The Tie That Binds

Creating A Human Business In A Digital World

Ricardo Gomez Angel |

As business increasingly becomes digital, the old fashioned handshake or a face to face meeting to conclude a contractual relationship is becoming decreasingly common. The Internet of Everything, along with the decentralization that Blockchains promote will fuel the rise of digital identities. In a world where humans are reduced to impersonal and invisibile manifestations i.e. bits or qubits, creating a socially responsible business that balances the expectations of society (jobs and human employment included) with the need for digitization and automation is like walking a tightrope. This article discusses the need for keeping humans at the center of business and not technology. In other words,

Let technology enable us, not engulf us.

Putting A Human Face To Business

Music is my life. It always has been. When I feel tired, I listen to piano pieces such as Ryuichi Sakamoto’s ‘Merry Christmas, Mr. Lawrence’ and i instantly feel relaxed. For energy, I listen to heavy metal and rock. If I am in the mood for dancing, EDM, Techno and Dance music come to the rescue.

I have learnt Indian classical music for three years but decades of not practicing has left me with a deep sense of regret. But, I have not given up hope. There is plenty of time to pick up where I stopped.

So, I would not be lying when I say I empathize with the purists in feeling a loss of quality when I listen to songs encoded in MP4 or other digital formats. MP3 has no doubt reduced the size of songs to a few megabytes by compressing. However, there is a price to pay- loss of music quality.

It is a similar story with cameras that shoot raw footage and those that shoot in a digital format. In other words, if I think of every technology through the lens of time, cost and quality triangle — a bid to improve two reduces the third. To reduce cost of storage and time to deliver music, the quality of music suffers.

Yesterday, I walked into a music shop closest to my apartment and I was surprised to find an incredible amount of interest in vinyl record players (pictured below).

Kai Oberhauser |

I could not control my curiosity. So, I walked to the counter and started talking to the staff — a man named Sam. Sam explained that the modern digital natives have no idea what a vinyl player is and therefore, there is enormous amount of curiosity around buying one and listening to uncompressed music. Further, a wave of nostalgia is sweeping music consumers. As per Fortune magazine, sales of vinyl records in 2015 were up 32% to $416 million, their highest level since 1988 according to the RIAA. In other words, as per Fortune, revenue from vinyl sales exceeded revenue from on-demand, ad supported streaming services (excluding paid subscription services such as Pandora and internet radio) such as YouTube, Vevo and Spotify free which were $385 million.

Over the past two years, I have heard many such anachronistic comments such as consumers preference for SLR cameras over digital ones (DSLR’s). As cloud storage becomes cheaper, the demand for raw photographs may keep growing.

For instance, a new nationwide study commissioned by a major credit card issuer has discovered that 65% of millennial parents believe shopping in-store enables them to more effectively remain within budget goals compared to shopping online.

Granted, that the vast majority of the market has moved towards digital options both in music and photography. So, I am not suggesting that we will go back to older technologies. However, the increase in demand for older technologies that are relatively expensive but deliver unadulterated, natural human experiences cannot be overlooked.

What I am suggesting is that beyond a point over digitization or over reliance on Machine Learning or Artificial Intelligence can have diminishing marginal returns.

Every business has to keep in mind the client experience first before automating processes and not the other way around. Without revenue, there is no cost to cut.

The point is: optimize for human experience before other variables.

Your Employee Is Also Your Client

Let me explain using a thought experiment. Let us assume that Ajay works for a car manufacturer that makes Alpha brand of cars. Because of Robotic Process Automation (RPA), some of his daily tasks are automated and his pay is reduced. The other option for him is to find a different job elsewhere. In this scenario, Ajay is no longer able to afford the Alpha sedan he dreamt of. However, you may say that autonomous vehicles and ride sharing are right around the corner and Ajay can always use Uber or share a autonomous car in the future.

That’s a valid point assuming Ajay can afford renting a ride every day. Now, suppose Ajay loses his job , he can no longer rent ie He is rendered immobile. Then, the question becomes: can he find a job that allows him to work remotely? Maybe. Can he be a gigster? Maybe.

Now, what if the skills Ajay has developed over decades are no longer needed? Then, it’s time for reskilling unless there are programs that provide universal basic income.

In any case, there comes a point where the marginal revenue lost is greater than the marginal cost saved by automation.

Basics of Banking Don’t Change

Bankers don’t just create wealth. In very simplistic terms, they are custodians of society’s wealth. Let’s conduct another small thought experiment: John deposits $100 of his savings in Bank A. His savings came out of his salary derived from his employment. Bank A then lends $40 to an entrepreneur who wants to start his business.

Bank A invests $30 out of the balance $60 in government bonds which provides government funds for building infrastructure. The bank keeps the rest ($100-$40 lent and $30 invested) as reserves just in case John needs to withdraw money from the ATM. The assumption here is that depositors will not withdraw their entire balance all the time.

Without John depositing his money, the virtuous cycle of lending to an entrepreneur, providing funds to the government, and ready cash to John when he needs it will never begin in the first place.

In other words, technology should not reduce the very things it is designed to ease — wealth creation and distribution in society.

A Safer Form of Venture Capital

Just like the Dutch Tulip Mania, an excess of Initial Coin Offerings (ICO’s) as a way of crowdfunding venture capital resulted in raising capital for business models that simply could not be explained. China’s crackdown on ICO’s is a good example of a country at the forefront of technology adoption restricting misuse.

As per TechCrunch, “The Chinese committee voiced concern that some ICOs are financial scams and pyramid schemes. That echoes a recent warning from Singapore’s MAS.”

The idea of crowdfunding businesses has a lot of inherent risks which many platforms are trying to mitigate but ICO’s which have raised approximately $1.6 Bn year to date have magnified these risks by hiding behind hard to understand and possibly non-existent business models.

Making Business More Human

It’s very easy to come across articles that talk about disruptive technologies such as AI, Blockchains & DLT, cryptocurrencies but very little on actually harnessing these technologies at scale for the benefit of society. For instance, decentralization can be good. However, if it promotes anarchy, it is no use for the greater good. Ironically then, a federation that serves as a preventer of fraud, an arbiter of disputes and a guardian for the rights of the common man is needed to prevent a World Wide Wild West. Solutions that could prevent such a scenario need to be debated globally.

A Global Consortium

Technologies such as Artificial Intelligence are globally disruptive. Therefore, there needs to be a global consortium of public and private players that enables smooth adoption and prevents black box situations such as AI gone rogue from disrupting lives. Global standards, and guidelines for rollout may provide a cushion to ease the introduction of such technologies. This global consortium will also adopt a multidisciplinary approach that considers the second and third order effects of disruptive technologies which private consortiums may not have the resources or inclination to think about. A simple analogy is the California based design firm IDEO which encourages all its employees to turn anthropologists to find more human design solutions by adopting a multidisciplinary approach.

Involving the Regulators At Inception

Although most of the tech community may balk at this proposal, it is worthy of discussion. Assuming technology is intended to help society and business without ill intentions, involving the regulator prior to release to the common man would provide legitimacy and carefree adoption. It might slow down the rollout but it will become a legal solution which is a challenge for many technologies today.

If such a radical approach does not work, designing technologies while realizing that ultimate scalability comes from being mainstream is another approach. In other words, thinking of loopholes that can be exploited before releasing the technology would be a great way to take it mainstream. Although, it would involve a lot of ethical hacking, it keeps the interests of the common man front and center.

Think of regulators as a partner and a proxy as far as safeguarding people’s interests are concerned. The very same people that will sustain the business.

Think of Blockchains As Triple Entry Accounting

If Blockchains are the new ledgers, then accounting syllabi across the world need to include the computational basics behind Blockchains and the accounting standards around triple entry accounting. Of course, that would mean the formulation of such standards by a global consortium as mentioned above. In addition to the standard double entry book-keeping that is a system of debits and credits, the Blockchain has an additional entry recording proof of receipt or ownership.

Data is key to AI, Data Science A Great Education

AI by itself is not sufficient. It needs data organized in a uniform manner to scale globally. Just as XBRL facilitated uniformity in financial statements, data governance standards will enable organization of data into data libraries that will allow AI to scale. Mexico is recently contemplating a law that will force banks to open up their data and create a sandbox for FinTech players to work with bank API’s. This regulation is broader in scope than its European counterpart the PSD2. However, it opens up a lot of issues around privacy, reciprocity etc. which need resolution for smooth rollout. Privacy and safety concerns, along with organization of data require concerted, global efforts.

Every plan for automation should include alternatives for the jobs being displaced

Again, this is thinking about second and third order impacts. Although, there is evidence that businesses have started thinking about job displacement, the need for reskilling needs to be addressed. Particularly, what skills to impart and how to impart such skills to somebody who doesn’t know the basics. Is it impossible? No, where there is a will, there is a way.

Dangers of Incorrect Predictions

It is foolhardy to think all the predictions we read about massive unemployment or displacement of jobs because of AI are true. Many of them are derived by extrapolation which assumes certain trends to continue uninterrupted. On the other hand, there are industry leaders that are warning us that AI should not be taken lightly or that underplaying the disruption would be dangerous. Either scenario — over predicting or under predicting does not provide actionable guidance. One thing is certain — the journey towards Artificial General Intelligence (AGI) or replicating the human brain has begun. Awareness through constant learning is one action that is common sense but hard to implement.

Final Thoughts

Whether we are close to Singularity ie AGI trouncing human intelligence or closer to a digital reserve currency, only time will tell. What is true is that technology is reshaping the basic economics of many businesses.

Financial inclusion through FinTech startups is a good idea but only if people want to be included in the official economy. Human nature is at its ingenious best when it comes to taxes. This is just one problem. There are far more powerful political and socioeconomic forces that can stall adoption of a new technology precisely because of various human interests.

This article urges global cooperation to manage change at the speed of change. Quite often, technologies are thought about from a positive lens of enablement and evolution with lesser deliberation around socioeconomic ramifications. The dangers have to be managed. Whether they are managed before or after unleashing disruption is up to us. Never has there been a need for an interdisciplinary approach to managing change than today. Business always was, is and will be personal.

This is because our humanity is the tie that binds us all. By extension, our children too.

Writer @ The Intersection of Finance, Tech & Humanity. Stories of a Global Language: “Money”. Contributor @ Startup Grind, HackerNoon, HBR. Twitter@akothari_mba

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