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Only a small group of companies is harnessing the potential of AI

A new study from Boston Consulting Group and MIT Sloan Management Review reveals managers’ growing concerns about the risks of AI. Additionally, it highlights the five organizational behaviors that companies taking advantage of AI’s value have in common.

After many decades of progress, artificial intelligence is ready to become an important resource for many businesses, but according to the new study from MIT Sloan Management Review (MIT SMR), BCG GAMMA and BCG Henderson Institute from Boston Consulting Group, companies are still not yet aware of its potential. The study reveals that although managers consider AI to have the potential to be an important business opportunity, many are increasingly more worried about the strategic risks associated with AI.

Titiled Winning With AI: Pioneers Combine Strategy, Organizational Behavior, and Technology, the study is based off of a survey of more than 2,500 managers and 17 interviews with leaders and experts. The data reveals that:

  • Nine out of ten managers agree that AI presents a business opportunity for their companies.
  • Currently, seven out of ten companies refer to a minimal or zero impact of AI. 90% have made at least one investment related to artificial intelligence, but less than 40% claim to have earned income thanks to AI in the last three years.
  • In 2019, 45% perceive some sort of risk associated with AI, an increase from 37% in 2017.

“The report confirms that artificial intelligence is a relevant topic for leaders of all industries. However, despite the fact that some companies have already made significant progress, most still have difficulty generating value with artificial intelligence,” says Sam Ransbotham, one of the authors of the report. “How can corporate leaders seize opportunities, manage the risks and minimize the difficulties associated with AI? There are increasingly relevant unknowns that companies need to respond to move forward creating value associated with AI. ”

The study shows that businesses today that are managing to create value through their AI initiatives with these five common behaviors:

  1. They integrate their AI initiatives into their business strategy. 88% of respondents who found value in AI in their business strategies integrated their AI initiatives with their digital strategy.
  2. They unify their AI initiatives with their transformation strategies. To generate business value through AI, managers must be able to obtain data from different departments and initiatives and integrate them into work groups by establishing cross-functional collaboration.
  3. They take bigger risks, prioritizing revenue growth over cost reduction. Respondents who only highlighted cost reduction as a result of AI initiatives are less optimistic about the possibility of achieving greater savings with AI than those who have seen revenue growth. Only 44% of those who have managed to reduce costs expect the same results in the next five years, while 72% of those who have increased revenues expect that success to continue in the same period.
  4. They align the development of AI with its use. Beyond the tools, systems or processes to implement artificial intelligence, these companies ensure that employees use solutions that use AI, can measure results and are aware of the value generated.
  5. They avoid the “technology trap.” Companies that perceive that they increase value thanks to AI initiatives recognize that it is not only a technological opportunity, but also a strategic initiative that requires investments related to the recruitment and retention of talent, new ways of working and change management. Companies with AI initiatives supervised by the CIO, whose team usually manages technology initiatives, are almost 50% less likely to see the value that AI can bring.

“As business leaders develop a strategy with AI, talent is a complex problem without an easy answer. The capabilities that required of future workers will differ from current ones, not just for the relatively small number of workers who develop solutions related to artificial intelligence, but even more important for a much larger number of workers who will use artificial intelligence solutions directly or indirectly, “says report co-author Sam Ransbotham.

The results of the report regarding talent development reveal that 65% of respondents obtain business-related value in the use of AI when they use a varried approach: they build internal teams and rely less on external suppliers; selectively import talent with AI experience for technical leadership roles; and train their current employees in skills related to the understanding and management of artificial intelligence (upskilling).

In Spain, Llorenç Mitjavila, head partner of BCG Gamma in Iberia, believes that there is a virtuous circle in the development of AI. “Access to talent, the consolidation of Spain as a technological and innovation hub, and eminently positive media coverage, contribute to a general enthusiasm for Artificial Intelligence. Many of the big Spanish companies are investing in AI solutions, and we have a vibrant ecosystem of start-ups based on these technologies that are attracting very significant investments. ”

“AI is an important strategic opportunity, which entails strategic risks if companies do not act carefully. There is already a gap between winners and losers, and this gap will increase in the coming years. To obtain value, technology and algorithms are not enough, companies must integrate AI into their corporate strategies and processes, which is often much more difficult than the technology itself and to succeed in doing so requires new ways of working that differ from the approach required to obtain value from technological initiatives “concludes Shervin Khodabandeh, another one of the authors of the report.

