspects of life. Basic, yes, but simple? Not really. A myriad of organizations will focus on that single objective, including banks, insurance companies, realtors, inspectors, movers, retail firms (purchases for the new house), new school systems, utility companies, postal systems, the department of motor vehicles, tax authorities, and more. Today, virtually none of these organizations share access to the same information, and consequently, the family’s data remains fragmented and perhaps inaccurately replicated across different players. To sort things out, the family must message data back and forth with each organization. As all these entities begin to implement AI systems, they will focus mainly on their own data or information they have permission to access and that could limit AI’s effectiveness.
Now imagine a world where, through a blockchain-based system, every party involved in the move could see the data and information pertaining to the end-to-end relocation process with appropriate permissions granted by the stakeholders— in this instance, the family. Organizations could access just the data they need, and because the information reflects blockchain’s enhanced trust levels, parties no longer need to engage in messaging and reconciliation. As organizations widely implement these kinds of models, the possibilities for AI systems will grow significantly.
In this situation, AI could become a type of consumer advocate service. A family would “own” and control their data since they alone would have full access to it. As a result, they would act as the conduit to drive that data into an AI system, which then makes recommendations and optimizes the data for their benefit.
AI systems will evaluate and optimize the elements of the moving experience across the end-to-end process, making links and connections that simply can’t be done today without severely overtaxing current fragmented data sets. For instance, an AI system could potentially access data related to the operational data for a house, including its historical utility/energy use, its insurance claim history, maintenance schedule, weather data, and combine this with the family’s behavior patterns, including hobbies and entertainment options, and use this and other information to calculate an accurate home maintenance cost profile. It could then design a service and insurance plan custom-tailored to the family’s needs.
In the future, wider access to data across an ecosystem and the advances in automated business logic via smart contracts could enable new and greater access for AI machines to traverse business ecosystems and deliver more comprehensive solutions to customers.
AI’s promise: for starters, doubling today’s economic growth rates
Artificial intelligence could double annual economic growth rates in 2035, according to an analysis of 12 developed economies by Accenture Research. It will change the nature of work, creating new, human-led relationships with machines that should increase labor productivity by up to 40 percent. And that’s just the beginning.
By helping people work smarter, AI could boost average profitability by as much as 38 percent, producing a bounty of up to US$14 trillion across 16 industries by 2035. The information and communication industry alone could deliver an extra US$4.7 trillion in gross value added in that year.
Combining multiple technologies in unique ways, artificial intelligence enables leaders to harness new entrepreneurial savvy that can rapidly sense and comprehend opportunities or threats, act on that information, and ultimately learn from the experience.
Use cases: blockchain makes AI better—faster
The combination of AI and blockchain is fueling the onset of the “Fourth Industrial Revolution“ by reinventing economics and information exchange.
As the following examples demonstrate, from healthcare to government and beyond, the potent combination of AI and blockchain is slowly but surely transforming industries and institutions worldwide.
1 Smart energy, smart buildings
Green-friendly AI and blockchain solutions can help reduce energy waste and optimize energy trading. For example, an AI system with access to a host of city-wide data sources through blockchain could be used to maintain a building, such as overseeing energy use by considering factors like the presence and number of residents, seasons, and even traffic information. To supply the energy, distributed blockchain technology will
ensure transparent and cost-effective transactions between producers and consumers, while machine learning algorithms that can hone in on transactions to estimate pricing. What’s more, blockchain combined with AI could significantly expeditereal estate-related transaction processes, which can otherwise go through too many channels before a contract is approved.
2 Public science
The “file-drawer problem” in academia occurs when researchers don’t publish “non-result” experiments. Because no record of them exists, duplicate experiments and a lack of knowledge follow, trampling scientific discourse. To resolve this problem, research institutions could store and access an index to academic research, making this experimental data available across the ecosystem. By adding data analytics to the combined data, scientists would have a much richer data set to pull from than would be feasible within a single institution. Then they could begin to identify elements and patterns, such as how many times teams have tried the same experiment or determine the probable outcome of a certain experiment, with greater certainty.
Hossein Kakavand, CEO of Luther Systems, asserts that AI will also play a bigger role in public science once “smart contracts” transacted using blockchain technology require smarter “nodes” that function semi autonomously. Smart contract simulate contractual agreements and can have wide-ranging applications—in public science and elsewhere—when academicsembrace the blockchain for knowledge transfer.
3 Supply Chain
The advancement of free trade has created increasingly complex global value chains. As goods move across production and supply networks, they cross through multiple jurisdictions, connect both advanced and emerging economies, involve multiple players and are subject to different laws and standards. This all requires a great deal of coordination, which not only adds to the complexity, it adds to the costs of these goods. The Global Alliance for Trade Facilitation, for example, estimates that roughly seven percent of the global value of trade is absorbed in documentation costs alone.
Blockchain-based digital identity promises to make the supply chain leaner, simpler, and more cost-effective. Digital identity for all actors, goods, and places in a supply chain, establishes provenance and a means of trackability throughout all touchpoints in the supply chain. Through creating digital representations of real-world assets, and tracking the relevant data of those assets as a single, shared source of information, major efficiencies and product improvements can be realized. Rather than valuable data being collected in siloes across myriad stakeholders, including manufacturer, distributor, wholesaler and retailer, data could be shared across relevant stakeholders.
Through adding artificial intelligence to the platform, that data can be fed through a variety of algorithms to improve the supply chain further. Consider the 3 A’s progression of AI, as it evolves from being an assistant to an advisor to an agent, applied to a shipment of apples. As an assistant, the AI can enhance accessing the data through a chatbot interface – one can ask and receive answers to specific questions like ‘Where are the apples now?’ or ‘What temperature are they being stored?’ As the technology and application becomes more sophisticated, the AI can be an advisor and proactively alert the employee of potential issues. If the AI has detected a high likelihood of storms, it can advise rerouting the shipping freight or if the weather is projected to spike, it can recommend additional cooling. And as the AI learns and demonstrates a high level of aptitude, it can become an agent by acting upon its recommendations, rerouting or adjusting the temperature itself.
4 Smart Devices
As the Internet of Things progresses and our lives are integrated with smart devices, a combination of blockchain
and AI will be used to decide how these devices act, interact, and transact. Sensors will be widely prevalent to
learn and ingest real world information, with AI used to train and improve the devices understanding and actions made from the data. When a refrigerator is out of milk and needs to communicate to a corresponding device its desire to purchase milk, a blockchain platform will facilitate this interaction. And just as consumers today use reviews on websites to evaluate the quality and trustworthiness of a site, AI will be able to look through each device’s history of transactions (hosted and secured on the blockchain) to determine which devices to trust, and even characteristics such as which agent most often delivers the milk quickest.
Accenture is a founding member of the ID2020 Alliance, a UN-affiliated public/private partnership committed to applying the latest in innovative technologies to provide verifiable digital identities to the 1.1 billion individuals that currently cannot prove who they are with any certainty. This and similar applications of blockchain technology for identity can be combined with AI to monitor the environmental conditions in a refugee camp or community health information and produce insights to guide care and support. As AI can more quickly digest and analyze this data, more accurate and timely decisions can be made to support the at-risk groups.
In healthcare, AI is revolutionizing diagnosis and treatment planning at scale. Early progress has been made with AI systems to improve cancer treatments, as well as Google’s DeepMind building capabilities to diagnose eye diseases through analyzing medical images. Smart, personalized medicine can improve health outcomes, but people are wary about sharing such personal data. For a standard hospital visit, data is likely collected by the primary care physician, the hospital, and labs where tests are processed, and that data could be lost, entered incorrectly, or be subject to hacking. By enabling secure and controlled shared access to health data through blockchain systems, patients can reclaim ownership of their data and allow access to it on a case-by-case basis. This would allow patients to benefit from AI-enabled personal care, while knowing their data is protected and encrypted.
