European Businesses Need to Embrace Automation Before It's Too Late
Entrepreneur's New Year’s Guide
Don't get me wrong -- I'm not trying to replace humans with robots. What I am interested in, however, is economic growth. Yes, it's true that automation will increasingly be used as a substitute for human labor. However, automation is also paving the way to a scientific, economic and social evolution the likes of which we've never seen, with consequences we cannot even begin to fathom. It is undoubtedly the greatest competitive opportunity of the century for innovative businesses that know how to combine human intelligence with technology.
While rolling out ambitious regulations like GDPR, the EU has been slow to follow the rest of the world in the race for leadership in AI adoption. And I'm not the only one who thinks so: a group of leading European computer scientists recently wrote an open letter saying that while machine learning has "large implications for the future competitiveness of Europe," the continent is not keeping up with China and the U.S., who have dedicated AI support systems of financiers, entrepreneurs and forward-thinking governments.
Most of the leading AI research centers and firms are in the U.S. and China, and the majority of external funding goes into these hubs -- according to McKinsey, the U.S. took in around 66 percent of external investment in 2016, while China followed second with 17 percent. Another indicator that the U.S. and China are far ahead in leading in AI research and innovation are their number of AI-related patent registrations, which far outnumber Europe's. Researchers are being tempted away from academic research by high salaries in industrial fields backed by companies like Amazon and Apple, while Europe's outdated policies and lack of investments are hindering its ability to keep talent.
Some individual member states like the U.K. and France have made progress in reviewing their digital strategies, but the U.S. and China have much more comprehensive R&D plans combined with support from external investments. The EU could be doing much more to stimulate the AI industry, such as implementing an EU-level AI strategic plan and EU-wide liability rules on AI and robotics to moderate the uncertainty surrounding AI adoption.
In the meantime, European businesses shouldn't be twiddling their thumbs while waiting for the EU to catch up. Now is the time to prioritize digitization and push to be at the forefront of technological innovation!
The transformative power of AI
AI is what's going to be driving innovation and growth in the future. It could contribute up to $15.7 trillion to the global economy in 2030, according to PwC, with such a strong competitive impact that failure to adopt could lead to significant losses for businesses.
According to McKinsey, early AI adopters with proactive strategies have higher profit margins than other firms, with the gap only expected to widen even more over the next few years.
It estimates that Europe has only captured 12 percent of its potential from digital technologies, as opposed to the United States's 18 percent. It also predicts that through further digitization, Europe could gain an additional €2.5 trillion of GDP in 2015.
Across all sectors, the adoption of these technologies will lead to countless possibilities for growth, cost reduction, optimizing marketing and improving customer experience. There are plenty of examples of how these technologies are beneficial to business with a potentially global scale. Take Google, who used its DeepMind machine learning to reduce the amount of energy used by their data centers by 40 percent. Citibank uses AI to find the best language to use in email campaigns to get responses. And who can forget the prime example of Amazon, which has continuously used automation and data to seize new opportunities and outperform competitors in new territories.
My field is digital advertising, which has greatly profited from automation in the last 10 years. Consequently, I believe that whatever can be automated, should be. As an example, my business is the first in London to have hired a robot as a receptionist. This doesn't mean that we put our human receptionist out of work. Quite the contrary, in fact. Hiring a robot has allowed our employee to focus on more challenging work (in this case, focusing on doing accountancy work).
Embracing automation means adapting to it.
For those who are worried about the "robocalypse," remember that history has always shown that job growth resulting from new technology counterbalances the displacement caused by automation.
Even so, it's important to adapt, and adapt fast. In digital media, it's already absolutely necessary to learn how to use automation or develop skills that aren't at risk of being automated, such as marketing strategy and client interaction.
My company wields automation to optimize the performance of our clients' digital media campaigns, and to great effect. We've democratized software innovation, so that not only the senior team has an influence over how the business operates; everyone can introduce process improvements. In other sectors, there will be similar opportunities to make the most of automation rather than resist it.
This is another area where the EU needs to step up its game; businesses can focus on efficiency, but it's the role of regulators to protect people from the effects of technological disruption.
Both the EU and European businesses need to develop and refine their strategic AI plans. They need to make a concerted effort to support the development of AI at a wide scale. This means enabling investment and encouraging entrepreneurship while maintaining an educated and skilled workforce. The current level of investment is insufficient to enable a broad adoption of AI by European businesses, which could lead to the obsolescence of entire business models.
I'm interested to see how Europe will use its strengths in the AI race. It has made a clear step into the digital era to value privacy and transparency, as shown by the implementation of regulation like GDPR. A report from the House of Lords suggests that the U.K. is keen to be a pioneer in AI ethics and international norms, knowing that it can't rival giants like China in AI spending. The EU should definitely keep adapting policies to new technologies and define the standards of data quality, but it also has to make sure that its nations and businesses have a platform to keep innovating.
Businesses need to identify where they can bring about savings in labor and improvements in efficiency. Everything needs to be assessed to see where the potential for automation lies. Data collection and processing are an obvious target for automation, but it's important to think outside of the box and be ready to redesign the entire system. Part of this is to foster a company culture that welcomes automation and knowing how to apply human intelligence to automation in order to drive businesses forward.
Harnessing AI means that we all need to be proactive about educating ourselves on how to best grasp the opportunities available. Despite what some may think, that there's one thing that still hasn't changed since the dawn of the machines: the importance of human capital.