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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
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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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The Cyber-Organisation and the New World of Work

The Cyber-Organisation and the New World of Work: Advocating a twin governance and collaborative intelligence solution to overcome a constant disruptive business context

By Mario Raich, Simon L. Dolan, Dave Ulrich and Claudio Cisullo

This paper explores the concept of the cyber-organisation and, in particular, the so-called cyber-enterprise and its functionality in a business context that is constantly generating disruption due to rapid technological advances and a shift in the definition of work. The cyber-enterprise is, and will be, operating in this fast-changing context driven by artificial intelligence. We argue that cyber-reality will change the fundamental roles of all stakeholders, be they employees, suppliers, customers, investors, partners, associations or governmental agencies, and will require corresponding changes in the governing bodies of organisations. Today, we are living in a world in transition and transformation(1). There are three powerful converging megatrends that may explain the shaping of the new world of work: globalisation, digitalisation and creation / destruction. Add to this the rise in cyber-reality, artificial intelligence (AI), global connectivity, as well as hybrid reality, hybrid work and business entity, and, finally, new, disruptive technologies like quantum computing, blockchain, neurotech and robotics, and you will understand that a new form of cyber-organisation is emerging. It is not a luxury; it is a vital necessity in order to survive and sustain business. We propose a new structure of twin boards to deal with this new business environment strategically and operationally.

Beyond contexts related to business, we are also facing global challenges threatening our sheer existence: demographics and global migration; environmental deterioration through global pollution; climate change; asymmetric conflicts and wars. Other contributing factors that are shaping, or will shape, the cyber-enterprise include the emerging new “Intelligent Internet” (including the Internet of Things), combined with machine learning, mobile technology and new technologies encompassing people, artefacts and cyber-entities (CE)1, which is on the way to becoming the first autonomous cyber-entity existing and acting in hybrid reality.

Beyond digital reality, a new, much-more-potent and disruptive revolution is surfacing: cyber-reality (CR). Cyber-reality is a powerful configuration of elements from digital reality, augmented reality and virtual reality. Together with artificial intelligence (AI), it will lead to a far more radical transformation than anything we have seen before. In fact, digitalisation is just one step, albeit a necessary one, in the transition towards virtual reality (VR). The progress of VR is tightly linked to the development of computer technology and artificial intelligence.

More: https://www.europeanbusinessreview.com

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Oil and gas after COVID-19: The day of reckoning or a new age of opportunity?

he oil and gas industry is experiencing its third price collapse in 12 years. After the first two shocks, the industry rebounded, and business as usual continued. This time is different. The current context combines a supply shock with an unprecedented demand drop and a global humanitarian crisis. Additionally, the sector’s financial and structural health is worse than in previous crises. The advent of shale, excessive supply, and generous financial markets that overlooked the limited capital discipline have all contributed to poor returns. Today, with prices touching 30-year lows, and accelerating societal pressure, executives sense that change is inevitable. The COVID-19 crisis accelerates what was already shaping up to be one of the industry’s most transformative moments.

While the depth and duration of this crisis are uncertain, our research suggests that without fundamental change, it will be difficult to return to the attractive industry performance that has historically prevailed. On its current course and speed, the industry could now be entering an era defined by intense competition, technology-led rapid supply response, flat to declining demand, investor scepticism, and increasing public and government pressure regarding impact on climate and the environment. However, under most scenarios, oil and gas will remain a multi-trillion-dollar market for decades. Given its role in supplying affordable energy, it is too important to fail. The question of how to create value in the next normal is therefore fundamental.

To change the current paradigm, the industry will need to dig deep and tap its proud history of bold structural moves, innovation, and safe and profitable operations in the toughest conditions. The winners will be those that use this crisis to boldly reposition their portfolios and transform their operating models. Companies that don’t will restructure or inevitably atrophy.

A troubled industry enters the crisis

The industry operates through long megacycles of shifting supply and demand, accompanied by shocks along the way. These megacycles have seen wide swings in value creation.

After the restructurings of the early 1980s, the industry created exceptional shareholder value. From 1990 to 2005, total returns to shareholders (TRS) in all segments of the industry, except refining and marketing companies, exceeded the TRS of the S&P 500 index. Oil and gas demand grew, and OPEC helped to maintain stable prices. Companies kept costs low, as memories from the 1980s of oil at $10 per barrel (bbl) were still acute. A new class of supermajor emerged from megamergers; these companies created value for decades. Similarly, the “big three” oil-field service equipment (OFSE) companies emerged. Political openings and new technologies created opportunity for all.

From 2005 to January 2020, even as macro tailwinds such as strong demand growth and effective supply access continued, the global industry failed to keep pace with the broader market. In this period, the average of the oil and gas industry generated annual TRS growth about seven percentage points lower than the S&P 500 (Exhibit 1). Every subsegment similarly underperformed the market, and independent upstream and OFSE companies delivered zero or negative TRS. The analysis excludes companies that were not listed through this period (including some structurally advantaged national oil companies, and private companies).

Exhibit 1

In the early years of this period, the industry’s profit structure was favorable. Demand expanded at more than 1 percent annually for oil and 3 to 5 percent for liquefied natural gas (LNG). The industry’s “cost curves”—its production assets, ranked from lowest to highest cost—were steep. With considerable high-cost production necessary to meet demand, the market-clearing price rose. The same was true for both gas and LNG, whose prices were often tightly linked to oil. Even in downstream, a steep cost curve of the world’s refining capacity supported high margins.

Encouraged by this highly favorable industry structure and supported by an easy supply of capital seeking returns as interest rates fell, companies invested heavily. The race to bring more barrels onstream from more complex resources, more quickly, drove dramatic cost inflation, particularly in engineering and construction. These investments brought on massive proved-up reserves, moving world supplies from slightly short to long.

Significant investment went into shale oil and gas, with several profound implications. To begin with, shale reshaped the upstream industry’s structure. As shale oil and gas came onstream, it flattened the production-cost curve (that is, moderate-cost shale oil displaced much higher-cost production such as oil sands and coal gas), effectively lowering both the marginal cost of supply and the market-clearing price (Exhibit 2).

More: https://www.mckinsey.com

About the authors: Filipe Barbosa is a senior partner, Scott Nyquist is a senior adviser, and Kassia Yanosek is a partner, all in McKinsey’s Houston office. Giorgio Bresciani is a senior partner in the London office, where Pat Graham is a partner.

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AI, Robots, and Ethics in the Age of COVID-19

Before COVID-19, most people had some degree of apprehension about robots and artificial intelligence. Though their beliefs may have been initially shaped by dystopian depictions of the technology in science fiction, their discomfort was reinforced by legitimate concerns. Some of AI’s business applications were indeed leading to the loss of jobs, the reinforcement of biases, and infringements on data privacy.

Those worries appear to have been set aside since the onset of the pandemic as AI-infused technologies have been employed to mitigate the spread of the virus. We’ve seen an acceleration of the use of robotics to do the jobs of humans who have been ordered to stay at home or who have been redeployed within the workplace. Labor-replacing robots, for example, are taking over floor cleaning in grocery stores and sorting at recycling centers. AI is also fostering an increased reliance on chatbots for customer service at companies such as PayPal and on machine-driven content monitoring on platforms such as YouTube. Robotic telepresence platforms are providing students in Japan with an “in-person” college graduation experience. Robots are even serving as noisy fans in otherwise empty stadiums during baseball games in Taiwan. In terms of data, AI is already showing potential in early attempts to monitor infection rates and contact tracing.

No doubt, more of us are overlooking our former uneasiness about robots and AI when the technology’s perceived value outweighs its anticipated downsides. But there are dangers to this newfound embrace of AI and robots. With robots replacing more and more job functions in order to allow humans to coexist as we grasp for some semblance of normalcy, it’s important to consider what’s next. What will happen when humans want their former jobs back? And what will we do if tracking for safety’s sake becomes too invasive or seems too creepy yet is already an entrenched practice?

A New Normal Comes Racing In

After a vaccine for COVID-19 is developed (we hope) and the pandemic retreats, it’s hard to imagine life returning to how it was at the start of 2020. Our experiences in the coming months will make it quite easy to normalize automation as a part of our daily lives. Companies that have adopted robots during the crisis might think that a significant percentage of their human employees are not needed anymore. Consumers who will have spent more time than ever interacting with robots might become accustomed to that type of interaction. When you get used to having food delivered by a robot, you eventually might not even notice the disappearance of a job that was once held by a human. In fact, some people might want to maintain social distancing even when it is not strictly needed anymore.

We, as a society, have so far not questioned what types of functions these robots will replace — because during this pandemic, the technology is serving an important role. If these machines help preserve our health and well-being, then our trust in them will increase.

As the time we spend with people outside of our closest personal and work-related social networks diminishes, our bonds to our local communities might start to weaken. With that, our concerns about the consequences of robots and AI may decrease. In addition to losing sight of the scale of job loss empowered by the use of robots and AI, we may hastily overlook the forms of bias embedded within AI and the invasiveness of the technology that will be used to track the coronavirus’s spread.

More: https://sloanreview.mit.edu

About the Authors

Ayanna Howard (@robotsmarts) is the Linda J. and Mark C. Smith Professor and Chair of the School of Interactive Computing in the College of Computing at Georgia Tech. She also serves as director of the Human-Automation Systems (HumAnS) Lab in the School of Electrical and Computer Engineering. Jason Borenstein is the director of graduate research ethics programs and associate director of the Center for Ethics and Technology within the School of Public Policy and Office of Graduate Studies at Georgia Tech.