Blockchain: redefining trust
Blockchain is a new type of database system that maintains and records data so that multiple stakeholders can confidently and securely share access to the same data and information. As such, it is changing the nature of boundaries between organizations.
Since the invention of modern databases in the 1950s, thegoverning business model concerning them has centered on trust. For example, Party A needs to have confidence that Party B (or anyone else) hasn’t unilaterally changed any data. Consequently, companies traditionally build data systems they can fully control and operate using a “messaging” based business model. In this case, Party A sends its view of the world in a “message” to Party B, and vice versa. Only when both parties can reconcile those views will they complete the business transaction. Blockchain is changing that concept of trust in data.
Through blockchain and other types of Distributed LedgerTechnologies (DLT), companies can now access a common shared data set that they and other stakeholders know they can trust.This new definition of trust emerges from several key blockchain concepts:
Provenance: Each participant with appropriate access can view the full history of a data element—from its inception through each stage of its lifecycle—including who introduced it to the system, all pertinent events and the key parties involved.
Tamper-evident: Thanks to sophisticated math and software rules, data is extremely difficult to manipulate without everyone knowing. As a result, participants can prove to themselves that the data has not been tampered with.
Control: Participants have the ability to specify access permissions at a data element level vs. to a traditional database, data table, or row level; allowing a significant increase granularity of control.
Security: Protection and control can be implemented at the data element level instead of the database or data table levels, making it much more difficult to penetrate.
Successfully melding AI and blockchain
Two new digital technologies could create synergies unlike anything the business world has ever seen, but tapping into that power could be challenging.
Companies that recognize the power of this combination will have to manage coordinated technology implementations and more complex transformations. To navigate the challenges ahead, leaders will need to think through several key decisions.
Dealing with privacy issues. AI thrives on oceans of data, and blockchain can expand that access and ensure information’s trustworthiness, but privacy concerns could scuttle initiatives before they’re even launched. For example, one experiment focused on AI and blockchain technologies has already created controversy by using patient data without consent. What’s more, the EU’s data privacy rules, which took effect in 2018, threaten
massive fines for organizations that violate them. Working with regulators and governments to demonstrate the value AI-plus-blockchain can deliver to individuals and society at large should be a mandate.
Thinking outside of the (corporate) box. AI needs comprehensive levels of data to function optimally, but most companies restrict the amount of information available due to trust issues. While blockchain offers a way to enhance trust and security, enabling shared access to data and securing this information appropriately require significant amounts of effort and resources. That puts a premium on understanding the value at stake in AI plays and creating a workable strategy to obtain it. Two new digital technologies could create synergies unlike anything the business world has ever seen, but tapping into that power could be challenging.
Preparing for a mega-mindset shift. Most leading companies are already hard at work digitalizing their organizations, introducing things like cloud concepts and big data analytics. This “stretching” of formerly static processes, policies and procedures can certainly help prepare organizations for the transition to human-led AI, but to achieve its fullest potential, companies must investigate and plan how to integrate it and blockchain effectively and embed these technologies into your overall corporate strategy to “pivot to the new”.
Pivoting to the new is a way of framing the digital age that demands companies exist in a constant state of change. That means a new approach to organizational change that enables companies to:
- Transform the core business to drive up investment capacity
- Grow the core business to sustain the fuel for growth
- Scale new business to identity and scale growth areas at pace
It’s a deliberate approach that can yield big results.
Blockchain helps deliver upon the promise of AI by providing new levels of data access, trust, and security.
Several organizations are already experimenting with this combination of technologies, but initiatives largely remain in the pioneering mode. As confidence increases and companies zero in on trapped value pools, the growth of AI-plus-blockchain plays will likely explode. In this environment, leaders need to stake an early claim to the talent, resources and capabilities their companies will need to succeed in this fast-moving new business world.
