Where are we headed? Digital transformation, Business and Society

“The obvious starting point now is Covid because it has been a catalyst and accelerant,” argues Mark Esposito. “It’s important to quantify how much we have digitally transformed. We roughly estimate that we are six to seven years ahead of where we were in 2019 from a technology perspective. But that doesn’t mean there’s been a total digital transformation because companies only change once they’re culturally aligned.”

There is evidence that the internet has expanded by more than 30 percent since the start of the pandemic, with talk of Web 1, Web 2, Web 3 which are ways of defining where the internet has gone and how it is being integrated into daily life. In practical terms for organisations, companies have started to seriously pose the question of how innovation can be achieved through technology. Where are the shortcuts to start digitising?

The answer lies not in ignoring the past and simply investing heavily in new technology. Companies are asking themselves: where do we have existing solutions that we can integrate and which do not require large amounts of capital investment. Mark cites the example of cashless payment in retail stores: “They were ready before 2019 but they have accelerated because people wanted to avoid physical contact with money.”

We are seeing the results elsewhere. “Today financial technology, or fintech, has taken on a dimension of its own. New players are challenging the traditional financial institutions, namely the banks, by giving people access to credit using non-banking systems. We are seeing this in Latin America, in Africa, and we have been witnessing it in Asia for quite some time. The world has become much more convergent in terms of financial inclusion and this was not so prominent prior to Covid.”

Mark Esposito asserts that the next phase will be the rise of the metaverse, where humans can interact on the internet to do things in a virtual world that they can already do together in real life. “The amount of investment currently flowing into this is quite significant. And clearly the composition and constituents of the metaverse and what it will mean for all of us from a technical perspective, and more importantly, from a societal perspective, is really where we need to have a deeper conversation and greater engagement.”

Critical point

So are we now reaching the point where the balance of power will change in organisations? Is what was once marginal competing with the way we do business? Can the old and the new coexist?

“I don’t see that we’re at a tipping point where convergence will become a global blanket,” says Dr Esposito. “I think we are seeing the application of technology at a deeper level in specific regions. What Covid has done is create an even more digital divide across the world … not necessarily because of levels of economic development but due to the political context, the willingness of people to adopt technology. But this is a medium-term view.”

We do have this idea of leapfrogging technologies, where those who are behind suddenly see the benefits of adoption. “I’m just wondering whether or not it’s going to be a messy process. Ultimately, the choice may not be there for very long, or it will always be there because ultimately people want it.”

Financial services, banking and insurance have always been prone to transformation because they are exposed to cutting-edge technology such as blockchain, cryptocurrency, NFTs, Mark argues. They are in a position to be active participants in the story. “What is interesting now is whether we are introducing the behavioural or human-centric side to technology. This has happened in healthcare where we are now carrying out surgery on people using precision techniques. They are significantly improving the quality of life and recovery time. So there are elements in which we are humanising technology.

“I think that will probably be a fundamental new chapter of what I call techno-optimism, and where we see technology as a proxy for the enhancement of society, rather than technology as merely an economic measure of efficiency.”

AI in the decision-making process

When artificial intelligence, among other technological developments, is imposed on the way a company operates – and AI itself is also changing rapidly – we start to see a reshaping of the business agenda. The question is: will decision-making eventually be replaced by a computer algorithm, and who is ultimately responsible?

“If you’re talking about instances where we think a computer algorithm would probably come up with generally better results – and there are many fields, including the justice system and healthcare – we may not quite know how it came up with those results. Do we just go with the answers and trust them, because the computer set this result, the computer said this person is guilty or innocent and they have a better record than humans? Or do we revert to an individual at the top who is ultimately going to take responsibility?

“Very often we have the idea that machines always have the advantage. If you ask the question: which is more efficient, the algorithm or the human? The answer is the algorithm.

But the explainability of the algorithm (the concept that a machine learning model and its output can be explained in a way that makes sense to a human being at an acceptable level) is what is called the ‘black box’: we can’t really know how the algorithm ends up with one decision. “So we should never let the algorithm become deterministic to the point where we can’t explain why.”

The essence of ‘life efficiency’ is much more than an algorithm, Mark says. “If I make a decision and I am wrong, by comparison it’s perfectly fine because I’m human. We have to consider the technicalities of decision-making and the idea that some decisions are made on gut instinct, maybe backed up by some data. But here there’s clearly a hierarchy where the buck stops with the CEO, so we understand where the responsibility lies.”

The answer is to keep the human in the loop. “Computers are phenomenal in building statistical models; they’re much more accurate than if I resort to my memory or to my expertise because we’re dealing with a data-driven strategy, which is much more precise than my own ability to remember facts.”

So the conversation should be about integrating technology into the job of a person. “One of the most renowned medical algorithms is called IBM Watson, considered to be the most sophisticated doctor on Earth. So to the question: who is more likely to predict cancer, a doctor tapping on their clinical experience or IBM Watson? Well, the answer is Watson.

“But over dependency on technology is as bad as under dependency. Integrating technology into our jobs fundamentally improves our work.”

Coping with technological advances

In the wider world there are many people who fear technology: they do not want to be tracked, they want to reduce their exposure to an AI-driven world.

Yet many in the corporate world will want a partnership with artificial intelligence, but to find a balance where the essential things that make us human and improve our lives aren’t being taken in a direction that we don’t want to go. So, they believe, if we get that balance right we will be much better off.

And there are others who are happy to take all the benefits of AI, even if it means giving up a sense of autonomy; they may lose a lot of the skills they have but will go along with it and see what happens. How will these three scenarios play out in society and in business?

“If we go to regions of the world where the technology is pervasive, where mobile phones are constantly being tracked, credit cards are monitored when making payments or ATM withdrawals, or using our internet access to send emails or facilitate any form of digital transaction – it becomes difficult to imagine that we could be entirely excluded from that world,” says Dr Esposito. “So I’m sceptical about the possibility that we could be entirely immune.”

As to the third scenario: “I’m hoping we’re not giving in because that means we are also giving into the manipulation that comes with technology. But it would be unfair to think that we can’t also be influenced by everyday things. Consider reading a menu in a restaurant when we are encouraged to choose an item because of the size and boldness of the typeface.

“I want people to understand that technology can easily hack some of our behaviours because it’s within its range to generate engagement, to push us to maybe do something that seems to be cool or has some formal social normative aspect.”

The partnership option is where more and more thinking should go, he says. “I guess the question is not ‘shall we partner’ but ‘how will we partner’ with technology.”

The limits that we have in some industries are equally necessary in technology because, in a society with conventional norms, we create boundaries, not least to preserve our privacy. “It’s really about the narrative we will develop around the role of technology in our lives. Most of our inheritance systems do not have this technology when they were designed. So our 20th century legacy of ideas will not help us with the challenges we are faced with right now.”

David versus Goliath: the future of tech

That narrative is how we define the relationship in a private company between its focus on growing the revenue base and their foundation for the collective good. Good governance is the desired solution, Mark argues. “We need to understand how we make sure that precious and valuable information is protected, without feeling that we are creating innovation graveyards, which is one of the arguments some governments put forward.”

AI development in the world is in the hands – “unfortunately” – of a very few, very large companies. There are fundamentally two kinds. “One is the American: Facebook, Amazon, Apple, Netflix, Google, Microsoft. The other is the Chinese companies: Baidu, Alibaba, Tencent. The Americans are private companies, the Chinese state owned. You can see where the challenge, the tension, is right now.

“A way for this to become a better conversation is that we generate the portability of the technology to more and more countries and regions where we can see it prospering and propelling from the ground up. Where there is less dependency on a few, let us say, fortresses and more grassroots movements. I think decentralisation in this case is required for the tension between public and private to be less daunting than it is right now.”

If we are infusing technology into small and medium enterprises, which Dr Esposito considers to be the backbone of the economy, if we make it possible for them to scale, to have access to financing, to make sure they can go into global markets, then we are going to protect those innovators, those companies and those employees.

“An economy cannot be run totally by multinational companies. We know this because those countries that have a backbone of small and medium enterprises are the rich countries … If you take the example of the 54 countries in Africa, what you notice is they do not have a small-medium enterprise culture, they have 50% of their value in multinational company, many of these extracting value. So we have to rethink the purpose of organisations without having this necessity of feeling that the only way to have significance is in these large companies.”

Mark cites the example of a Capgemini  project from 2020 concerning the portability of technology. “If you decentralise technology and make it available to more, you are empowering the small-medium enterprises to be part of the picture, rather than them being acquired or eventually eradicated from the market itself.

“So I’m a proponent of a healthy society, a society where you have in the multinational company the propellers. But the small and medium enterprises are consolidating on the ground. That’s where the story really happens. If we use technology as a way of equalising, I think we can do that.”

But in the absence of this, the opposite is true, Dr Esposito concludes. “If we don’t manage this correctly, technology will become the largest ‘dis-equaliser’ we have had in history. And we have to be very careful to make sure that we’re not taking it for granted, that we are collectively working for a redistribution of power in the right way.

“Technology being part of the solution to this is really where I think the 21st century could go in terms of the potential. I am a techno-optimist myself; I like to believe that technology can really address some of our challenges, if it is not just neutral but is very advanced towards the idea of enhancing society in general.”

Watch the discussion here: