View from the Board: technology shapes society or society consumes technology?

Industrial revolutions are economic phenomena, characterized by the encounter between General Purpose Tecnologies (do not mistake by recent Chat-GPT) that have been maturing for decades, and the (economic-relevant) society of its time, in a context in which such tecnologies would achieve a broad impact.

"General-purpose technologies (GPTs) are technologies that can affect an entire economy (usually at a national or global level). GPTs have the potential to drastically alter societies through their impact on pre-existing economic and social structures. The archetypal examples of GPTs are the steam engine, electricity, and information technology."

The steam engine found a Europe with pent-up demand; electricity has found centres of demand (cities) in need of interconnection; the internet has found the world ripe for globalization; and artificial intelligence has found a world hungry for productivity gains.

Tech development preceeds society needs

· The first steam engine was built in 1606 and in 1698 it was already pumping water in mines. The 1st Industrial Revolution began 80 years later.

· The first electric battery (and continuous generation of electric current) was in the 1800s; the alternating current system was patented in 1888. The 2nd industrial revolution began in 1870 and scaled with electric power.

· The development of TCP/IP dates back to the early 1970s (patent in 1983); Internet adoption scaled in the late 1980s, and early 1990s (1991 outside the academic environment, 1993 Mosaic and 1994 Netscape).

· AI was recognized in 1956 (its development predates that date). The 1970s saw the Ice Age of AI – when no one believed there would be a practical application for this research. With the internet and the generation of Big Data, initially in the varjo (B2C), AI has returned to focus.

The Industrial Revolutions

Steam engines, electricity, the internet, and artificial intelligence, each in its own time of wide application (and disregarding previous decades of development), are considered General Purpose Technologies. Every industrial revolution is marked by a context conducive to the adoption of GPTs.

1st Industrial Revolution: steam machines responded to the demand for a Europe ready to consume. In almost 80 years, consumption centres have been formed from Mancester to beyond Italy, and serviced by production centers. Society "consumed" the available technology as it was in their best interest.

Wasn't it society that got to the point where it made sense to consume technology, not technology that changed society?

2nd Industrial Revolution: With the U.S. economy demanding integration between cities and ready-to-consume, electricity (comparable to the internet in the 3rd revolution) and mass production conveniently present themselves. Society "consumed" electricity and produced volumes because it had repressed demand for connection between consumption centres and repressed demand for consumption of products (consumer goods and durable goods).

Hadn't society reached the point where it made sense to consume technology, and wasn't it technology that changed society?

3rd Industrial Revolution: With increased demand from Asian tigers, low-cost countries in Latin America and Eastern Europe, and the emergence of the Chinese economy, the internet has facilitated communications and globalized consumption, and robotic automation has reduced costs by enabling transcontinental supply chains.

Again, has society reached the point where it made sense to consume the technologies of the internet and robotics on a large scale?

What is science if not a foresight-testing exercise, without any commitment to the known?

At certain moments in history, the context of society has found technologies capable of responding intensely and almost ubiquitously to the demands of the time.

4th Industrial Revolution: Since 2011, when the term Industry 4.0 was coined, we have seen Artificial Intelligence also take on the role of General Purpose Technology – just like steam engines, the internet and electricity. Society, in search of productivity (doing more with less), structures cyber-physical systems composed of equipment, sensors, devices (hardware and software) and people, and consumes in an unstoppable way. The focus of the 4th revolution is the productivity of resources: machines, people, time, capital and knowledge.

For example, the use of AI for dynamic pricing engines in retail, or the mass personalization of advertising, aims at marketing budget productivity (better marketing ROI).

Job replacement is no less impactful than obsolescence due to productivity gains. Macroeconomic issues arise, such as full employment and universal basic income. In companies, the speed of productivity is discussed, driven by mass layoffs or turnover without replacement.

Should we assume AI will shape our society, firms and behaviour? Or should we lead the process, envision our preferred futures and consume AI on-demand, as it really is: a tool? Despite AI power, still stronger is the power to decide how to use it.

Assuming society - thus people (ourselves) - is the protagonist (otherwise I would be deeply disturbed), what kind of individuals will be at the forefront? Who will be leading our companies and our nations?

Food for thought.

Open-questions for Board Members to Reflect On

1. How can we effectively integrate ESG (Environmental, Social, and Governance) practices into the company's long-term strategy, while ensuring shareholder value preservation and sustainable value creation, given the growing impact of AI on operations and processes?

2. Considering the current macroeconomic scenario and the advancement of AI, what are the key trends and risks that we should monitor to ensure the company's resilience and competitiveness in the global market? How can the board contribute to a more accurate context analysis and the formulation of strategic guidelines that include the responsible adoption of AI?

3. How can we enhance knowledge management in the enterprise by utilizing artificial intelligence tools to capture, share, and apply knowledge effectively, ensuring that the organization benefits from collective expertise and continuous innovations? What are the best practices for encouraging a culture of learning and innovation among employees, thereby promoting sustainable value creation?

4. In what ways can we balance the need for short-term profit with long-term strategic investments, especially in areas such as technological innovation and talent development, considering the implementation of AI? What are the best practices to ensure that the company does not compromise its future sustainability by adopting AI?

5. How can the board play a more active role in oversight and foresight of emerging risks, such as cyber risks, regulatory changes, market disruptors, and the use of AI? What governance mechanisms and analytical tools should we implement to enhance our ability to proactively manage these risks?

6. How can we promote and value diversity and inclusion in our organization by using artificial intelligence tools to eliminate bias and create an equitable work environment? What are the best practices to ensure that diversity of perspectives and experiences contribute to innovation, strategic decision-making, and sustainable value creation for the company?

7. In the context of AI-accelerated digital transformation and rapid changes in the workplace, how can we reimagine our work and employment policies to attract and retain talent, and promote diversity and inclusion, while optimizing productivity and employee satisfaction?