Two geophysicists, one from England and the other from the United States, both believe that an area called “La Cumbre Vieja” on the island of La Palma (in the Canaries) will eventually fall into the Atlantic - some 300 cubic miles of material. This will create a Mega-Tsunami that will be 100 meters tall, 2 kilometers long and travel at 500 miles an hour across the oceans. The BBC did an hour-long documentary about the preparedness of New York City to respond to it’s arrival when it was an its way. The CEO of the Emergency Preparedness Department of the city, Joseph J. Esposito, estimated that 50% of New Yorkers would not heed the warnings. The total estimated death toll along the east coast of the US alone would be some 50 million people. A disaster of unprecedented scale.
In the world of digital technology there is also a disaster of unprecedented scale occurring today that I call the “Digital Tsunami”. This tsunami is unprecedented in human history for is transformative power and the speed at which it is moving. Not believing that it has arrived and/or not acting on that belief means corporate death – no company can survive if it doesn’t get started.
First, the amount of innovation in America, China and India is incredible but it is largely invisible. You can’t understand the scope and scale of innovation reading journals as it’s simply not there. The New York Times and the Financial Times of London has very little on innovation. These and other journals publish all kinds of stories on publicly traded companies but virtually nothing on the world of Private Equity which is sponsoring this innovative tsunami. To understand what’s really going on in this private world you have to subscribe to an expensive consulting report like CBInsights.
For example, in the field of advertising over the last five years there have been something in the order of 14,000 startups and that's only the tip of the iceberg. There are something in the order of 500 million supportive applications that have been developed to supplement the original programs.
In the field of artificial intelligence alone the amount of invested capital has increased from $2 billion to $34 billion over the last two years. This is an extraordinary explosion of investment by both the large publicly traded companies and the some 6,000 firms in the private equity space.
Secondly, the speed at which these innovations are adopted is unbelievable. It is estimated that ChatGPT got to 1 million users on its first day and then to100 million users within two months of its appearance. Compare that with, say, the invention of the telephone which took 60 years to get to 80% of the US population. TheChatGPT pattern is a similar pattern to what's happened with the ubiquity today of smart telephones of which there are now almost 7 billion in use around the world today.
So, the world we live in is changing dramatically almost every single moment of every day with one innovation or another. The giant corporation Google estimates that some of it's technological tools are improving by 100% every 3 1/2 months. With such an extraordinary pace of innovative change, companies that don't start down this road immediately are going to be faced with annihilation in the very near term.
An example of a successful adoption of these technologies would be the John Deere company. It will likely be remembered as a manufacturer of farming machines painted green. But in 2017 it invested some $275 million in a company known as Blue River Technology. Blue River has the capability of assessing the needs of each individual plant in a farmer's field...called “See and Spray.” Now a farmer need not water his/her entire field in order to maximize productivity but only those plants that need more moisture; some 60% of the costs of water fertilizer and pesticides are saved.
In addition to the impact of Blue River, John Deere has a suite of innovations in the pipeline with over 30 joint ventures and investments with new technological potential. Yes, John Deere is still in the farming machine business, but it has really transformed itself into a farming productivity and yield company from a metal bending organization. How can any competitor who still only sells the machine compete in the long term?
Another example is Google’s Med-palMD. This company is a licensed doctor in the state of California. YES – a licensed medical doctor. The program scored 87% in thestate medical exam. It is overseen by a group of five physicians who make sure of the diagnoses that it comes up with. But over its first year of operation the program was so successful at recognizing the symptoms real patients were showing up with that, in fact, the oversight group has a much-diminished role.
An extraordinary component of this “doctor” is that the patients deemed it to be 40% more empathetic than their real-life counterparts. It is always polite and concerned and never gets tired. The result, a program that is more accurate AND more empathetic than it’s human counterparts….extraordinary and it’s already happened!
In many areas, artificial intelligence applications yield significantly better results than humans and in many fields from medicine to consulting, Generative AI is becoming equal to all but the “best” humans from biology to medicine to accounting to engineering – field of endeavour after field of endeavour.
The contention of leaders in these innovative fields, from Sundar Pichai of Google to Elon Musk, is that those companies that fail to adapt to the Digital Tsunami will all be gone and gone shortly.
So, get started as an observer, an executive or a director. Get started today. An interesting and somewhat reasonable but radical proposal, made by Marc Andreessen of the famous A16Z venture capital firm:
“Make your CTO your CEO today!”
About the Author: Professor Emeritus David R. Beatty at Rotman School of Management
One of the world’s most experienced corporate directors and educators, David has served as a Director on 40 boards in Canada, America, Mexico, Australia and England and been chairman of 9 public and 2 private companies. He was the founding Managing Director of the Canadian Coalition for Good Governance (2003-2007), an organization that today represents 50 institutional investors with ~$3 trillion of assets under management (AUM).
In 2004, he helped create and still helps oversee the Canadian Directors’ Education Program with the Institute of Corporate Directors (ICD), a rigorous 12-day course that has now graduated over 8,000 senior Canadian entrepreneurs, directors and family office members.
Overseas he has taught In dozens of other jurisdictions. For example, From 2010 until 2017 he and the GCC BDI created and led the Directors Education Program for Saudi Aramco, the world’s largest company headquartered in Dammam, Kingdom of Saudi Arabia.
In 1994 he was made an Officer of the Most Excellent Order of the British Empire (O.B.E.) by Her Majesty Queen Elizabeth II at Buckingham Palace for his services to Papua New Guinea. In 2012 he was awarded a Queen Elizabeth II’s Diamond Jubilee medal for his contributions to Canadian mining. In 2013 he was inducted into the Order of Canada (C.M.) the nation’s highest civilian honor. The only recipient ever to be cited for his work on Canadian Corporate governance. In 2018 he was presented with a Lifetime Achievement Award by the International Corporate Governance Network (ICGN) a grouping of global asset managers with AUMs ~$50 trillion in 47 nations. He was only the third Canadian to be so recognised