By Matjie Lillian Maboya
The recent tornado in KwaZulu Natal and the 2012-2018 drought in Cape Town are just some of the natural disasters that have made it to mainstream media, showing that climate change is undeniable. The impacts of climate change have been felt worldwide and there have been multiple climate strikes and provocative talks by the likes of Greta Thunberg that bring to light just how little progress we are currently making to combat it. Parallel to this raging stream has been the advent of the fourth industrial revolution (4IR) which has gained momentum and carries the immense potential to transform our lives and amplify our efforts to address climate change. There are already multitudes of people using advanced technology to galvanise people to act on the ground in making the planet greener such as Mr Beast who launched a sophisticated tree planting campaign that saw more than 20 million trees planted worldwide. Indeed, the possibilities arising from the confluence of climate change and 4IR are plentiful, and so are the potential setbacks in addressing socioeconomic inequality.
The sheer power of tools brought by the 4IR such as big data and greater computing power enables us to integrate different forms of data that previously seemed irrelevant or disconnected. For example, in our attempts to reduce plastic waste that has a negative impact on the environment, we can draw data from plastic bag manufacturing companies, grocery stores that sell plastic bags and plastic recycling centres to understand consumer behaviour on the life cycle of a plastic bag. Processing such data on one platform can enable us to pick up trends about the location and frequency with which a consumer buys plastic bags and when we can potentially send him/her/them a timely reminder to take reusable bags from home on a day they are most likely to go grocery shopping such as on their payday. Combining existing climate data with greater computing power and statistical analysis enables us to draw nuances through the wide range of data sources such as in this example, making it possible to serve consumers better and also engage them in tangible ways to mitigate and adapt to climate change.
Similarly, the technology can be used to hold manufacturers to account and to also wring them into tangible actions to protect the environment. While the 4IR will transform our lives in many ways, some still will remain the same for a long time. For example, while the manufacturing of electric automobiles is on the rise, the cars continue to use rubber tyres which are often not recycled or properly disposed of. The use of 4IR technology such as the internet of things can allow for car manufacturers to add microchips to track the tyres so they can be located and collected when they reach the end of their usability period. Such measures will help to reduce pollution and conserve energy through recycling.
But, 4IR technologies are not the saving grace for all climate-related issues. While they allow for advanced disaster management systems through real-time tracking of weather systems, there are limitations. For example, IBM has recently launched faster weather forecast systems that cover the globe and has thus been a leader in this endeavour. However, in cities that are under resourced even with these warnings, the city might not have adequate resources to evacuate people in time. Unfortunately, most of our cities are not built to withstand climate change-related disasters. Flooding events are one such example that highlights areas with poor drainage and although 4IR can give us early warnings about storms, there is still significant work to be done on a municipal infrastructure development level to build and maintain drainage systems that are more resilient to water-related disasters.
For example, “Greenhouse gas emissions” and “artificial intelligence” can hardly be translated into most South African languages. This already limits the potential for more people to get involved with shaping the conversations and shifting the necessary levers to spearhead change in both fields. Moreover, technologies such as cloud computing, 3D/4D printing and machine learning all require electrical and computing infrastructure which most of the world still does not have access to. This means that the 4IR directly benefits those who are privileged enough to access these resources, leaving behind masses of those who cannot access them. Similarly, knowledge of climate change and its negative impacts are split along socio-economic lines whereby; those in low-income groups are hardest hit by environmental depletion and natural disasters, while wealthier individuals are more knowledgeable and better capacitated to adapt to climate change. 4IR technology can be a way to bridge this knowledge gap through the deployment of technology that can run faster dissemination of bite-sized information packets about each climate-related disaster in a more affordable manner than mainstream media. It starts with the small decisions such as, who gets to sit on the panels about 4IR and climate change, to the nature of the end-user for which these technologies are designed to serve. Advanced robotics and machine learning will ultimately take in the biases of the people who design them. If these people are not the world’s majority, then we will continue to build a world based on ‘the exception’ while passing it as the ‘norm’.
ARTIFICIAL INTELLIGENCE –A GAME CHANGER FOR SOUTH AFRICA?
In South Africa, where economic growth has been stagnant and digital adoption is accelerating but still lags global trends, the imperative to transform is urgent. Artificial Intelligence (AI), as a key component of a digital business environment and as an enabler of industry-disrupting advances, is a game-changer that deserves attention.
Organisations that are able to leverage technologies like AI to reshape our world will have the opportunity to weave themselves into a new digital society. For economies that adopt AI, a future of increased annual growth rates awaits, a future in which quantum computing’s near-unlimited processing and algorithmic power can solve difficult problems in entirely new ways across multiple industries.
WHAT IMPACT COULD AI HAVE IN SOUTH AFRICA?
South Africa is facing low economic growth. Unemployment is high, skills levels are low, and productivity and competitiveness are declining. There are multiple challenges specific to business and industry sectors that AI could help address.
In South Africa, the majority of organisations are dealing with legacy technologies, systems, business models and corporate structures, large core workforces and sunk investments in owned infrastructure.
Many businesses are just starting their digital journeys, addressing data quality and data management—fundamental building blocks for digitalisation of businesses—and coming to terms with the new business models,processes and skills needed to leverage the opportunities a digital world offers.
The addition of AI to process automation and to augment human capabilities can deliver huge value for businesses, driving efficiencies, productivity and innovation.Across key industry sectors, South Africa is facing a number of challenges. The contributions of the agriculture and manufacturing sectors to South Africa’s GDP are declining. And the growth prospects of the consumer goods industry, which is closely linked to the economic health of the country, is down. A lack of skills, insufficient and deteriorating infrastructure, a lack of access to information, and outdated regulatory policies are among the many issues impacting this decline.
How could AI help?
In the agricultural sector, the use of autonomous vehicles, drones and sensors will enable precision agriculture,
improving use of resources and increasing yields.
In the manufacturing sector, embedding intelligence throughout the value chain and in products can improve responsiveness to demand, and enable the introduction of many value-adding services.
To organisations in business and industry, AI may seem a long way off. It is not.
AI CAN DOUBLE SOUTH AFRICA’S ECONOMY
AI is emerging as new factor of production. South Africa can no longer depend on increases in capital and
labour to drive economic growth. Careful investment in AI can, however, transform the country’s economy. Accenture’s research quantifies the value,and pinpoints where and how AI can most readily deliver value in this country.
AI BOOSTS GVA ACROSS INDUSTRY SECTORS
In 2017, Accenture’s research showed that AI has the potential to add up to an entire percentage point to annual economic growth rates in South Africa by 2035. This means that by embedding AI in the economy, South Africa could potentially double the size of its economy size five years earlier.
This alone is a compelling reason for the country to jump onto the AI bandwagon. In this paper, we drill down, showing the impact of AI on South Africa’s industriesand how each of these will benefit from AI. The numbers are significant.
Our research shows that Manufacturing, Agriculture and Wholesale and Retail, Accommodation and Food Services will benefit the most with use of AI boosting their annual gross value add (GVA) growth rates by 1.4, 1.2 and 1.1 percentage points, respectively, in 2035.
In absolute dollar terms, Public Services and Finance and Business Services will gain the most with additional boosts to their annual GVA of R308 billion and R252 billion, respectively, in 2035. The potential gross value add of AI-augmented growth for South Africa: R1,372 billion.
What will it take to succeed?
To successfully pursue an AI agenda in South Africa, policy makers and business leaders must prepare for, and work toward a future with artificial intelligence. To do this they must understand that AI is not simply another productivity enhancer; it is a tool that can transform our thinking about how growth is created.
WHAT IS ARTIFICIAL INTELLIGENCE?
AI is not a new field; much of its theoretical and technological underpinning was developed over the past 70 years by computer scientists such as Alan Turing, Marvin Minsky and John McCarthy.
Today, the term refers to multiple technologies that can be combined in different ways to:
Computer vision and audio processing, for example,are able to actively perceive the world around them by acquiring and processing images, sound and speech. The use of facial recognition at border control kiosks is one practical example of how it can improve productivity.
Natural language processing and inference engines can enable AI systems to analyse and understand the information collected. This technology is used to power the language translation feature of search engine results.
An AI system can take action through technologies such as expert systems and inference engines, or undertake actions in the physical world. Auto-pilot features and assisted braking capabilities in cars are examples of this.
All three capabilities are underpinned by the ability to learn from experience and adapt over time. AI already exists to some degree in many industries but the extent to which it is becoming part of our daily
lives is set to grow fast.
Two key factors are enabling AI growth:
1 Unlimited access to computing power
Public cloud computing was estimated to reach almost US$70 billion in 2015 worldwide. Data storage has also become abundant.
2 Growth in big data
Global data has seen a compound annual growth rate (CAGR) of more than 50 percent since 2010 as more of
the devices around us have become connected. As Barry Smyth, professor of computer science at University College Dublin, tells us: “Data is to AI what food is to humans.” So in a more digital world, the exponential growth of data is constantly feeding AI improvements.
AI IN SOUTH AFRICA – MOVE FORWARD
There is no doubt that AI will create a quantum change in every industry segment over the next decade. The opportunity for South Africa is not just to improve efficiencies, but use AI to close gaps and radically improve productivity of people and assets, spur innovation and increase competitiveness across sectors.
The time to move forward—at every level, from reskilling for an AI future todeveloping policies to drive adoption and ensure ethical use of AI—is now.
- ABA Journal, “How artificial intelligence is transforming the legal profession,” April 1, 2016
- Robotics Business Review, “Fetch Robotics,” 2015
- Finders, K., “IPsoft gives automation platform a face,” September 30, 2014.
- IPsoft, “Amelia: Mortgage broker agent at a global bank,” 2016.
- Ford, “Ford teams up with MIT and Stanford to advance automated driving research,” January 22, 2014
- Ventureburn, SA startup Aerobotics secures funding round from Nedbank VC fund,13 July, 2018
- United Arab Emirates Government, UAE Artificial Intelligence Strategy
For the full report please visit https://www.accenture.com/_acnmedia/pdf-85/accenture-pivoting-with-ai-pov.pdf.
The ability to innovate and to consistently unlock value within business, now and in the future, is one of the most important criteria for success in the digital era. Research from Accenture indicates a growing challenge ahead for South Africa — with only 3 percent of South African organisations successfully unlocking trapped value. Innovation champions with the capability and savvy are showing the way.
Companies are accumulating trapped value.
Exponential technology innovations and the declining cost of advanced technologies are creating abundant value
opportunities for companies to raise efficiency and develop new kinds of products, services and business models. The winners are innovating—using digital technologies to unlock value in their current businesses, seize
new market opportunities and scale up innovation. These are the disruptors.
In South Africa, Accenture’s research shows that most companies are on the wrong side of disruption. They are struggling to convert the opportunities presented by advanced technologies into value. We measured trapped value in two ways: by how consistently companies release value in their current business, and how much more value they are expected to release in future. Our data shows that the largest share of organisations in South Africa—76 percent—are “omni-trapped”, meaning that they do not achieve both.
At the other end of the scale, only 3 percent of South African businesses (compared to a global average of 14 percent) are value releasers—companies able to take full advantage of opportunities to release trapped value. Clearly, South African businesses need to rethink their response to disruption.
Why is this so important right now?
ABUNDANCE FOR ALL
This is a critical period for South Africa and for businesses across Africa. Africa is a continent alive with potential and real innovation.
Take ride-hailing company Lyft, for example, which listed at a market cap of $26 billion. The founders of Lyft first spent five years developing Zimride, a successful rideshare programme in the United States that was inspired by observing a grassroots transport system developed by Zimbabweans who didn’t have access to public transport.
An innovation architecture can help realise this potential, unlocking Africa’s abundance for all by addressing
endemic challenges, such as access to healthcare, education and basic services, and helping businesses
raise efficiency, develop new kinds of products, services and business models to access new markets and
DISRUPTION IS A REALITY
Business leaders in South Africa know that technology–driven innovation and innovators are going to disrupt
the status quo and shape a new reality for their industries, but many feel unprepared for the level of potential
disruption they face. Results from interviews with 100 C-suite South African executives from across 11 industries indicate:
- 75 percent expect their industry to be significantly disrupted in the next three years.
- 46 percent feel unsure or dissatisfied that their company’s innovation efforts will position them well to overcome future disruption.
- Almost half concede that their companies are not prepared for disruption.
To prepare for disruption, our research indicates that South African businesses need to make innovation part of their DNA.
INNOVATION MATTERS: UNLOCKING TRAPPED VALUE AND MANAGING DISRUPTION
Using a bottom up approach, we identified 81 factors from these insights and used them as a basis to develop the Accenture Innovation Maturity Index.
This index measures the maturity of a company’s innovation capability—the innovation structures and practices it has in place.
INNOVATE BY DESIGN
Build the formal mechanisms for reliable innovation.
- Define an innovation strategy. Successful innovators aim for disruptive advances rather than incremental improvements; they balance innovation between old and new, and make sure it is quantifiable.
- Instil a culture of innovation in which creativity is encouraged and rewarded, and ideation is applauded.
- Create an innovation architecture that specifies clear processes for moving innovation from ideation
through R&D to mass-market commercialisation. (see figure 2.)
EMBED INNOVATION PRACTICES
- Data-driven. Generating, sharing and deploying data to deliver new product and service innovations safely and securely.
- Hyper-relevant. Knowing how to be–and stay–relevant by sensing and addressing customers’ changing needs.
- Talent Rich. Creating new, modern forms of workforces (flexible, augmented and adaptive) to gain a competitive advantage in fast-changing markets.
- Asset smart. Adopting intelligent asset and operations management to run businesses as efficiently as possible, and to free up the capacity for other innovative efforts.
- Inclusive. Adopting an inclusive approach to innovation and governance that incorporates a broader range of stakeholders.
- Network-powered. Harnessing the power of a carefully managed ecosystem of partners to bring the best innovations to your customers.
- Technology-propelled. Mastering leading edge technologies that enable business innovation
THE INNOVATION CHAMPION APPROACH
What sets Global Champions apart is their focus on building an innovation architecture—the actual processes that are used to find ideas and bring them all the way to full-scale innovations.
Our research also indicates that Innovation Champions outscore South African companies by almost 30 points in each of the seven key innovation practices.
Global champions build innovation into the fabric of their business by adopting all innovation practices, but they stand out most in their ability to continuously be network powered, data driven and hyper relevant.
WHAT DOES THAT LOOK LIKE? CONSIDER THE FOLLOWING EXAMPLES:
Additive manufacturing company Carbon is collaborating with Adidas to create the Futurecraft range of personalised 3D printed shoes.
Carbon’s Digital Light Synthesis system enables Adidas to test and prototype design concepts 10x faster than
previous methods, allowing Adidas to rapidly scale production.
Oil producer Chevron spent $4.3 billion in 2018 on shale basins, approximately 20 percent of its total spend.
It is using data-analysis expertise gained at its offshore wells to make horizontal drilling more efficient. This analysis is based on a proprietary database of over five million well attributes, supplemented by data analytics of petrophysical properties. The insights gained helped Chevron reduce the time taken to drill a shale well from 27 days, to just 15 days, for longer and more complex wells.
Tommy Hilfiger’s runway collections are instantly available through TommyNow, the company’s “see now, buy now” initiative.
This initiative eliminates the standard six-month wait between the runway and retail. As soon as shows begin,
shoppers can order items through the label’s digital platforms, and an event live-stream.
POSITION FOR FUTURE SUCCESS
We believe that all too many times innovation is seen as intangible and a buzz word used loosely not linked to
achieving business value. At Accenture innovation is defined as a new way of doing things that adds value. Having the right innovation structures and adopting practices that allow organisations to unlock trapped value
will better position them for future success.