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Responding to the Impact of Artificial Intelligence on Business THE 4TH INDUSTRIAL REVOLUTION Responding to the Impact of Artificial Intelligence on Business MARK SKILTON & FELIX HOVSEPIAN The 4th Industrial Revolution “Unprecedented and simultaneous advances in artifcial intelligence (AI), robotics, the internet of things, autonomous vehicles, 3D printing, nanotechnology, bio- technology, materials science, energy storage, quantum computing and others are redefning industries, blurring traditional boundaries, and creating new opportuni- ties. We have dubbed this the Fourth Industrial Revolution, and it is fundamentally changing the way we live, work and relate to one another.” —Professor Klaus Schwab, 2016 Mark Skilton · Felix Hovsepian The 4th Industrial Revolution Responding to the Impact of Artifcial Intelligence on Business Mark Skilton Felix Hovsepian Warwick Business School Meriden, UK Knowle, Solihull, UK ISBN 978-3-319-62478-5 ISBN 978-3-319-62479-2 (eBook) https://doi.org/10.1007/978-3-319-62479-2 Library of Congress Control Number: 2017948314 © Te Editor(s) (if applicable) and Te Author(s) 2018 Tis work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microflms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Te use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Te publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Te publisher remains neutral with regard to jurisdictional claims in published maps and institutional afliations. Cover credit : CatLane/iStock/Getty Printed on acid-free paper Tis Palgrave Macmillan imprint is published by Springer Nature Te registered company is Springer International Publishing AG Te registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Linda, Claire, Emma and David Felix, to my brother Frederick and sister-in-law Frida Foreword It is rare for a week to pass without the press, digital media, radio, or televi- sion presenting an article or opinion on the future impact of new technology on society. Te adoption and acceleration of technology in the twentieth and now twenty-frst centuries and the way in which it has altered our lives and envi- ronments is not a new phenomenon. It is instructive also to remember that many of the advances in biology, particle physics, quantum theory, electron- ics, computing, communications, and materials science are relatively recent. Decoding the human genome, discovering the Higgs boson, measuring gravitational waves, the micro manufacture of integrated circuits, the devel- opment of the Internet, and the mass adoption of personal computers and smart phones have mainly all occurred in the past 10 to 30 years. Surely, robotics, artifcial intelligence, machine learning, the Internet of Tings, cyber-physical systems, and the blockchain are just examples of newer technologies that will advance civilizations development for the good? In efect, the so-called 4th Industrial Revolution will continue the progress made by the other three revolutions where steam, electricity, and then electronics took society from mechanical production to mass production and then auto- mation. In the past, comfort has been drawn from the assertion that technol- ogy has always created more jobs than it has replaced. Tis has generally been true, although we should not forget that that job creation did not always land in the communities where employment had been lost. Pertinently, Elon Musk, the CEO of TESLA, and Bill Gates, the founder of Microsoft, have, respectively, advocated a universal basic income and the taxation of robots. In fact, the majority of articles hitting our airwaves, vii viii Foreword screens, and papers are concerned more with the impact of technology than the technology itself. What is changing, and therefore generating debate, is the scale and number of new technologies, with all likely to mature in just a few years from now. Add to this the globalization of the workforce, and it is far from certain that businesses and governments will easily respond to very signifcant impacts on employment generated by the 4th Industrial Revolution. For businesses, if everyone is out of work, where does the money come from to purchase their goods and products? For governments, how can economies be sustained for the beneft of society if no one is paying tax? Tese are of course extremes, but make no mistake they are real issues. In getting to grips with these issues, a prerequisite is deep understanding of what the technologies are, and what they might lead to. Tis book, “Te 4th Industrial Revolution,” is a well-structured and intelligent account of the myriad of sub-technologies that make up what will for certain be the 4th Revolution. It is based upon extensive research and presents the key con- cepts in an easy to read format. For business leaders, the critical question of the moment is “what tech- nologies are emerging, and how do I change my business model and strat- egy to exploit them, where relevant.” Tis book will help bring color to this vital strategic debate. For policy makers and legislators, the likely scale and impact of mass adoption of fourth generation technology is easier to com- prehend with this book to hand. Warwick, UK Simon Ricketts May 2017 Former Group CIO Rolls Royce plc Senior Non-Executive Director HMRC Honorary Professor, Information Systems Management Warwick Business School, UK Preface While writing this, I am listening to music streaming over a cloud provider to my wireless headphones. Te passage of connection is through multiple net- works, Wi-f to the local home network that passes through an internet gate- way through the Internet service provider and to the music streaming service hosted on the subscribe service cloud datacenter. Te return connection passed from the mobile phone to the Bluetooth headphones in milliseconds. If I move to another room or building, the connection automating switches to an avail- able mobile cellular connection service provider and the music continues as I move around. Te mobile application is making recommendations alongside each music track I play. It suggested music bands that I have never listened to or seen before. I click on the link and soon hear a similar sounding track. How is it doing this? Matching similar music could be done in several ways. Machine learning is a phrase used in this context that may operate by processing pat- terns of sound that follows similar characteristics processing the cloud stream- ing music library to match similar music. On the other hand, matching could be through human recommendations that seeks to crowd source the knowledge of hundreds or thousands or even millions of previously played tracks and pref- erences, their likes and dislikes, and comments. Tis could equally be manipu- lated by human curated tracks choreographed to provide recommendations or codifed into the machine algorithms to promote preferences. Tis machine intelligence could be used to combine both machine and human preferences to select music tracks that match my preferences. Algorithms play a role in everyday experience, the intelligence in the telecommunica- tions network switching to optimize the service across distributed locations. ix x Preface In background, the mobile phone device is also managing its battery energy through algorithms that make localized decisions to optimize the battery life and update GPS location tracking. At any given moment, this mobile device might be interacting with me in an active manner, or passively working in the back- ground across many events and services of which I may be unaware. To a mem- ber of the public this behavior may appear as both magical and bewildering at the same time. Tis challenges the defnition of what is “the self”, freedom and individual choice, and the rapidly evolving role that human-to-machine, and machine-to-machine, interfaces play in our lives. As human beings, we interact with machines and objects in our envi- ronment on a daily basis, and we are just beginning to appreciate the ever- increasing role that machine intelligence plays in that experience. But this story is only part of a much wider transformation in the nature of living, society, and the impact on personal enterprise strategic issues in the twenty- frst century. Warwick, UK Mark Skilton May 2017 Felix Hovsepian Acknowledgements Te development of this book has involved many hours of research and interviews with professional practitioners and academics in the felds of artifcial intelligence, computing and business sector expertize. We would like to give recognition and sincere thanks to the following peo- ple who gave their time in discussions, sharing thoughts and ideas that have helped us craft this book. Simon Ricketts, former Group CIO,
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