What Company Boards Need To Know About AI

(THIS ARTICLE IS COURTESY OF HARVARD BUSINESS REVIEW)

 

What Boards Need to Know About AI

MAY 24, 2019

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Being a board member is a hard job — ask anyone who has ever been one. Company directors have to understand the nature of the business, review documents, engage in meaningful conversation with CEOs, and give feedback while still maintaining positive relationships with management. These are all hard things to balance. But, normally, boards don’t have to get involved with individual operational projects, especially technical ones. In fact, a majority of boards have very few members who are comfortable with advanced technology, and this generally has little impact on the company.

This is about to change, thanks to machine learning and artificial intelligence.

More than half of technology executives in the 2019 Gartner CIO Survey say they intend to employ AI before the end of 2020, up from 14% today. If you’re moving too slowly, a competitor could use AI to put you out of business. But if you move too quickly, you risk taking an approach the company doesn’t truly know how to manage. In a recent report by NewVantage Partners, 75% of companies cited fear of disruption from data-driven digital competitors as the top reason they’re investing.

The questions boards are going to have to ask themselves are similar to those they would ask in the face of any large opportunity investment: Why are we spending all this money? What’s the economic benefit? How does it impact our people and our long-term competitiveness?

INSIGHT CENTER

Answering these questions requires expertise in technology. But you can’t just add a tech expert to the board and count on him or her to keep the rest of the board up to speed. Having served in that role, I have found it to be at best a useful half-step. Relying on a single techie is no replacement for having a full board mastering at least a basic understanding of AI and its disruptive potential.

Every board’s comfort level is going to differ depending on the industry. Manufacturers well understand how robots can free up people to do higher-order work by taking on repetitive and potentially dangerous jobs. Hospitals and health insurers are starting to deploy AI widely, but big successes have been elusive. By contrast, the financial services business is ripe for disruption by AI. Lenders have massive amounts of data and the potential to free up billions in cash flow by finding new efficiencies through applications that will, for example, help bankers make smarter lending decisions and create new revenue opportunities by offering customers better, more tailored products.

That said, here are four guideposts that board members in any industry can use to orient themselves when they begin the journey:

It’s math, not magic. Boards shouldn’t be intimidated by AI. Members don’t need to have degrees in computer engineering to understand the technology behind AI, just like they don’t need to be CPAs to understand the company’s balance sheet. Any good use of ML or AI is going to be an outgrowth of what the company is already doing, not some kind of universal all-knowing Skynet type of AI. Keeping that perspective at the forefront and gaining a basic understanding of AI will help boards better decide how to direct AI use.

Well-run AI projects should be easily understood. When evaluating if a project is right for their company, boards should feel confident enough to say when something doesn’t make sense. The best-run AI projects should be explainable in plain English. It should be clear how real groups of people, whether employees, customers or management, will be affected. If a vendor or internal team can’t explain how an AI project works, it may not be the right fit for your company. This is not unique to ML — it used to be true for ERP implementations — but ML is moving more quickly through the corporate world than ERPs did. For example, when I presented an ML-underwriting project to the board of one top credit-card issuer, I started with the economic impact to their business, the timeframe for delivery, what the roadblocks might be for IT and compliance, and who would need to get involved.

You don’t have to get creepy to get value out of data. Too often, companies assume that in order to make the most out of AI, they need to be like Facebook or Google and pull in every last bit of data they can find. But that can get creepy fast and, usually, there’s no need for that level of data. Our work developing machine learning-based credit underwriting models with banks and lenders has shown that social media data doesn’t provide such strong signals, anyway. Most companies are already sitting on a ton of pretty banal data that’s full of signal and insights that can be unlocked using ML.

AI is an operating expense, not a capital investment. If management’s plan for getting on the AI bandwagon revolves around a big one-time investment, chances are they are going about it wrong. AI has the potential to enhance the bottom line by boosting revenue and cutting costs, but budget needs to be put aside to ensure the algorithms and models are functioning properly and are being rebuilt or refit as macro factors change and new sources of data emerge. Think of AI as you would a Formula 1 race car, which performs best when its support team has a real-time view of the vehicle’s health as it’s zipping around the track.

Widespread adoption of AI in business is still in its infancy. Boards that fail to get in front of this trend will pay the price.


Douglas Merrill is the CEO and founder of ZestFinance, a Los Angeles-based financial services technology company. He was previously CIO and VP of Engineering at Google.

$15 Minimum Wage Is Not The Real Issue: $3 Per Hour Could Be Okay If…

 

This article today is going to be about humanity, and the political situation here in the U.S., yet this same discussion is true within all Nations on Earth. As the World economic picture becomes more and more automated and global, this situation becomes more true of every Nation. Last month when the U.S. held their Presidential election I voted for a “3rd Party” Candidate, not for Ms. Hillary or for Mr. Trump. This article is simply my opinions and beliefs and I am well aware that many of you folks reading this article will not agree with parts of, or maybe even with any of what I am going to say in it.  I know, as you do, that there is no such thing as pleasing any of the people all of the time so quite honestly, I don’t even bother trying to. I have one goal in my articles and that is in saying what I believe to be %100 truthful with my readers. The reason that I could not vote for Ms. Hillery is because she has proven herself over and over again to be an habitual liar. The reason I could not vote for Mr. Trump is because he is a total egomaniac and quite frankly, I don’t trust either of them to be honest with the people of this Country, at all. I believe that both are very dangerous to not only this Country, but to every Country on Earth. Also being that I am a fundamentalists believer of the Christian faith, I do believe what the Scriptures say about Demons possessing humans who do not have the Holy Spirit residing within them. Quite simply I do not believe that either of those two folks “Temples” are occupied by the Spirit of God.

 

I had the same issue as millions of other people last month when it came down to whom to vote for. I knew that one of the “big two” would win the election and that both of them were saying some good things about what they wanted to do to/for the Country and yet worried about what each would do to the Country. I believe that with Ms. Hillary that the minimum wage would go up and that with Mr. Trump having a Republican Congress and Senate, that the minimum wage may actually go down. There are many other issues that are worthy of discussion but today, this article is going to be about the $15.00 per hour minimum wage that Democrats have been pushing for the past year or so. Now remember (for those of you who know me) that I am a registered Independent and I do vote that way, I am closer to neither party.

 

Now let’s begin with my form of  “logic”. Do I believe that the minimum wage should be $15.00 per hour, or more? My answer to this question is basically, no, but it depends on a few other factors. Do I believe that flipping burgers for a living is worth a $15.00 per hour minimum wage, my answer is no, but then neither are thousands of other jobs here in this Country. If a your wage is $8.00 per hour, $15.00 per hour or $100.00 per hour yet it will only buy the same amount of things that you are able to buy with your current income right now, what does it matter what that minimum wage is? If your Country’s economy goes to ‘hell’ like it has in Countries like Zimbabwe and the inflation rate is in the thousands of percent per month, your currency is worthless. What my two parents could afford in 1965 with both of them working minimum wage factory jobs, I could not afford working two minimum wage jobs, one in a factory and the other an unarmed Security job in 1975. By 1981 when I moved to North Texas I witnessed many places where people working minimum wage jobs had rented three bedroom apartments where each apartment had three couples working just so they could afford a roof over their heads. What I also noticed was that in most cases between the three couples they never had more than one vehicle that they were sharing but in most cases, all six people were having to walk to work because they could not afford transportation.

 

There used to be a television show called “The Jefferson’s”  where a man named William Sherman was the lead Actor as Mr. Jefferson. I believe that many of you folks know this program, it was a rather good comedy. In one of the programs Mr. Jefferson dreamed that he had died and came back 25 years later so he checked in on his wife to see how she was doing. In one part of the skit a small girl came into their apartment and asked her Grandpa if she could have $5.00 so that she could get an ice cream, Grandpa’s response was “what, only $5.00” and you could hear the studio audience laugh. At the time you could buy and ice cream off of one of those portable ice cream trucks for a dollar of less. The joke was about the inflation rate during those 25 years Mr. Jefferson was dead and gone. Today, many of those ice creams will cost a person $3-4.00, it is not so humorous any more.

 

Inflation is pushed Nation wide by local politicians. The reason I say this is simple, all politicians at all levels want two things from the people, your vote and more of your money. Basically all local, County, and State Governments can never manage the tax revenues they get well enough so they are always wanting increases so that they can meet their obligations. How do they do this? Homeowner’s know, people want equity in their homes, the way you get this equity is to make your payments which gives you a tiny bit that goes on your principal each year, but the biggest fastest way is when the local politicians raise the value of your home. The kicker is that you had to pay more taxes, but hey, your home is worth more, meaning that you are worth more. But are you really? As the home values goes up each year the rest of the Nation’s economic cost factors build on the housing “boom” and everything goes up, except the wages of the working class people. Think about this issue, I am 60 yrs old and not once in my lifetime has the Federal minimum wage gone up when there has been a Republican in the White House and with Mr. Trump this worker’s wage may well go down.

 

This suggestion will never happen, I have no doubt about the fact, but please consider the concept for a moment. If I am making $15,080 per year before all the taxes I have to pay out of that salary and I have to pay rent and usually some of the utilities, mainly the power bills this can very easily in most markets be at least $800.00 per month. The $15,080 figure is what a minimum wage worker can earn per year if they do not miss one single day of work all year-long for any reason. After taxes if you are lucky you may clear $13,000, housing $9,600. This leaves $3,400 for things like required insurances, food, clothing, medical care, furniture, transportation cost like payments, gas, repairs, insurance and the list goes on and on. Yet the average CEO here in the U.S. makes 791 times more than their employees make.

 

If you or I could buy a new car for  $2,500-3,000 like we could in 1965, if you could still buy an 8 Acre farm for $8,500 dollars like you could in 1965 or rent a 3 bedroom house for $50 per month like you could then and you could go to the grocery store and buy food to feed a family of 5 for $20 per week, a $3 per hour minimum wage would have looked good because it would have been a “livable wage”. By the way, in 1965 the minimum wage was $1.25 per hour. What I am saying is that it does not matter if the minimum wage is $7.25 or $15.00 per hour if that wage is not a “livable wage”. The issue is that here in the U.S. the problem is greed at the very top levels, the top 1/10 of 1%. In Congress and in the Senate you have all of these multi millionaires and now all these billionaires in the White House (also most of the Cabinet) telling the working class that they can’t afford to pay the people a livable wage. Folks, it is the working class who actually does all the work that makes these greedy A-holes their millions and billions. They sit in their mansions being chauffeured to their offices while having other people going to the grocery stores for them and cooking their meals and cleaning their houses and doing their laundry for them complaining about how much they are having to pay “these people” who are walking to work and living in a slum or a pay by the week motel room. If you are making a million dollars a week clear money but you can’t afford to live any better than you are today at $15,000 per year what does it matter what the minimum wage number is? If a person is working a 40 per week job that person must be compensated at a “livable” rate! I do have one idea, it is one of those ideas that will never happen because the folks who have all the money, ie all the power, will never ever agree to it. The average CEO makes 791 times the amount of their workers. Make it a federal law that no one in a company can be compensated more than 50 times what their bottom wage earner makes. Why isn’t 50 times more, more than fair? I am sure many “top end ” folks would choke on their lobster tails and Caviar at the mere thought of having to survive on such a pittance!

 

Trump Has Already Betrayed The Working Class: He Has Proven He Is A Fraud And A Con

(This Article Is Courtesy Of The Huffington Post)

Trump Has Already Betrayed The Working Class

Donald Trump has betrayed the American working class. He is a fraud and a con.

12/08/2016 01:58 pm ET | Updated 1 hour ago

DREW ANGERER VIA GETTY IMAGES

They voted for him in droves. In a remarkable political shift, the white working class who have seen their wages decline over decades thanks to shameless pandering to Wall Street and big business by both political parties, finally gave up on the Democrats and threw their lot in with billionaire businessman Donald Trump.

Some have tried to argue that the switch didn’t really have to do with economics but the numbers say otherwise. According to CNN exit polling, voters earning under $30K shifted towards Trump by 16 percent. Trump won 79 percent of those who said the economy was poor. Even Trump’s embrace of white nationalism is after all a form of economic protectionism. If you feel there’s a limited pie, then you’ve got a better shot at your slice if you don’t have to compete against those “other” people. With his pick for Labor Secretary though Trump revealed exactly what kind of President he’s going to be for those who had any doubts. Trump is not going to save the working class, he’s going to destroy it.

Meet your next Labor Secretary Andrew Puzder. He is the CEO of Hardee’s and Carl’s Jr. He thinks to Make America Great Again, we need to pay workers less or ideally, give their jobs to robots. I’m not kidding. In an interview with Business Insider, Puzder explained that he thought getting the workers out of the restaurant biz would be a great thing because robots are:  “…always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”

Oh human beings and their unreasonable desire to earn enough to live AND not be discriminated against. It’s all so inconvenient for corporate CEO’s like Puzder. We should just relegate these service jobs to the dustbin of history the way we already did with so-called “old economy” jobs. You know, the kind that actually allowed you to eat, buy a house, and pay the bills all at the same time. #MAGA.

By choosing Puzder for Labor Secretary, Trump has thrown his lot in with those who view workers as commodities to be used and discarded when they are inconvenient

 Now virtually no one aspires to a fast food job. Folks like Puzder who want to keep wages at their current level of roughly $18K per year like to pretend fast food jobs are just starter jobs for teenagers. I mean, these aren’t the sort of jobs that you are expected to raise a family on, right? Well, this is as much of a fantasy as the idea that Trump is a working class hero. Seventy percent of fast food workers are older than 20. The average age of a fast food worker is 29.

The reason for this is simple: low-paying service jobs are what our economy creates now even as middle class jobs decline. A majority of jobs lost during the Great Recession were middle-income jobs. A majority of those gained were low wage. Food service prep, cashier, and sales clerk are the three most common jobs in the country employing some 10 million plus American workers. If you automate those three jobs, what will replace them? Low-paying service work may not be ideal but it beats the heck out of no jobs at all. People who view the loss of these 10 million jobs as a great thing are the same type of people who drive through the derisively named “Rust Belt” and see “creative destruction” and “progress” instead of destroyed communities and destroyed lives.

Lest you think Puzder’s worker contempt is out of step with Trump’s supposed populism, Trump himself begs to differ. In a typically whiny and petty reaction to criticism, Trump tweeted this week that Carrier’s union workers themselves were responsible for the company deciding to ship jobs overseas.

He tweeted: “If United Steelworkers 1999 was any good, they would have kept those jobs in Indiana. Spend more time working-less time talking. Reduce dues.” Puzder shares Trump’s “blame the worker” mentality and has no sympathy for workers seeking to earn a higher wage. Speaking with Business Insider, he blamed his own push towards automation on wage growth.  In Puzder’s world, it’s not his fault if Hardee’s workers are replaced with robots even though as CEO of the company he is in fact the one making exactly that decision.

Of course, Trump’s working class hero schtick was always a complete sham.

 The fault really lies with all of those high on the hog living workers with their $18K per year incomes and the advocates who would outrageously push to make those wages higher. You will not be surprised to learn then that one of Puzder’s favorite pastimes is penning Wall Street Journal op-eds on why lifting the minimum wage would just be dreadful. Typical line: “Does it really help if Sally makes $3 more an hour if Suzie has no job?” Exactly. So why not get rid of the minimum wage altogether and pay Sally the 50 cents per hour that you apparently think she’s worth?

I’ll tell you why. Because once long ago, we decided as a nation that we valued our workers.  We believed that we would all prosper if American workers earned enough to buy the goods and services they produce. We decided that workers shouldn’t toil for 40 hours a week and still live in poverty. Visionaries like Henry Ford understood this, and FDR, and the labor leaders who fought to birth the great American middle class which used to be the envy of the world. You want to make America great again? Try connecting with that American past.

By choosing Puzder for Labor Secretary, Trump has thrown his lot in with those who view workers as commodities to be used and discarded when they are inconvenient or when those workers become a penny more costly than a touch screen computer. He has thrown his lot in with those who view a future of endless Gilded Age inequality as inevitable. By choosing Andy Puzder as Labor Secretary, Donald Trump has betrayed the American working class. He is a fraud and a con.

Of course, Trump’s working class hero schtick was always a complete sham. The man rails against companies shipping jobs overseas while he makes his own schlocky crap in Mexico and Bangladesh for God’s sake. He stiffs contractors. He buys his steel from China. He illegally busts unions at his gaudy casinos! It is time for those of us who actually care about workers and see them as human beings rather than an expense item on the balance sheet, to stop licking our wounds and start fighting for those who will suffer the most under President Trump.