 

Winning With AI: Pioneers Combine Strategy, Organizational Behavior, and Technology: Link

Stories about our Brains in the Media

“A team of researchers from the Pohang University of Science and Technology in Korea have created some organic nano cables that simulate the functioning of biological synapses; the highways of our brain. The distinction of this advance is that they consume almost the same energy as ours, about 1.23 femtojoules. “Now they “only” have to reduce to a tenth the thickness of the nano cables. By then, we will be much closer to a biological computer or a digital brain. ” This is the news that instead enlightens us away from true knowledge, and lead us to believe that the brain is only connections, cells to cells, makes no sense. The digital brain is a joyful occurrence. And it seems that this gentleman has not delved into what synapses, electrical, or chemical, or lateral connections are.

In a cubic millimeter of the brain, there are about 100,000 neurons connected through 1 billion connections that communicate by exchanging chemicals, ions, and other substances that cause this activity. Do you mean this real brain?

The brain weighs a kilo and four hundred grams. The dendrites: extensions of each neuron to receive information and send it to the body of the neurons, when the total amount is added together, gives us a figure of 70 with 70 zeros. Without counting on these connections, they can change, exchange in seconds, increase or decrease their size, disappear, assert their connection strength or decrease it. They are usually not fixed, nor stable. Something that this laboratory seems to disregard.

For this immense network to work, more than one hundred neurotransmitters are needed and twice as many other substances from a complex metabolism of the entire body, which includes the digestive brain and the ten million sensors distributed throughout our body and being sent to our brain constantly. This information must be added to the organizing center that we call the brain, as well as the bacteria that form the intestinal macrobiota, thousands of proteins that act as enzymes, as signals, as structural support and many other functions. The brain is the center of our bodies’ nutrients, oxygen from the blood, and a network of blood vessels measuring 600 kilometers.

In that brain insulin plays a role. This role serves as an important neuromodulator that contributes to neurobiological processes, such as cellular, biochemical and molecular functions, but which is manufactured outside the brain, as we know, in the pancreas.

Insulin has a major role in synaptic plasticity, in the mood, learning: it exerts a neuroprotective function, in the birth of new connections, for the survival of the circuits, even as a neurotransmitter.

Insulin from the pancreas plays a major role in cognitive processes, attention, overall functions, learning and memory.

The mind-body relationship is being scandalously simplified. They have to explain to us where they are going to install a pancreas to supply insulin to that biological brain that they plan to manufacture.

(Insulin, aging, and the brain: mechanisms and implications. Abimbola A. Akintola and Diana van Heems Department of Gerontology  and geriatrics, Leiden University Medical center, leiden, Nethederlands)

 


José Antonio Rodríguez Piedrabuena 
Specialist in Psychiatry and Psychoanalysis

Digital Media, the New “Drug” for Children

Manfred Spitzer, German professor, director of the Department of Psychiatry at the University Hospital of Ulm and the Center for Transfer of Neurosciences and Learning, argues that digital media (computers, tablets and smartphones) “do not increase academic learning capacity, but rather the opposite.” In his opinion, they can have a negative impact on the brain’s learning processes and cause both physical and psychological, pathological disorders.  “Children get used to focusing their attention on screens, outsourcing their brain processes of information gathering, reducing their retention and memorization capacity, causing them to learn less.” “It’s logical,” he says, “because if they use a pocket calculator or a translator, for example, they don’t develop the mental processes necessary to learn arithmetic or a language properly.”

According to the investigation’s results, parents, teachers and politicians are asked for a deep reflection on the pedagogical usefulness, or assitance to learning, of these resources and their risks, which are physical as well. The Spanish medical associations have defined all of this abuse as a new addiction to digital media like any other drug. These new “drugs” are a test of the fragility of the human mind. Because our eight million-year-old genetics developed within nature, with rewards coming from our environment and interrelation in small groups, but today, we have become emotionally deprogrammed from them.

