Profiting from the next Industrial Revolution

26 March 2019

On 13 March, the Australia-Israel Chamber of Commerce, together with partners Commonwealth Bank and BWD hosted a business lunch featuring panel of experts including Kylie Macfarlane, General Manager Corporate Responsibility, Commonwealth Bank of Australia, Dr Hugh Bradlow, President of the Australian Academy of Technology and Engineering, board member of Silicon Quantum Computing and former Chief Scientist at Telstra and Dr Jeanne Ng, Director of CLP Research Institute and Chairman of the Hong Kong Institute of Qualified Environmental Professionals.

The discussion was wide-ranging and explored how and why sustainability and technology are driving the new corporate agenda, how to manage technological disruption and create sustainable busines practices and how corporate Australia can profit from the Fourth Industrial Revolution.

Moderator Derryn Heilbuth, Managing Director of strategic advisory firm BWD kicked off discussions by asking panellists where they saw the biggest opportunities in fourth industrial revolution.

Dr. Hugh Bradlow said blockchain was too fragmented, but IoT would transform the world and 5G would have a huge impact across the economy.

“The industries most affected will be healthcare and transport. Machine vision and big data are important, the rest of the technologies are still emerging,” he said.

On the question of ethics around AI, Kylie MacFarlane said ethics committees and frameworks would become the norm as the data economy and resulting issues of privacy grew.

“As corporates, if we use data, we need to ask ourselves how do we think about privacy at scale?”

Dr. Jeanne Ng agreed that ethics was very important. She said that technologies happen where there’s no regulation.

“Regulation will come, but it’s a laggard,” she said.

“There is innovation, then a flurry of activity and then regulation will respond to cracks in the ecosystem. How prepared are we to self-regulate and be accountable?”

Jeannie added it would be good if businesses got together to level the playing field and started to shape some principles.

The discussion moved to the opportunity around smart cities, and, in particular, China and Hong Kong’s response to the growing interest in smart cities.

Jeanne said that things were moving very quickly in China, but that Hong Kong was a little behind.

“It’s very fast in China, and there are a lot of advancements you don’t hear about. It’s top down in China - data is owned by government - so the question of privacy doesn’t apply. The government can advance technologies very quickly as it has the right to know where its citizens are at any given time,” she said.

She spoke of a report released by the China State Council recommending that nine mainland Chinese cities work together to become comparable to Silicon Valley, but she said there is a social and psychological barrier that needs to be overcome.

“The governments between the different cities are not used to communicating, everyone sees each other as a competitor. We need to learn to collaborate,” she said.

Hugh said there were only two key areas with regards to smart cities – traffic/transport/parking and policing and surveillance. He said things like ‘smart bins’ were insignificant.

The panel were asked to share their thoughts on whether we have the business culture capable of addressing 21st century problems, and were we making a mistake by putting the ‘geeks’ in the back office and not getting them involved in strategy?

Kylie said we will evolve because we will have to.

“It won’t be a smooth, consistent transition - there will be economic winners and losers, companies will come in and out, share prices will go up and down. There is a social shift that has to happen,” she said.

“What role will organisations have in welfare provisions when we transition workforces, and how do we make sure the social consequences aren’t a shock that adversely affects people’s health and wellbeing?”

She said there are companies writing job descriptions for jobs that don’t exist yet and bringing people into these roles. Qualities such as adaptability, creativity and being agile are part of the descriptions.

“We need to forethink the demand and supply. Geeks are already ruling the world, leave them in back room at your peril,” she continued. “There is a continuum between innovation and wisdom and we need both.”

Hugh said that more engineers and scientists will be required as you won’t be able to use and understand quantum computing unless you have deep maths and physics knowledge. He said we currently are excluding half the workforce – only 22% of AI professionals are women.

“We need to shift our culture dramatically or else it’s going to be huge challenge; we need to bring up the levels of all people who are going to be displaced…which is most people in most jobs.”

Jeanne said we have chartered accountants and chartered engineers but environmental professionals don’t have formal recognition.

“Companies want people with experience and accreditation, so we need to recognise the human capital required to do this type of work.”

She also said that our education system needs a major overhaul starting from kindergarten.

“What is it that we should be teaching people, and how do we prepare them for all these changes?” She said diversity is going to be extremely important, and that we need diverse range of experts around the table to think about design, strategy and implementation.”

Moderator Derryn then asked the panel what advice we should be giving boards about long-term value creation, and Jeanne said there are enough lessons of companies not looking in the right direction.

“Boards need to be shown examples like Kodak,” she said. She spoke about CLP’s board and senior management’s trip to Israel.

“It was a real eye opener. The world is changing so fast, they hadn’t seen that before. So, it’s about going to places that are the top in the world [like Israel] to help open their eyes,” she said.

Kylie said we need to go beyond boards - they have a fiduciary duty, but shareholders have the power.

“Environmental activists first hit the company taking the fossil fuels out of the ground, now they realise you need to talk to the investors, as they’re the ones who can drive the change through,” she said.

During the audience Q&A, Jeanne was asked about CLP’s integrated reporting approach. She said that annual reports typically focus on financials, whereas integrated reporting asks what are the core things to include including risk management and emerging opportunities?

Jeanne added that integrated reporting created more conversation between the different parties; it raised awareness on the data side and helped the organisation make decisions from a strategy perspective.

“Integrated reporting forces the attention of the board, CEO and CFO. It’s a good starting point as it gets people to sit together and decide on one deliverable,” she said.

Kylie said [in Australia] we are at the start of this journey.

“There are many group data warehouses for financial reporting, but no investment for non-financial reporting, and this information needs to be just assured,” she said.

The discussion concluded with thoughts from speakers on a re-emphasis on the arts, humanities and social justice.

When asked how a focus on AI and science could help with the issues of overpopulation, obesity and mental health that society is now facing, Kylie gave the example of bots as a proxy for human carers in homes.

“These bots deliver eye contact, as it’s been found that eye contact is important for wellbeing,” she said.

“As well as STEM there is now HEAT – humanities, engineering, art and technology,” she continued.

“Creativity is becoming more and more important, ethics will be at the forefront of the discussion and we will see the re-emergence of liberal arts degree.”

Hugh said we need EQ as well as IQ – ‘backroom geeks’ can’t identify these issues.

“Mental health will be the number one problem of the next 50 years, not climate change, not urbanisation,” he concluded.