Connect with us

Business

WHY AI ISN’T THE DEATH OF JOBS

Published

on

Companies using AI to innovate are more likely to increase employment, writes Jacques Bughin in MIT Sloan Management Review.

When pundits talk about the impact that artificial intelligence (AI) will have on the labor market, the outlook is usually bleak, with the loss of many jobs to machines as the dominant theme. But that’s just part of the story — a probable outcome for companies that use AI only to increase efficiency. As it turns out, companies using AI to also drive innovation are more likely to increase head count than reduce it.

That’s what my colleagues and I recently learned through the McKinsey Global Institute’s broad-based research initiative aimed at understanding the spread of AI in economies, sectors, and companies.1 We polled 20,000 AI-aware C-level executives in 10 countries to compile a sample of more than 3,000 companies (mostly large), identified distinct clusters within that pool, and ran a variety of scenarios on those clusters to project the effects of AI on employment, revenue, and profitability.

This research and analysis suggest that although AI will probably lead to less overall full-time-equivalent employment by 2030, it won’t inevitably lead to massive unemployment. One major reason for this prediction is because early, innovation-focused adopters are positioning themselves for growth, which tends to stimulate employment. (See “How AI-Based Innovations Drive Employment.”)

Here’s how we expect things to play out in the five clusters of companies we examined.

Enthusiastic innovators, or pioneering companies that make early investments in AI and embrace the disruption it can create in the quest for advantage, adopt a full range of AI technologies and use them to bolster innovation and efficiency. These companies are analogous to what sociologist and communication theorist Everett Rogers called “early adopters” back when he coined the term — they’re intrinsically motivated to use new technology to shape and open markets.2 While this approach is potentially complex in the short term, our analysis shows that by 2030, the profitability of enthusiastic innovators will grow 8% faster than that of the average company on an annual basis, their revenue will grow 4% faster, and their head count will rise 2.2% faster.

Source: MIT Sloan Management

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business

Mercedes-Benz sells 180,539 vehicles, January

Published

on

By

Mercedes-Benz delivered 180,539 vehicles to its customers worldwide in January (-6.7%).

The second-best start to a year for sales was influenced by important model changes in the high-volume SUV and compact-car segments.

In particular, the model change of the B-Class, CLA and GLE, each with a double-digit sales decrease, had a negative impact on total unit sales worldwide despite the ongoing high demand for the cars with the star insignia.

From today’s perspective, the company expects the model changes to affect deliveries in the first quarter.

With a high degree of probability, the full year will be affected also by exogenous challenges and geopolitical risks, the company announces in its global sale report for January.

A member of the Board of Management of Daimler AG responsible for Mercedes-Benz cars marketing and sales, Britta Seeger, said “With more than 180,000 vehicles delivered, Mercedes-Benz has started the year 2019 with the second-best January ever”.

“With the B-Class, the CLA and the GLE, we look forward in the coming months to the new generations of models very popular with our customers and expect the model offensive in our high-volume segments to provide significant sales impetus”.

Continue Reading

Business

AMAZON ERROR ALLOWED ALEXA USER TO EAVESDROP ON ANOTHER HOME

Published

on

A user of Amazon’s Alexa voice assistant in Germany got access to more than a thousand recordings from another user because of “a human error” by the company.

The customer had asked to listen back to recordings of his own activities made by Alexa but he was also able to access 1,700 audio files from a stranger when Amazon sent him a link, German trade publication c’t reported.

“This unfortunate case was the result of a human error and an isolated single case,” an Amazon spokesman said.

The first customer had initially got no reply when he told Amazon about the access to the other recordings, the report said. The files were then deleted from the link provided by Amazon but he had already downloaded them on to his computer, added the report from c’t, part of German tech publisher Heise.

 

Continue Reading

Business

CRYPTOCURRENCY INDUSTRY FACES INSURANCE HURDLE TO MAINSTREAM AMBITIONS

Published

on

Cryptocurrency exchanges and traders in Asia are struggling to insure themselves against the risk of hacks and theft, a factor they claim is deterring large fund managers from investing in a nascent market yet to be embraced by regulators.

