ABB is a company with a 135-year history that has nevertheless leapt to the forefront of the Fourth Industrial Revolution through its innovations in robotics, artificial intelligence (AI), and the Internet of Things (IoT).
The company aims to be “the industrial conglomerate of a low-carbon, digital age”, involved in everything from developing robots with the dexterity to conduct a full symphony orchestra successfully to automating liquified natural gas terminals in the Sea of Okhotsk east of Russia.
We caught up with Ulrich Spiesshofer, CEO since 2013, who has transformed the company into a tech innovator able to both predict customer needs and deliver smarter, more personalized customer experiences. In the first part of this wide-ranging conversation, we discuss how AI impacts the company’s business model, future strategy, and workforce development.
Q: The successful deployment of AI is likely to lead to better customer experiences while, at the same time, cutting the cost of doing business — in short, building a considerable competitive advantage for the companies successfully deploying it.
However, Dr. Kai-Fu Lee has suggested that focusing on incremental gains, like using AI to improve customer service, is missing the bigger opportunity — that the real opportunity is for companies to rethink their entire business models.
How is AI changing the way that ABB does business?
We believe the biggest opportunity for AI is to move from “automation” (rule-based systems) toward “autonomy” where sophisticated machines (robots, smart cars, smart grids) increasingly perform tasks by taking decisions with less human supervision required.
Rather than blindly following rules, these increasingly autonomous systems will learn from prior experience and human intervention to boost uptime, speed, yield, energy efficiency, and safety.
We see this new, more autonomous AI helping our business in three main areas:
AI helps scale our expertise
ABB is not only a technology provider, but increasingly we also possess extensive domain expertise in many of our customer segments (i.e. utilities, chemicals, mining, oil and gas, transportation, buildings, and so on). Today, this domain expertise is concentrated in our “human capital” (the accumulated experience of our global workforce).
We are continually looking to scale this expertise by codifying it in intelligent systems that are enabled by AI. This will take the form of smarter robots, smarter electrical systems, adaptive cybersecurity defenses, and other ABB Ability™ solutions that incorporate AI technologies.
AI improves product development
We will also use AI to make our products better. Digital connectivity provides us with information about how customers use our products — which features are used vs. those that are not, which components may be more prone to failure under particular conditions, and the operating conditions in which our products are used. This data can be distilled into insights with machine learning to make these products better and more reliable.
AI helps spot new opportunities
Lastly, as we continue to employ ecommerce tools to transact a growing proportion of our business online, we can start using AI to look for insights into the sales side of our business in order to look for new opportunities to create bundles, adapt prices, or measure the effectiveness of various incentives and investments in driving up sales.
Q: Between 2004 and 2014, we’ve seen the launch of many new technologies (smartphones, IoT) with great fanfare about their potential impact on productivity. Yet, in that period, productivity growth in the U.S. fell to a rate of 0.4%. That is the slowest growth rate since records began in the late 1800s.
A recent Accenture report, “How AI Boosts Industry Profits and Innovation,” suggests that AI has an even greater capacity to increase productivity than those other technologies — with the potential to boost profitability by 38% by 2035.
What makes AI different than those other technologies, and how do you anticipate it boosting productivity?
AI is different from other technologies because it is capable of accumulating knowledge — of learning — by doing and adjusting its response based on past performance.
The best illustration of AI’s progress is the computer program AlphaGo, which in 2016 defeated the world champion at the ancient Chinese game of Go. The latest version, named AlphaGo Zero, learned only by playing games against itself, starting with completely random play. In only three days, with no human intervention and no historical data, it had surpassed the abilities of the 2016 version of the program.
Previous industrial revolutions provided dramatic improvements by multiplying the productivity of manual laborers. Many of those activities are now highly optimized. For instance, in the Western world, less than five percent of us work on farms — a far cry from the 60%+ a few hundred years ago. But those few workers produce more food than ever thanks to mechanization and automation.
In this Fourth Industrial Revolution, AI will start to automate routine tasks in the growing part of our economy that involves knowledge workers.
We already see “software bots” showing up in customer service roles where they respond to routine questions from customers who may not know that they’re interacting with a machine instead of a customer service representative. Next, we’ll see AI systems act as a “knowledge multiplier” for technicians in the field, so that one technician on an offshore oil rig can service products that previously would have required 10 specialized technicians.
Augmented-reality (AR) goggles can overlay specific instructions or guidance from an AI system to help walk the remote technician through the complex task of repairing a machine.
Increasingly autonomous trucks, ships, and trains will also reduce the need for human drivers. At the same time, as some jobs are being displaced by AI, new ones will be created. In a recent report, the World Economic Forum predicts that 75% more jobs will be created as a result of AI. Many of these jobs will involve the creation, deployment, and maintenance of AI-based systems.
This article is part of our CEO interview series. For more executive perspectives on the future of business in the Fourth Industrial Revolution, check out: