Opinie Archive

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BCG Report: Are You Making the Most of Your Relationship with AI?

Management Review suggests that in order to see significant financial returns, organizations need a multidimensional, complex relationship with AI—one that involves several methods of learning and different modes of interaction.

Businesses everywhere are recognizing the power of AI to improve processes, meet customer needs, enter new spaces, and, above all, to gain sustainable competitive advantage. With this recognition has come an increased adoption of—and investment in—AI technologies. A global survey of more than 3,000 executives revealed that more than half of respondents are deploying AI: six out of ten have an AI strategy in 2020, up from four out of ten in 2018. AI solutions are more prolific and easier to deploy than ever before, and companies around the globe are seizing on the opportunity to keep up with this exciting trend. Yet despite their efforts—to hire data scientists, develop algorithms, and optimize processes and decision making—most companies aren’t seeing a significant return on their investments.

So, what allows a small number of companies to stand out from the crowd?

For them, AI isn’t just a path to automation; it’s an integral, strategic component of their businesses. To achieve significant financial benefits, companies must look beyond the initial, albeit fundamental, steps of AI adoption—of having the right data, technology, and talent in place, and organizing these elements around a corporate strategy. Currently, companies have only a 21% chance of achieving significant benefits with these fundamentals alone, though incorporating the ability to iterate on AI solutions with business users nearly doubles the number, to 39%. But it’s the final stage of AI maturity, of successfully orchestrating the macro and micro interactions between humans and machines, that really unlocks value. The ability to learn as an organization—by bringing together human brains and the logic of machines—is what gives companies a 73% chance of reaping the financial benefits of AI implementation.

More: To embrace AI’s full potential, companies must recognize that humans play an equally important role in the equation—and reshape themselves accordingly. Download the Full Report

Authors: Sam Ransbotham, Associate Professor, Boston College/MIT Sloan Management Review; Shervin Khodabandeh, Managing Director & Senior Partner, Los Angeles; David Kiron, Executive Editor, MIT Sloan Management Review’s Big Ideas initiatives; François Candelon, Managing Director & Senior Partner, Global Director of the BCG Henderson Institute
Paris; Michael Chu, Partner and Associate Director, Data Science, Silicon Valley – Bay Area; Burt LaFountain, Managing Director & Partner, Boston

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Athens Journal of Business & Economics

We are glad to announce that the January issue (Volume 7, Issue 1, January 2021) of the Athens Journal of Business & Economics (AJBE) has been uploaded: https://www.athensjournals.gr/ajbe/v7i1. Below you can find the table of contents. The AJBE sponsors the following academic events:

  • 14th Annual International Conference on Global Studies, 18-21 December 2020, Athens, Greece (https://www.atiner.gr/cbc)
  • 8th Annual International Conference on Business, Law & Economics, 3-6 May 2021, Athens, Greece (https://www.atiner.gr/ble)
  • 16th Annual International Symposium on Economic Theory, Policy and Application, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/economics)
  • 19th Annual International Conference on Management, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/management)
  • 19th Annual International Conference on Marketing, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/marketing)
  • 19th Annual International Conference on Accounting, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/accounting)
  • 19th Annual International Conference on Finance, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/finance)
  • 8th Annual International Conference on SΜΕs, Entrepreneurship and Innovation: Management – Marketing – Economic – Social Aspects 26-29 July 2021, Athens, Greece (https://www.atiner.gr/sme)

You are more than welcome to submit a proposal for presentation. Please note that the program of the December conference on Global Studies is available at: https://www.atiner.gr/2020cbc-pro. Late submissions for this event will be accepted by the end of November. ATINER has decided to offer the option of remote (online or pre-recorded) presentation for those who cannot travel for objective or subjective reasons. If you need more information, please let me know, and our administration will send it to you including the abstract submission form. Finally, you are welcome to contribute to the AJBE with an original research paper.

TABLE OF CONTENTS
Download the entire issue (PDF)
Front Pages i-viii
Labor Productivity in France: Is the Slowdown of its Growth Inevitable or are there Levers to fight it?
Catherine Bruneau & Pierre-Luis Girard
9
The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?
Carlo Klein
41
Sustainable Governance and Knowledge-based Economy – Prerequisites for Sustainable Development of the Developing and Transitional Economies
Kristina Jovanova
67
Outcomes from Building Transparency in Governance in a Smart City Project in India: A Case Study of Panaji, Goa
Mridula Goel & Sheetal Thomas
85
The Sustainable Development Goals and Leading European Retailers
Peter Jones & Daphne Comfort
105

Dr Zoe Boutsioli
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Dr Zoe Boutsioli  Vice President of Publications ATINER (A World Association of Academics and Researchers).
25 Years of Non-Euclidean Improvement “Our city is open to the world, we never expel a foreigner from learning or seeing” “τήν τε γὰρ πόλιν κοινὴν παρέχομεν, καὶ οὐκ ἔστιν ὅτε ξενηλασίαις ἀπείργομέν τινά ἢ μαθήματος ἢ θεάματος” Pericles’ Funeral Oration from Thucydides, “The Peloponnesian War”. Come to open to the world Athens to learn about Democracy in the city where its theory was first developed and taught and see the place (phnyx) where it was first practiced.

Please note that as a world association of academics and researchers with a very specific mission (please see our website), ATINER is based on the voluntary work of our members and friends. This includes the toil of sending this email to you, so please let us know if you are not interested so that our work is not in vain. If you no longer want to receive emails from us, please click unsubscribe below. This way you will avoid the nuisance of receiving emails from ATINER.

 

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BCG Six Steps to Bridge the Responsible AI Gap

As artificial intelligence assumes a more central role in countless aspects of business and society, so has the need for ensuring its responsible use. AI has dramatically improved financial performance, employee experience, and product and service quality for millions of customers and citizens, but it has also inflicted harm. AI systems have offered lower credit card limits to women than men despite similar financial profiles. Digital ads have demonstrated racial bias in housing and mortgage offers. Users have tricked chatbots into making offensive and racist comments. Algorithms have produced inaccurate diagnoses and recommendations for cancer treatments.

To counter such AI fails, companies have recognized the need to develop and operate AI systems that work in the service of good while achieving transformative business impact—thinking beyond barebones algorithmic fairness and bias in order to identify potential second- and third-order effects on safety, privacy, and society at large. These are all elements of what has become known as Responsible AI.

Companies know they need to develop this capability, and many have already created Responsible AI principles to guide their actions. The big challenge lies in execution. Companies often don’t recognize, or know how to bridge, the gulf between principles and tangible actions—what we call crossing the “Responsible AI Gap.” To help cross the divide, we have distilled our learnings from engagements with multiple organizations into six basic steps that companies can follow.

The Upside of Responsible AI

Concern is growing both inside and outside boardrooms about the ethical risks associated with AI systems. A survey conducted by the Center for the Governance of AI at the University of Oxford showed that 82% of respondents believe that AI should be carefully managed. Two-thirds of internet users surveyed by the Brookings Institution feel that companies should have an AI code of ethics and review board.

Much of this concern has arisen from failures of AI systems that have received widespread media attention. Executives have begun to understand the risks that poorly designed AI systems can create—from costly litigation to financial losses. The reputational damage and employee disengagement that result from public AI lapses can have far-reaching effects.

But companies should not view Responsible AI simply as a risk-avoidance mechanism. Doing so misses the upside potential that companies can realize by pursuing it. In addition to representing an authentic and ethical “True North” to guide initiatives, Responsible AI can generate financial rewards that justify the investment.

A Stronger Bottom Line. Companies that practice Responsible AI—and let their clients and users know they do so—have the potential to increase market share and long-term profitability. Responsible AI can be used to build high-performing systems with more reliable and explainable outcomes. When based on the authentic and ethical strengths of an organization, these outcomes help build greater trust, improve customer loyalty, and ultimately boost revenues. Major companies such as Salesforce, Microsoft, and Google have publicized the robust steps they have taken to implement Responsible AI. And for good reason: people weigh ethics three times more heavily than competence when assessing a company’s trustworthiness, according to Edelman research. Lack of trust carries a heavy financial cost. In the US, BCG research shows that companies lost one-third of revenue from affected customers in the year following a data misuse incident.

Brand Differentiation. Increasingly, companies have grown more focused on staying true to their purpose and their foundational principles. And customers are increasingly making choices to do business with companies whose demonstrated values are aligned with their own. Companies that deliver what BCG calls total societal impact (TSI)—the aggregate of their impact on society—boast higher margins and valuations. Organizations must make sure that their AI initiatives are aligned with what they truly value and the positive impact they seek to make through their purpose. The benefit of focusing strictly on compliance pales in comparison with the value gained from strengthening connections to customers and employees in an increasingly competitive business environment.

Improved Recruiting and Retention. Responsible AI helps attract the elite digital talent that is critical to the success of firms worldwide. In the UK, one in six AI workers has quit his or her job rather than having to play a role in the development of potentially harmful products. That’s more than three times the rate of the technology sector as a whole, according to research from Doteveryone. In addition to inspiring the employees who build and deploy AI, implementing AI systems in a responsible manner can also empower workers across the entire organization. For example, Responsible AI can help ensure that AI systems schedule workers in ways that balance employee and company objectives. By building more sustainable schedules, companies will see employee turnover fall, reducing the costs of hiring and training—over $80 billion annually in the US alone.

More: https://www.bcg.com/

By Steven MillsElias Baltassis, Maximiliano Santinelli, Cathy CarlisiSylvain Duranton, and Andrea Gallego

BCG GAMMA is BCG’s global team dedicated to applying artificial intelligence and advanced analytics to business at leading companies and organizations. The team includes 800-plus data scientists and engineers who apply AI and advanced analytics expertise (e.g., machine learning, deep learning, optimization, simulation, text and image analytics) to build solutions that transform business performance. BCG GAMMA’s approach builds value and competitive advantage at the intersection of data science, technology, people, business expertise, processes and ways of working. For more information, please visit our web page.

Authors: Steven Mills, Partner & Associate Director, Data Science, Washington, DC: Elias Baltassis, Partner & Director, Paris; Maximiliano Santinelli, Associate Director, Data Science, Boston; Cathy Carlisi, Managing Director, BrightHouse, Atlanta; Sylvain Duranton, Managing Director & Senior Partner, Global Leader, BCG GAMMA, Paris, Andrea Gallego, Partner & Chief Technology Officer, BCG GAMMA, Boston

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BCG’s Center for Climate Action: Climate Should Not Be the Virus’s Next Victim

The COVID-19 pandemic swept the world in just a few months, with immediate and catastrophic consequences: hundreds of thousands of deaths and a global economic standstill. The climsate problem has unfolded over decades but, if left unchecked, will likewise have profound and permanent consequences for lives and economies on the planet.

As countries globally are feeling the strain on their economies, climate is at risk of becoming the pandemic’s next victim. This must not happen. As they  mobilize massive resources to tackle COVID-19 governments, businesses, and investors have a once-in-a-lifetime opportunity to rebuild in ways that support a carbon-neutral future and usher in a new economy. By focusing on the climate agenda, even in the midst of this pandemic, leaders can direct investments toward sustainable infrastructure, green jobs, and environmental resilience. This isn’t just a moral imperative—it’s also an economic one.

The COVID-19 Crisis Is a Threat to the Climate

In the wake of the pandemic, global carbon emissions are expected to decline by 5% to 10% in 2020. This is the largest drop since World War II. (See Exhibit 1.) But instead of offering relief for the climate, it actually veils a significant threat.

In theory, this year’s projected drop in greenhouse gas emissions puts the world on a trajectory to limit global temperature rise to 1.5°C by 2050. (According to the UN’s Intergovernmental Panel on Climate Change, the world requires a 5% reduction of global net emissions every year to reach the 1.5°C goal by 2050.) But a crippling economic shutdown cannot be a first step toward this path. Instead, preventing the climate crisis will require fundamental economic transformation.

On the one hand, COVID-19 will almost certainly trigger a few helpful structural shifts—including more remote working, less frequent and shorter-distance business travel, and abbreviated supply chains—as companies seek to derisk their operations. On the other hand, the risk of a significant rebound in emissions—and worse, a delay in the needed transformation of global economies—currently seem much more likely, for several reasons:

  • The asset base is carbon dependent. In many sectors, dependence on fossil fuels is hardwired into production and business models. Without active moves by governments and businesses, countries will gradually revert to combusting high levels of coal, oil, and gas as the economy rebounds.
  • Fossil fuels are cheap. Much of the energy transition so far has been driven by the growth of wind and solar, with electric mobility gaining momentum. Now a perfect storm of COVID-19-induced demand shock and oil-producer-induced oversupply has hit the oil market—briefly turning US prices negative for the first time in history. As gas and coal prices fall, the economic case for lower-carbon energy sources diminishes.
  • Funding capacity has eroded. The pandemic has eroded trillions of dollars of global GDP, and while many decarbonization levers can benefit GDP, delivering on the Paris agreement will require a total of $75 trillion in investments. Funding these investments will become more challenging, especially in emerging economies that are already struggling to pay off their existing foreign-currency debt as a result of capital flight.
  • Focus may shift. With jobs, health, and economic well-being on the line, governments and the public are more focused on addressing this urgent and very visible crisis than on longer-term challenges such as climate. As a result, the needed economic transformation could well be put on hold.

Despite the decline in this year’s emissions, we will still be adding more than 47 gigatonnes of CO2 equivalent into the atmosphere (down from approximately 53 gigatonnes last year). The next few years are decisive for bringing this figure down further, and our actions will shape the planet for generations to come. Unless we manage to fundamentally transform global energy systems and lay the foundation for a green economy now, the pandemic-induced drop in global emissions will not be the beginning of a turnaround, but a one-off effect for climate.

By Patrick HerholdVeronica ChauMichel FrédeauEsben HegnsholtJoerg HildebrandtCornelius Pieper, and Jens Burchardt

More: BCG

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Allianz: Shipping losses at record low, but Covid-19 impact and political tensions cloud the horizon

  • Safety & Shipping Review 2020: 41 large ships lost worldwide in 2019, down by more than 20% year-on-year and almost 70% over a decade.
  • Number of shipping incidents (2,815) is up, as are claims from machinery issues. Ro-ro vessel safety is a growing concern.
  • Consequences of coronavirus and a sustained economic downturn could threaten long-term safety improvement and trigger an uptick in losses from cost-cutting measures, fatigued crew, idle vessels and weakened emergency response.
  • Rising geopolitical tensions, emissions rules and de-carbonization targets, mis-declared cargo and fire incidents continue to pose risk challenges.

Large shipping losses are at a record low having fallen by over 20% year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020. However, the coronavirus crisis could endanger the long-term safety improvements in the shipping industry for 2020 and beyond, as difficult operating conditions and a sharp economic downturn present a unique set of challenges.

“Coronavirus has struck at a difficult time for the maritime industry as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels,” says Baptiste Ossena, Global Product Leader Hull Insurance, AGCS. “Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”

The annual AGCS study analyzes reported shipping losses over 100 gross tons (GT) and also identifies 10 challenges of the coronavirus crisis for the shipping industry which could impact safety and risk management. In 2019, 41 total losses of vessels were reported around the world, down from 53 12 months earlier. This represents an approximate 70% decline over 10 years and is a result of sustained efforts in the areas of regulation, training and technological advancement, among others. More than 950 shipping losses have been reported since the start of 2010.

Coronavirus challenges

The shipping industry has continued to operate through the pandemic, despite disruption at ports and to crew changes. While any reduction in sailings due to coronavirus restrictions could see loss activity fall in the interim, the report highlights 10 challenges that could heighten risks. Among these are: 

  • The inability to change crews is impacting the welfare of sailors, which could lead to an increase in human error on board vessels.
  • Disruption of essential maintenance and servicing heightens the risk of machinery damage, which is already one of the major causes of insurance claims.
  • Reduced or delayed statutory surveys and port inspections could lead to unsafe practices or defective equipment being undetected.
  • Cargo damage and delay are likely as supply chains come under strain.
  • The ability to respond quickly to an emergency could also be compromised with consequences for major incidents which are dependent on external support.
  • The growing number of cruise ships and oil tankers in lay-up around the world pose significant financial exposures, due to the potential threat from extreme weather, piracy or political risks. 

“Ship-owners also face additional cost pressures from a downturn in the economy and trade,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”

More: AGCS Marine Risk Consulting