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Which innovations will shape Canadian industry in 2019?

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Canada is in the midst of an economic shift. New and traditional industries are increasingly being driven by innovation and these advances in technology are shifting the economic landscape at an unprecedented pace.

This is the assessment by Borden Ladner Gervais, which is Canada’s largest law firm. The company has issued a new thought leadership report, titled “Top Innovative Industries Shaping the Canadian Economy”.

The report weighs in on the opportunities and risks Canada faces in order to maintain its status as an international leader in innovation across eight key industries: cybersecurity, the Internet of Things, smart cities, cryptocurrency and blockchain, autonomous vehicles, fintech, renewable energy and cannabis.

To find out more about the report and its implications for Canadian businesses, Digital Journal spoke with Andrew Harrison, a partner at BLG.

Digital Journal: Where does Canada stand as a global tech innovator?

Andrew Harrison: Canada has always been at the forefront of innovation. Products developed by Canadians or Canadian companies encompass a variety of industries and include medicinal insulin, the snowmobile, the telephone, the pager, BlackBerry Messaging, IMAX, the Canadarm and the goalie mask, to name a few. Canadians are also fast adopters of new technologies; email money transfer between individuals, which was inconceivable only a few years ago, has been used by 63 per cent of Canadians.

This is why Canada is recognized worldwide for its research and technological know-how, but we have to be mindful of the challenges in a global competitive market.

DJ: What potential does Canada have to grow faster? Is this sector specific?

Harrison: Canada is well positioned to succeed and take the lead in all innovative industries, but there are definitely sector-specific challenges that could limit this growth. For example, the lack of regulation as to whether cryptocurrencies are considered securities or not is creating uncertainty, which may restrain investment in this sector.

DJ: What are the risks that could hamper innovation and development?

Harrison: For any new product, financing is always an issue; with innovation, money becomes an even more crucial element. Companies must have access to capital – including from individual and institutional investors – if they want to bring their innovative product/process to life. Evolving politics and policies can also have a significant impact.

DJ: What framework will Canada need in the future to secure its innovation potential?

Harrison: The key element is finding a proper balance between regulating the issues that might be created by the innovation itself or its use and providing a space where innovations can thrive without too many restrictions.

DJ: What does the Canadian government need to do?

Harrison: In many cases, laws and regulations were enacted long before we saw these innovative technologies and products brought to life, so they need to be updated. In certain sectors, such as cryptocurrencies and autonomous vehicles, the Canadian government has yet to provide a framework that would define the playing rules for all participants.

The government will also need to take a look at its current regulations on privacy: the coming into force in May 2018 of the European General Data Protection Regulation (“GDPR”) and recent high-profile data breaches have created the need for stronger privacy guidelines. Failure to do so could prevent Canadian businesses from accessing the European market.

DJ: What can academia contribute?

Harrison: Universities play a big role in fostering innovation – they could be the home of research and innovation and incubators of ventures, entrepreneurs, and tech talent. Universities can partner with industry players and have their researchers work closely to solve key industry issues. This is already happening in Canada. The Smith School of Business and Scotiabank, for instance, have partnered to set up the Scotiabank Centre of Customer Analytics at Smith School of Business to bring together professors, graduate students and analytics practitioners to collaborate on applied research projects in customer analytics. The academia plays a big role in creating an innovation ecosystem.

DJ: What is Canada’s most pressing technological need?

Harrison: There is still much work to be done to connect with Canada’s rural and remote communities. In 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) declared that broadband Internet amounted to an essential service and adopted minimal performance standards across Canada: 50 megabit per second download and 10 megabit per second upload. However, the evidence presented to the Committee by a variety of stakeholders shows that the digital divide remains prominent in Canada – it is estimated that it will take roughly 10 to 15 years for the remaining 18% of Canadians to reach those minimums. Canada needs to develop a comprehensive rural broadband strategy in partnership with key stakeholders and make funding more accessible for small providers.

DJ: What type of investment is needed with skills and training?

Harrison: Canada has a serious shortage of tech talent, which makes it imperative for both the government, the education, and the business sector to invest in raising and fostering STEM talents. To help businesses attract the talent they require, the federal government is offering hiring grants and wage subsidies to offset payroll costs for recent post-secondary STEM students and graduates.

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DX survey reveals high levels of enterprise-consumer disconnect

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A new survey looks at the global investment and effectiveness of businesses’ digital transformation efforts. The survey shows a disconnect between enterprise investments and consumer experiences.

The survey is titled “The Kony Digital Experience Index (KDXi) Survey”, and the main takeaway is that while businesses have invested nearly $5 trillion on digital transformation initiatives, only 19 percent of customers have reported any significant improvement in the experiences offered to them.

The Kony Inc., survey included 1,600 responses from business leaders and customers across the U.S., Europe and Asia. The responses were used to gauge the target digital project implementation efficiencies in banking, retail, utilities and healthcare. The research showed a disconnect on both sides and a potential misalignment around investment priorities, and highlighted the impact this could potentially have for businesses.

Among other things, the study found that consumers are underestimating the number of businesses that are investing heavily in every customer experience outcome by at least 50 percent. This means that while business are spending money on digital transformation projects, consumers are not necessarily noticing a difference.

The survey also reported that 62 percent of consumers say that they spend more with companies that offer effortless digital experiences, while 56 percent of consumers indicate that they will switch if a retailer does not deliver the digital experience they want. This signals the necessity for businesses to continue to invest in the digital experience for the customer. However, in doing so they need to start making an impact.

As the report states: “It is critical for businesses to have a greater focus on understanding and aligning with customer needs and priorities to ensure that they are driving the agenda for the digital technology they create and fund.”

In terms of what businesses should be doing, the basis of a strategy includes:

  • Embracing innovative thinking, ambition and a commitment to improvement
  • Prioritizing investment in digital outcomes, not digital initiatives
  • Getting their foundations right before evolving
  • Building for now, but investing in a roadmap that leads to the future
  • Saying no to silos and yes to integrated digital strategy
  • Setting a customer-centered digital transformation agenda

This means companies should work to provide web experiences that make it easier for users to navigate, and for websites to be more engaging and intuitive to use. There also needs to be comprehensive online and mobile facilities so that users can do everything online or via their mobile device. Furthermore, to truly step forwards, businesses need to begin offering digital experiences such as AI, chatbots and augmented reality.

Summing this up, Thomas E. Hogan, chairman and CEO, Kony, Inc. states: “Improvements in costs and efficiencies are always welcomed and clearly important to project funding, but the real returns and real impact of digital starts and stops with its impact on the customer experience.”

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‘Ethical AI’ matters — the problem lies in defining it

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News that Microsoft will invest around $1 billion to examine ethical artificial intelligence signals that the tech sector is thinking deeper about the ethics underlying transformative technologies. But what is ethical AI?

Microsoft is to invest around $1 billion into the OpenAI project, a group that has Elon Musk and Amazon as members. The partners are seeking to establish “shared principles on ethics and trust”. The project is considering two streams: cognitive science, which is linked to psychology and considers the similarities between artificial intelligence and human intelligence; and machine intelligence, which is less concerned with how similar machines are to humans, and instead is focused on how systems behave in an intelligent way.

With the growth of smart technology comes an increased reliance for humanity to place trust in algorithms, that continue to evolve. Increasingly, people are asking whether an ethical framework is needed in response. It would appear so, with some machines now carrying out specific tasks more effectively than humans can. This leads to the questions ‘what is ethical AI?’ and ‘who should develop ethics and regulate them?’

AI’s ethical dilemmas

We’re already seeing examples of what can go wrong when artificial intelligence is granted too much autonomy.Amazon had to pull an artificial intelligence operated recruiting tool after it was found to be biased against female applicants. A different form of bias was associated with a recidivism machine learning-run assessment tool that was biased against black defendants. The U.S. Department of Housing and Urban Development has recently sued Facebook due to its advertising algorithms, which allow advertisers to discriminate based on characteristics such as gender and race. For similar reasons Google opted not to renew its artificial intelligence contract with the U.S. Department of Defense for undisclosed ethical concerns.

These examples outline why, at the early stages, AI produces ethical dilemmas and perhaps why some level of control is required.

Designing AI ethics

Ethics is an important design consideration as artificial intelligence technology progresses. This philosophical inquiry extends from how humanity wants AI to make decisions and with which types of decisions. This is especially important where the is potential danger (as with many autonomous car driving scenarios); and extends to a more dystopian future where AI could replace human decision-making at work and at home. In-between, one notable experiment detailed what might happen if an artificially intelligent chatbot became virulently racist, a study intended to highlights the challenges humanity might face if machines ever become super intelligent.

While there is agreement that AI needs an ethical framework, what should this framework contain? There appears to be little consensus over the definition of ethical and trustworthy AI. A starting point is in the European Union document titled “Ethics Guidelines for Trustworthy AI“. With this brief, the key criteria are for AI to be democratic, to contribute to an equitable society, to support human agency, to foster fundamental rights, and to ensure that human oversight remains in place.

These are important concerns for a liberal democracy. But how do these principles stack up with threats to the autonomy of humans, as with AI that interacts and seeks to influencing behavior, as with the Facebook Cambridge Analytica issue? Even with Google search results, the output, which is controlled by an algorithm, can have a significant influence on the behavior of users.

Furthermore, should AI be used as a weapon? If robots become sophisticated enough (and it can be proven they can ‘reason’), should they be given rights akin to a human? The questions of ethics runs very deep.

OpenAI’s aims

It is grappling with some of these issues that led to the formation of OpenAI. According to Smart2Zero, OpenAI’s primary goal is to ensure that artificial intelligence can be deployed in a way that is both safe and secure, in order that the economic benefits can be widely distributed through society. Notably this does not capture all of the European Union goals, such as how democratic principles will be protected or how human autonomy will be kept central to any AI application.

As a consequence of Microsoft joining of the consortium, OpenAI will seek to develop advanced AI models built upon Microsoft’s Azure cloud computing platform. There are few specific details of how the project will progress.

Commenting on Microsoft’s big investment and commitment to the project, Microsoft chief executive Satya Nadella does not shed much light: “AI is one of the most transformative technologies of our time and has the potential to help solve many of our world’s most pressing challenges…our ambition is to democratize AI.”

Do we need regulation?

It is probable that the OpenAI project will place business first, and it will no doubt seek to reduce areas of bias. This in itself is key to the goals of the partners involved. For wider ethical issues it will be down to governments and academia to develop strong frameworks, and for these to gain public acceptance, and then for an appropriate regulatory structure to be put in place.

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Digital transformation is causing C-suite tensions

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Photo by Taylor Nicole on Unsplash
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Digital transformation is not only about technology, it’s also about changes of practices which need to diffuse through an organization’s culture. This needs to be begin at the top. A new report finds C-suite discord is a block to effective DX processes.

Rapidly undergoing effective digitally transformation puts a strain across C-suite relationships, according to a new survey of major enterprises. The report has been produced by business management software provider Apptio, and commissioned by the Financial Times. Titled “Disruption in the C-suite“, the report is draws on the findings of a survey conducted with 555 senior executives, (50 percent occupying CxO roles). The executives were based in major economic nations: Australia, Denmark, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the UK and the U.S.

The report finds that while digital transformation leads to greater collaboration across different business functions, it can also create blurred responsibilities across the C-suite. This crossover carries the risk of key issues being missed; it also serves as a source of tension between top executives, as traditional functions merge and territorial disputes are triggered. As a sign of such differences, 71 percent of finance executives found the IT unit within the C-suite should be seeking greater influencing skills to better deliver the change their business requires.

Team deficiencies found in the survey included not having key performance indicators in place with to measure digital transformation progress. Also, the CFO was found to be the least deeply aligned member of the C-suite team, especially not being aligned with the CIO.

To overcome these divisions, the report recommends that organizations invest time in ‘bridging the trust gap’ between functions and seek to ease tensions, especially between the offices of the CIO and the CFO. An important factor is with establishing which function has accountability. Another measure that can be taken is with ensuing that data is more transparent and where key metrics are issued in ‘real-time’.

The report also charts how digital transformation is being fully embraced, as leaders at global brands are embracing processes and technologies like artificial intelligence, workplace reskilling, cloud computing, agile working and de-centralized decision-making.

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