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In 10 years, we'll see big changes in how people live their lives and how companies operate, thanks to the innovation that's now being kindled around the world. So says Alec Ross, former innovation adviser to Hillary Clinton during her term as U.S. Secretary of State, who lays out the thesis in his new book, The Industries of the Future. In Part 1 of our interview, Ross explains how the technology underlying the cryptocurrency Bitcoin, blockchain technology, will greatly reduce the friction in financial and other transactions. Here he discusses the impact of cognitive robots and the outlook for U.S. companies trying to compete on a global scale.
This interview has been edited for length.
You talked about robotics a lot in your book and you focused for the most part on physical robots. What about cognitive robots, and the idea that robotic processes will displace knowledge workers?
Alec Ross: It's really interesting. Because of two developments, robotics is going to be able to shift from being manual and repetitive to [being] cognitive and nonrepetitive. The significant events this year are 1) mathematical breakthroughs in modeling, [where] tasks that were once very complex to model for robots, like grasping, [are now] able to be done; and 2) cloud robotics: The notion that a robot has to have an enormous amount -- tens of thousands and hundreds of thousands of dollars' worth -- of hardware and software has been rendered moot by cloud robotics. This essentially has made machine learning and powerful AI a much more accessible commodity than we would have imagined five years ago. And what this means is that they'll increasingly get into the work of knowledge workers.
When we think about robotic labor, to this point we've thought about it largely displacing manual labor. But where it's clearly headed is displacing cognitive labor. Think about the economics of robotics: Humans are very low Capex and a lot of Opex. When you hire a human, there are not very many upfront costs: maybe buying them a computer or something like that. But it's quite substantial Opex. They want a salary every two weeks. Robots have an inverted cost structure. It's a lot of Capex. You've got to buy the expensive robot, but then [there's] very little Opex. They'll work for 24 hours, you don't have to give them a salary, they don't have health insurance benefits, they don't get sick. And so what we see is that as powerful robotics grows more affordable, the Capex/Opex trade-off is increasingly advantaging robotic labor and advantaging it not just for manual labor but for cognitive labor.
McKinsey has predicted that the work of as many as 140 million knowledge workers will be done by cognitive robots over the next 10 years, across the globe, which is both fascinating and terrifying when you think about the impact on the economy and how companies operate.
Alec Rossauthor, Industries of the Future
Ross: We're moving into a work world where either you're telling a computer what to do or a computer is telling you what to do. And I imagine that in the 2020s, there will be the kinds of labor protests against automated labor as there were in the 1990s against free trade.
It is a fascinating time. As much as we think about how the Internet has changed communication, collaboration and commerce, I think the changes over the next 10 years are going to be equal to what the Internet has done to the world over the last 20.
A lot of the topics that you cover in your book are presented with a global perspective. What's the outlook for U.S. companies in terms of competing in this global economy where technology changes the dynamics and can change the balance of power?
Ross: The United States is in a great position because it has some distinct strengths. No. 1: It has the world's best knowledge workers. No. 2: It has access to high-risk, early-stage capital to nourish ideas and bring them to market. And No. 3: The entrepreneurial spirit is better here than anywhere else in the world. We have a willingness to take risks that others simply do not. So I do continue to believe that the United States is in a position to capture the industries of tomorrow better than anybody else.
If I were an American company, what I would focus on is identifying today's frontier markets [outside the U.S.] that are going to be tomorrow's developing markets. So in the same way that people who began investing in China or India in the 1990s and building relationships and building businesses there are likely quite wealthy today, so too are a lot of markets that are on the fringes today going to be very fast developing over the next 10, 12, 15 years. And positioning yourselves in large, fast-growing markets is smart corporate behavior for any American company.
I'm very bullish on the future of Mexico, Central America and South America. I think the American market is and will remain a strong one but I think we ought to take advantage of the fact that our companies are so strong and the dollar is such a strong currency that we ought to be a part of the development of other economies.
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