Jean-Francois “JF” Gagné, the CEO of Element AI on the role automation and AI will play in the recovery

Jean-Francois Gagne is the CEO of Element AI, a Montreal-based startup which develops artificial intelligence solutions for all kinds of businesses. Elemental operates in a tough market with serious competition from tech giants such as Amazon, Google, and Microsoft. Yet thanks to its innovative training technique, which harnesses simulated data, it has created a unique proposition that has attracted an impressive roster of blue chip customers.

Here Jean-Francois calls for a re-think on the assumptions built into the economic equation of international trade as well explaining why he thinks people will collaborate with machines to create new value.

Element AI is a partner of the Global AI Summit, an event which will be hosted by Tortoise on May 15th 2020, that will examine the future of the world and look in depth at the role technology, and AI in particular, will play in shaping it. Registration is free. Details are here

Which underlying assumptions about globalisation are going to withstand the pandemic, if any?

We were already seeing skepticism towards globalisation and growing protectionist and nationalist sentiments. Recent trade agreements have been bilateral or regional for the most part. In the wake of the coronavirus pandemic, impediments to international trade as we know it are only expected to grow. There is growing uncertainty and mistrust among nations and an erosion of free and fair-trade practices.

I would say probably most people see the current pandemic as cause to take their favored approach to trade, whether they’re for a totally new approach to globalization or think we never should have strayed from the Washington Consensus. Of course, seeing the fragility of the current system cracking under the pressure of a global pandemic should be taken as an opportunity to rethink globalization. We need renewed focus on smarter supply chain mapping and resiliency, the necessity of domestic productive capacity (or at least strategic inventories), and to redefine strategic national interests. However, I don’t think it necessarily calls for a total rethinking of how the world goes about trade.

Instead, I think we need to reassess the assumptions built into the economic equation of international trade.

For instance, many sectors have discounted to zero the risk associated with distancing production lines from consumption markets. This has made comparative advantage in labor costs all too easy justifications for single-minded offshoring decisions, leaving little room for redundancy. However, it should be clear to everyone now the cost associated with the risk of a pandemic’s impact on the global supply chain is non-zero.

I believe we will see a rethinking of the costs associated with unexpected, global events (e.g. weather disaster) happening again, combined with the lower cost of manufacturing through robotics and automation, result in a globalization with more self-sufficiency locally, but also redundancy and optionality globally.

You mention strategic inventories, smarter supply chain mapping and other measures; how can artificial intelligence be used to shore up the fragilities being exposed in our economies, and the global economic system?

AI systems have a role to play both in how we rethink our risk models and create a better ability to adapt on the fly. Information, whether vital or secondary, is often opaque, not available nor readily accessible across global supply chains. As a result, organisations are ill equipped to respond to disruptive events in a proactive and coordinated fashion.

Creating digital twins of our global economy could help generate complex simulation environments that support accurate and timely scenario planning, enabling a more systematic approach for policymakers and business leaders as they prepare for and face the next crisis. Having clearer pictures of what could happen and how we are prepared to respond would be a powerful tool for shoring up much needed trust as we reorient our global economy.

These digital twins would in part be supported by sensors along supply chain networks feeding live data that can also double as a transparency and tracing mechanism, underwritten by blockchain networks. There hasn’t been the critical mass of interest yet to implement this sophisticated approach, but these systems would greatly enable the management of strategic inventories, catch and reinforce weak links, and improve overall efficiencies.

These traceable systems would allow for the quick implementation of needed adjustments in a crisis by making it easier to track missing components or inputs and suggest alternatives in case of a shortage. There’s an added benefit as well of properly tracing and managing carbon emissions, which has previously hamstrung regulation for greener industry — another critical aspect of a sustainable and resilient recovery.

What might the role of automation and artificial intelligence be in the recovery?

Shifting to remote work has meant an acceleration in the digitalization of some businesses but has also created make-or-break situations for others. New AI solutions for working digitally can help ease the transition.

Document intelligence solutions provide the ability to read and process paper documents at an exponentially faster rate, helping facilitate the digitalization of paper-driven processes.

Natural language models will also make a much more user-friendly interface for knowledge management, helping supplement our more informal ways of sharing and discovering important information for our work.

As I mentioned before, digital twins will help companies navigate and adjust to the shifting geo-economic environment; time series analysis and forecasting techniques will make it easier to react quickly, armed with the relevant information.

Automation provides some appeal for solutions to maintain production while creating safer working environments. But, note that the above examples are examples of people collaborating with machines and creating new value. We should be intentional in how we build and integrate AI in our systems, so that it’s used as a way to invest in human productivity as opposed to leaving people behind.

Organizations should use this as a chance to create new ways of working that combine human intelligence with machine intelligence, all along the value chain. While there’s been a lot of skepticism of the willingness and ability of populations to upskill, the investment in recovery and need for new jobs could accelerate this transition to develop a workforce better able to create new value and productivity with AI tech.

Could the digitisation of international trade, perhaps through more extensive use of artificial intelligence, reverse the trend toward bilateral agreements and protectionism? Would this be desirable in most sectors?

I think everyone can agree in saying it’s hard to tell at the moment. Right now, we’re not seeing anything that is indicative enough of what the future will look like. Right now, you want to save the supply chains and economies from collapsing.

That said, we’re already seeing a reassessment of risks:

• Reshoring is accelerated;
• Redefinition of frontiers (more localised, regional);
• Redefining essential goods and services.

While we do so, we’ll need to balance emergency response and long-term planning.

If we forget a second about political feasibility, the appropriate, yet unsexy, answer is probably a mixed approach: ensuring the domestic production of a certain threshold of essential goods and services while preserving global supply chains to diversify operational risks.

For example, having offices and business partners in several countries over a number of continents has helped my company tremendously to weather the current economic challenges this pandemic poses. While this is positive for a company like Element AI, the same principle of diversification holds true for countries as well.

That said, I think it would be naive to ignore the current political climate that pits the US and China against each other, fragilizing the international trade environment for everybody else.

To answer the question about AI’s influence in this, the potential for added transparency and traceability of supply chains could become standard criteria in trade agreements. My opinion is that this enforced visibility would be enough to adjust to proper levels of supply chain diversification and sufficient strategic inventories. These adjustments could be relatively slight, but enough to provide the needed resilience in our supply chains without profoundly changing the dynamics of trade for the majority of sectors.

What will be the key determinants of the new ‘geo-economic environment’ in question? Do national strategies for artificial intelligence development have a role here?

It has been brutal work to maintain supply chains, especially given the technology available that could better handle the complexity. However, we still need intelligent investment to deploy what is possible and unlock some key enablers through continued research. Obviously, I have a pretty strong bias towards technology as a key determinant, but don’t get me wrong. Technology is not the only answer, and a lot of poorly thought through investments in tech could make things worse. These investments will need to be mission-oriented — where we decide what kind of projects we want to build for our post-pandemic societies (better public healthcare infrastructure, greener economies, an inclusive economy, a structure that fully supports our elderlies, etc). From there, we will need to decide the means by which we’ll achieve these: and I think that’s where national AI strategies have a role to play to support research, cultivating and attracting and encouraging patient capital, etc.)

Element AI is a partner of the Global AI Summit, an event which will be hosted by Tortoise on May 15th 2020, that will examine the future of the world and look in depth at the role technology, and AI in particular, will play in shaping it. Registration is free. Details are here