In his latest work, “Cyber Disease,” Spitzer warns that abusing screens makes children “fatter and nearsighted.” It also deprives them of rest, since exposure to screens in the hours before sleep creates a decrease in melatonin secretion and resets their circadian rhythm, “which causes them to wake up tired in the morning.”

When we use them at bedtime, our screens’ blue light, is interpreted by the brain as being daylight and, in addition, corrodes the essential melatonin for tissue repair mechanisms and sleep. One teenager declares that he lost his phone for two days and had two hundred messages, an addict to a new drug genre.

As for the adverse effects on the psychological level, experts talk about attention disorders, stress and depression. A recent British study indicates that 13-year-old girls who spend more than three hours a day on Facebook are twice as likely to suffer from depression five years later. In light of these risks, it is worth asking why educational leaders continue to promote the use of digital devices. Spitzer is blunt: “because of commercial pressures, since they bombard us with messages about the benefits of their products and make us addicted.”

Real World Isolation 

In Spain, a more worrying fact is that, 22% are extreme Internet users, meaning they spend more than six hours connected on weekdays, which not only leaves them little time for other activities such as sports, outings with friends or studying and reading, but it also negatively impacts our sedentary lives. The time for reading, thinking and distractions according to our biological nature is running out!

In South Korea, the country with the greatest penetration of these devices, they know it well. According to data from the Ministry of Science, 30% of those between 10 and 19 are addicted to their smartphones. A similar phenomenon is that of Japanese hikikomoris (secluded “hermits”), who isolate themselves from the real world in their rooms, permanently connected to the internet. Quite a few of them end up being hospitalized or frequent technology detoxification camps.

The analysis has indicated that inappropriate or excessive use among adolescents “can present problems of aggressiveness, anxiety, depression, sleep disorders and, in some cases, social isolation,” according to Raquel Muñoz, principal investigator of the study. The results have been obtained from studies carried out during the 2010-2011 academic year in 28 schools in the Vallés Occidental with 5,538 students between 12 and 20 years old in participation.

Taking a sample of our emotional state: what motivates us and of our lack of objectives for the development of our own personalies present in the world in which we live, what causes the emotional vacuum that hinders the management of personal time in the direction of health, culture, well-being and development of a person? These are symptoms of the simplifying trend of our civilization, where new technologies do the rest. 16% of Spaniards declare themselves openly extremist, demonstrating that trash television produces, facilitates and stimulates this situation and increases the interest to have emotionally altered and exalted voters for certain political parties. Due to all of this, no author has reason to dare to write, their readers will not have the time to devote to such a book. The functions of the pre-frontal portions in the brain are to anticipate and plan for the future. When these gadgets are constantly used since childhood, is is possible for the cerebral lobes to remain completely undeveloped.


 

José Antonio Rodríguez Piedrabuena 
Specialist in Psychiatry and Psychoanalysis

Artificial Intelligence, A Key Element among the 50 Most Innovative Companies

For innovative companies, the current landscape is still marked by the growing importance of digital technology. In particular, a new BCG report entitled The Most Innovative Companies 2019: The Rise of AI, Platforms, and Ecosystems, reveals that companies that excel in innovation increasingly implement more AI tools to develop new products and services, and improve internal innovation. In addition, they create technological platforms and ecosystems that allow them to take advantage of external innovation sources.

“Digital technology and external innovation have become key factors,” says Ramón Baeza, BCG’s Senior Partner and co-author of the report. “The main challenge for companies will not be to identify and access cutting-edge technological development, which will have to be sought outside of organizations, but to implement that technology within the company itself, integrating it with existing processes.”

As the main conclusion of the report, companies agree that the application of artificial intelligence in their processes is gaining ground. 90% of respondents (2,500 senior managers in the innovation area) stated that their companies are investing in AI, more than 30% expect AI to be one of the innovation areas with the greatest impact on their business during the next three or five years and another 30% give AI a leading role in their respective innovation programs.