Getting the buy-in from insurers would mark an important step in crypto industry efforts to show that it has solved the problem of storing digital assets safely following the reputational damage of a series of thefts, and allow it to attract investment from mainstream asset managers.

“Most institutionally minded crypto firms want to buy proper insurance, and in many cases, getting adequate insurance coverage is a regulatory or legal requirement,” said Henri Arslanian, PwC fintech and crypto leader for Asia.

“However, getting such coverage is almost impossible despite their best efforts.”

Many asset managers are interested in digital assets. A Greenwich Associates survey, published in September, said 72% of institutional investors who responded to the research firm believe crypto has a place in the future.

Last month, Mohamed El-Erian, Allianz’s chief economic adviser said that cryptocurrencies would gain wider acceptance as institutions began to invest in the space.

Most have held off investing so far however, citing regulatory uncertainty and a lack of faith in existing market infrastructure for storing and trading digital assets following a series of hacks, as well the plunge in prices.

The total market capitalisation of crypto currencies is currently estimated at approximately US$120bil (RM502bil) compared to over US$800bil (RM3.3tril) at its peak in January.

“Institutional investors who are interested in investing in crypto will have various requirements, including reliable custody and risk management arrangements,” said Hoi Tak Leung, a senior lawyer in Ashurst’s digital economy practice.

“Insufficient insurance coverage, particularly in a volatile industry such as crypto, will be a significant impediment to greater ‘institutionalisation’ of crypto investments.”

Regulatory uncertainty is another problem for large asset managers. While crypto currencies raise a number of concerns for regulators, including money laundering risks, few have set out clear frameworks for how cryptocurrencies should be traded, and by whom.

Insurance might allay some of the regulators’ concerns around cyber security. Hong Kong’s Securities and Futures Commission recently said it was exploring regulating crypto exchanges, and signalled that the vast majority of the virtual assets held by a regulated exchange would need insurance cover.

Custody challenge

Keeping crypto assets secure involves storing a 64 character alphanumeric private key. If the key is lost, the assets are effectively lost too.

Assets can be stored online, in so-called hot wallets, which are convenient to trade though vulnerable to being hacked, or in ‘cold’ offline storage solutions, safe from hacks, but often inconvenient to access frequently.

Over US$800mil worth of crypto currencies were stolen in the first half of this year according to data from Autonomous NEXT, a financial research firm.

Some institutions have started working to solve this problem, and may provide fierce competition to the incumbent players.

This year, Fidelity, and a group including Japanese investment bank Nomura have launched platforms that will offer custody services for digital assets.

Despite the industry’s complaints, insurers say that they do offer cover. Risk advisor Aon, received some two dozen inquiries this year from exchanges and crypto vaults seeking insurance, according to Thomas Cain, regional director, commercial risk solutions, at Aon’s Asian financial services and professions group.

“It is not difficult to insure companies that hold large amounts of crypto assets, but given the newness of the asset class and the publicity some of the crypto breaches have received, applicants need to make an effort to distinguish themselves,” Cain said.

The industry also says it is getting closer to solving the custody problem.

“This year there have been a number of developments, and some providers have developed custody solutions suitable for institutional clients’ needs,” said Tony Gravanis, managing director investments at blockchain investment firm Kenetic Capital.

“Players at the top end of the market have also been able to get insurance,” he said.

But this is not the case for all.

One cryptocurrency broker, declining to be named because of the subject’s sensitivity, said insurers struggled to understand the new technology and its implications, and that even those who were prepared to provide insurance would only offer limited cover. “We’ve not yet found an insurer who will offer coverage of a meaningful enough size to make it worthwhile,” he said. – Reuters

 

Continue Reading
Advertisement

Trending

Copyright © 2018 Inventrium Magazine

%d bloggers like this: