CH 1: Introduction – The Future of Leadership in the Age of AI

It’s almost impossible to turn around nowadays without finding another article predicting the impact that AI and other emerging technologies – the so-called Fourth Industrial Revolution – will have on our future. It’s one of the hottest topics being discussed by forward-thinking business leaders today. And well it should be. The fact that we are on the cusp of dramatic change in how business, workplaces and our very lives are carried out is inescapable.

Some writers picture a utopia where humankind is freed from manual labor, where machines do all the work and all people receive a universal basic income from the revenues that machines generate. This view further pictures all people, having been freed from the need to work for a living, as devoting their time to altruism, art and culture.

Other writers picture a dystopia where a tiny elite class has seized control of AI and uses it to produce all the goods and services needed by society. In this view, that miniscule elite uses their control of AI to horde all the world’s wealth and trap almost all people in inescapable poverty.

Other writers yet take a broader view of AI’s future. This view sees little ultimate disruption beyond adopting new paradigms of the workplace. Workers who now work in routine, repetitive jobs would be displaced from them as AI performs those jobs more efficiently, but AI creates new, higher-value jobs that make the net job loss close to zero. All that’s needed, in this view, is for displaced workers to learn the skills needed to fill the new jobs.

These perspectives are often presented in their most simplistic forms and fall victim to exaggeration. The utopian view exaggerates the ability of AI to function without human input. The dystopian view exaggerates estimates of potential job losses. The broad view, which I call the organic view, exaggerates the ease of transitioning workers from the routine, repetitive jobs that AI will replace into the skilled, higher-value jobs that AI will create.

Where does our future lie? Are we ascending into a Golden Age, or plunging into a Dark Age? Are we about to experience only a minor hiccup in the workforce? Our future likely does not lie at any of these simplistic extremes.

It would be foolish, however, to ignore AI as nothing more than yet another new technology. It will require dramatic changes in how leadership and management operate. It will be a career-changer not only for blue collar workers, but all the way up to the C-level. It will, thus, require a willingness by leaders to adapt to its new paradigms if they are to thrive in the new world those paradigms present, and an awareness of how to prepare future generations for employment in a future heavily dependent on AI. Envisioning our future by examining our past

AI and the other technologies driving the Fourth Industrial Revolution will change our workplaces and our lives even more than any of the past three did. Think about that statement for a moment.

Transformations from the First Industrial Revolution

The First Industrial Revolution introduced the steam engine and subsequent mechanical manufacture of what previously could only be manufactured by hand. This multiplied humankind’s physical ability by enabling goods to be produced much faster and less expensively.

It spurred increased consumption of goods that previously had been available only in limited quantities. It made mechanical transportation (trains) possible, also multiplying the physical power of animals of whose superior natural strength people had taken advantage. Finally, it spurred a shift in the workforce from farmers and craftsmen to factory workers and led to migration from rural settings to cities.

Transformations from the Second Industrial Revolution

The Second Industrial Revolution introduced electricity and mass production methods that again multiplied the effects of the First Industrial Revolution. The first revolution had multiplied humankind’s physical ability to produce goods. The assembly line multiplied that ability once again, making it possible to produce even more complex goods faster and less expensively.

The mechanical transportation introduced by the first revolution in the form of mass transit vehicles such as trains now became attainable by individuals in the form of automobiles. The workforce shift introduced by the first revolution became more pronounced. Powered machinery enabled farmers to accomplish more with fewer workers and factory work in burgeoning cities became more the norm.

Transformations from the Third Industrial Revolution

The Third Industrial Revolution introduced the computer. Unlike the first two revolutions, which multiplied humankind’s physical capabilities, this third revolution multiplied humankind’s mental capabilities, making it possible to retain more data and process it faster than humans could. This made it possible for people to process far larger amounts of information than unaided people could normally do and expand the range of projects they could accomplish.

This revolution expanded as the technology improved. It originally involved prohibitively expensive equipment that only the wealthiest organizations could afford and that required an entire floor of a building to house. Then it contracted to tabletop devices that individuals could afford, and contracted further to what we experience today, where most people carry in their pockets a handheld device that has more computing power than all the computers of NASA’s 1960s space program combined and offers instant access to people and vast storehouses of information all around the world.

Transformations promised by the Fourth Industrial Revolution

Considering the seismic changes that each of these previous revolutions created, how could we say that this Fourth Industrial Revolution could change our workplaces and our lives more than any of these past ones did? What this coming revolution, largely driven by AI, promises to do is to multiply both the physical and mental capabilities of humankind and combine them into systems that give us unprecedented control over our physical world.

It promises to put control of objects halfway across the world at our fingertips, uncover new ways to optimize agriculture, manufacturing, daily life and even our own health and take control of our physical world in ways we only now are beginning to be capable of imagining. Here is a small example of the kind of world AI and other emerging technologies are propelling us toward.

Imagine a “smart” industrial facility in which vibration sensors are attached to core components of the machinery as part of the Internet of Things (IoT). Those sensors send data into the cloud. The cloud is yet another emerging technology that enables individuals or organizations to access computational resources physically located off-site. In the cloud, an AI analytics program estimates each component’s Remaining Usefulness Lifetime (RUL) so the system gets maximum use out of each component. This process greatly enhances current maintenance procedures that replace components pre-emptively, well before they would likely fail. Such AI analysis is estimated to be able to reduce replacement costs by 20%.

When such analysis determines that a part is near the end of its RUL, the AI system sends a request directly to an industrial 3D printer in the facility to fabricate the replacement part. If printing the part on-site is not feasible, the AI system could autonomously send an order to an outside part supplier for a replacement part, using the Internet of Payments (IoP), a combination of IoT, AI, blockchain’s distributed ledger system and cryptocurrencies. The part supplier could manufacture the part and deliver it by drone, self-driving truck or delivery robot, any of which would also include some degree of AI to enable safe and speedy delivery.

In the whole example so far, human intervention would not be needed (unless the part’s cost exceeded a predetermined spending limit). That eliminates the need for equipment checks by maintenance engineers, people to place purchase orders, accounts receivable and accounts payable specialists, shippers or delivery drivers. The technologies handle all those steps without human intervention.

Once the part is printed or delivered, the first human intervention occurs. A part-time maintenance engineer is notified to install the part. Even here, technology changes the replacement process.

Rather than needing multiple specialist engineers on staff to maintain each complex system, the facility could employ an engineer with general rather than specialized skills to perform the replacement. Such an engineer would be able to perform tasks beyond their training, guided step-by-step by augmented reality (AR) a technology that applies AI and sensors to provide instructions that can walk a user through a complex procedure using visual images that overlay the object being repaired. These visual images respond to the user’s position relative to the object and the movements the user makes to ensure that the overlaid images always correspond to what the user sees.

Before you conclude that the scenario I just presented is a pipe dream, know that it was a real-life project on which I worked for an industrial facility. The functionality achieved in the project has not yet reached the mainstream, but this scenario is already used in specialized environments. What I believe will eventually push this scenario into the mainstream is its success. The savings and efficiencies achieved were unprecedented.

In terms of job impact, this combination of emerging technologies – pulled together by AI – replaced 150 people who had worked in various maintenance functions or in the supply chain with one part-time maintenance worker. Many – but not all – of workers in the jobs replaced were upskilled to better-paying jobs in the same firm. The rest were let go – and that includes not only some of the maintenance workers, but also those in formerly key positions in the supply chain.

This is the likely pattern for future job disruptions by AI and the emerging technologies that AI brings together. This is also why it is essential that leaders understand how to position themselves, so they can thrive – rather than be a casualty of – the coming job shifts.

Having seen how AI and the technologies it harnesses affected that single industrial facility, consider the effect AI will have as it expands. The same technologies are currently being applied on a smaller scale across cities, transportation systems, power distribution grids, water and waste management systems and food providers. Smart cities and all the elements that go into where we live, how we get around, how we work, what we eat and how we live our lives rest on systems that these converging technologies offer great potential for achieving greater efficiencies and improved sustainability.

Does this mean we are entering a Golden Age where all things will be under our control and no problems will exist? Hardly! We need only look back to previous industrial revolutions to see that dramatic workforce and cultural shifts caused by new technologies are never trouble-free.

The negative effects of past industrial revolutions

The First Industrial Revolution’s mechanized means of manufacture displaced craftsmen who had spent years learning their craft and performed it under fairly comfortable working conditions. It replaced them with low-skilled and low-paid laborers who worked under harsh conditions in early factories. That workforce shift spawned the Luddites, whose protests of this shift that threatened their livelihood erupted in violence, destroying machines that supported the workforce shift. This protest was quickly quelled by force, as were later destructive acts against the use of threshing machines that reduced the need for hired farm laborers in the early 19^th century.

The Second Industrial Revolution’s mass production capabilities intensified the industrialization of society. Further mechanization of agriculture further reduced the need for farm laborers. The growing replacement of horse-drawn transportation by cars dramatically reduced the need for horses, and the reduced need for horses dramatically shifted agricultural demand, one-quarter of which had previously been devoted to growing hay to feed the vast number of horses.

Unregulated speculative financial practices seeking to cash in on the new technologies ultimately spurred the Great Depression. Working conditions in factories and predatory labor practices pushed displaced workers and their families into dire straits. Only when labor laws caught up with the shift in the workforce and World War II reignited demand for manufacturing did the disruption of the Second Industrial Revolution finally stabilize.

The Third Industrial Revolution’s disruptions were far subtler. In many ways, it took the workforce in the opposite direction. Whereas the first two revolutions replaced skilled workers with low-skill workers, the third revolution consistently pushed workers to obtain higher skill sets. Both blue-collar and white-collar workers found themselves continually needing to obtain more skills as both factory and office environments became more complex.

Along the way, large classes of occupations were still displaced by new technologies. Secretaries who had been relied upon to translate dictated or handwritten information into formal, printed materials were displaced by the ability of white-collar workers to produce their own printed materials by means of PC-based word processing software. Factory workers whose work involved some of the most routine functions have found themselves replaced by early efforts at automation. But, mostly, the trend in the Third Industrial Revolution has been to require increasing levels of skills from workers.

Challenges of the upcoming Fourth Industrial Revolution

Our emerging Fourth Industrial Revolution continues that trend, but it puts it into overdrive. The skill-acquisition curve of the Third Industrial Revolution was relatively gradual compared to what is coming.

Much has been made of the effect of growing automation on blue-collar jobs, with advanced robotics increasingly depressing the wages of factory workers and decreasing the availability of entry-level jobs there. These effects are not limited just to blue-collar workers, though. As AI and other emerging technologies continue to advance and converge, they will also hit white-collar workers as well, and they will hit them hard.

AI is increasingly becoming capable of many of the tasks that occupy most middle-skill workers – both blue-collar and white-collar. It can crunch numbers faster and more accurately than the best analysts. It can discern patterns in data that are too subtle for most analysts to notice. It can optimize processes to a more granular degree than the best operations managers. It can even assess complex sets of variables to engage in high-level decision-making that formerly only top-level executives performed.

Are we then headed into a Dark Age where humans will be rendered obsolete? Again, the answer is a resounding, “No!” AI and the other emerging technologies are not a step into a world that says, “No humans needed.” In fact, these technologies will need qualities that only humans can provide before those technologies can fulfill their potential.

The road to achieving this potential will not be smooth. Businesses, government and education are already repeating some of the worst mistakes that led to disastrous disruptions and dire conditions in past industrial revolutions. This book will look at what AI and other emerging technologies can do and where they are headed to see where potential problems lie and help chart a course that takes us safely through the minefield that lies ahead of us. It will look at how we can prepare ourselves and the people who depend on us for their jobs – and their livelihoods – for the smoothest possible path into our future in an AI-enabled world.