The report shows that there is a big difference in the skills that companies have in terms of AI. More than 65% of the so-called “strong” innovators claim to be above the average in this area, compared to the mere 2% of “weak” innovators. Nearly 20% of respondents consider their companies to be “strong” innovators and exceed the average in terms of AI (a group that the report calls “leaders” in IA). Among these leaders, 94% believe that AI is important for the future growth of their companies, compared to 56% of “laggards” (respondents who consider that the capacities of their companies in AI are below the average).

AI will have a substantial impact on business processes, but its greatest potential lies in its ability to develop new products and services that provide large revenue streams over time,” says Michael Ringel, BCG Senior Partner and co-author Of the report. He also affirms that “the ‘leaders’ in AI are already making their way,” noting that, in these companies, the products and services based on AI solutions introduced in the last three years had meant a much higher percentage of sales.

Some 46% of “leaders” in AI declare that products and services based on AI tools represented 16% or more of their sales, compared to a mere 10% among “laggards”. Both agree that AI will gain ground in the future: 54% of “leaders” and 22% of “laggards” expect that AI enhanced products and services will contribute more than 16% of sales in the next five years.

Great Innovators Take Advantage of External Resources

The increasing use of AI is one of the factors that have fueled interest in platforms and ecosystems. The “leaders” in AI claim that they are more likely to turn to external providers for their AI projects. Moreover, some 36% depend entirely on external suppliers and another 48% mainly uses external services or a combination of internal and external capacities. This approach may be helping “leaders” to travel quickly through the AI learning experience curve, since knowledge is still scarce at present.

This year’s report shows that companies increasingly look abroad in search of new ideas. Collaboration models are booming: between 2015 and 2018 the number of great innovators using incubators grew (from 59% to 75%), as well as collaboration in the academic realm (from 60% to 81%) and in business (from 65% to 83%).

“Digital technologies facilitate collaboration platforms and these in turn enable ecosystems that bring together a group of organizations to develop new capacities or offer new products or services, even to promote a new field of science or technology,” says Florian Grassl , BCG Partner and co-author of the report. “However, not all ecosystems are the same. Participants are united by different types of incentives/interests. Of course, one of them is financial, but the knowledge, data, skills and community can be equally important.”

Some ecosystems are mere extensions of traditional ways of organizing and doing business. They tend to revolve around an orchestrator with whom all other participants interact and have established hierarchies and structures. Other ecosystems, including many of those involved in the first phase of R&D, tend to be more dynamic. They depend less on a central orchestrator and more on versatile interactions among the participants.

Since 2004, the Boston Consulting Group has surveyed the top managers of the innovation area from a wide range of sectors and countries on 13 occasions in order to better understand the role and status of innovation in companies.

With the ranking of the 50 most innovative companies, for the first time there have been notable movements in the first five positions on the list. Following the global survey, Apple, which led the ranking in all previous editions, descended to third place, while Google (or its parent, Alphabet) and Amazon rose to first and second place respectively. At the remainder of the top 5 table were Microsoft and Samsung.

Although technology companies occupy nine of the top ten, conventional companies account for more than half the list. Adidas (10th), BASF (12th), Johnson & Johnson (14th) and DowDuPont (15th) are among the top 15 and there are newcomers such as T-Mobile (13th), DowDuPont, Stryker (35th) and Rio Tinto (49th).

Innovative Trends in the Field of Communication

Juan de los Ángeles, founder and director of C4E, shared with the Proa Comunicación team current trends in the field of communication. During a session of inspiration, De los Ángeles underlined the importance of innovation and creativity in devising company strategy, as business become increasingly aware of what is currently driving the market and attracting consumers.

De los Ángeles highlighted the relevance for companies in any sector of being aware of the latest trends to be able to anticipate changes and meet the increasingly demanding demands of their customers. Today innovation is the best tool, also in the field of communication, to continue to improve and offer the market products and services with a clear demand for them.

In his presentation, Juan de los Ángeles reviewed the main trends that mark the evolution of advertising campaigns and communication strategies of companies such as “the power of the ‘mini versus the maxi'” and the application of technology to consumption.