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Technology and innovation expert Tom Goodwin on the merits of GenAI and how to leverage its potential.
During Rewire LIVE, we had the pleasure of hosting Tom Goodwin, a friend of Rewire and pragmatic futurist and transformation expert who advises Fortune 500 companies on emerging technologies such as GenAI. Over the past 20 years, he has studied the impact of new technology, new consumer behaviors and the changing rules of business, which makes him uniquely suited to understand the significance of GenAI today.
At the core of Tom’s thinking lies a question that all leaders should ponder: if, knowing everything you know now, were to build your company from scratch, what would it look like? At times counter-intuitive, Tom’s insights, steeped in history, provide valuable clues to answer this question. In this article, we share a handful of them.
INSIGHT 1: Technology revolution happens in two stages. In the first stage we add to what was done before. In the second stage we rethink. That’s when the revolution really happens.
Tom’s insight is derived from the Perez Framework, developed by Carlota Perez, a scholar specialized in technology and socio-economic development. The framework – based on the analysis of all the major technological revolutions since the industrial revolution – stipulates that technological revolutions first go through an installation phase, then a deployment stage. In the installation phase, the technology comes to market and the supporting infrastructure is built. In the deployment phase, society fully adopts the technology. (The transition between the two phases is typically marked by a financial crash and a recovery.)
During the first phase, there’s a frenzy – not dissimilar to the hype that currently surrounds GenAI. Everyone jumps on the technology, everyone talks about it. However, nothing profound really changes. For the most part, the technology only adds to the existing ways of doing things. In contrast, during the second stage, people finally make sense of the technology and use it to rethink the way things are done. That’s when the value is unleashed.
Take electricity as an example. In the first stage, electricity brought the electric iron, the light, the fan, the oven. These were all things that existed before. In the second stage, truly revolutionary innovations emerged: the radio, the TV, the telephone, the microwave, the microwave dinner, factories that operate 24/7, and so on. The second stage required a completely different mindset vis-à-vis what could do be done and how people would behave.
This begs the question: what will be the second stage of GenAI – and more broadly AI – be? What will be the telephone, radio, microwave for AI? Tom’s assertion here is that the degree of transformation is less about how exciting that technology is, and it’s much more about how deeply you change. Better AI will be about systems that are completely rethought and deep integrations, rather than UI patches.
Watch the video clip.
INSIGHT 2: Having category expertise, knowing how to make money, having relationships, and having staff who really know what they’re doing is probably more important than technology expertise.
Across many industries, battle lines are drawn between large traditional companies that have been around for a long time and the digitally-enabled, tech first, mobile-centric startup types. Think Airbnb vs Marriott, Tesla vs. BMW, SpaceX vs NASA, and so on.
The question is who’s going to win. Is it the digitally native companies who have created themselves for the modern era? Or is it the traditional companies that have been around for a long time? Put another way, is it easiest to be a tech company and learn how to make money in your target industry? Or be a big company who already knows how to make money but must now understand what a technology means and adapt accordingly?
Up until recently, the assumption was that the tech companies would win the battle. This proved true for a while: Netflix vs. Blockbusters, Apple vs. Nokia, etc. The assumption was that this would carry on. Understanding the technology was more important than understanding the category.
Tom’s observation is that in the past four years, these assumptions have been challenged. For example, traditional banks have got really good at understanding technology. Neobanks might be good at getting millennials to share the cost of a pizza, but they’re not that good at making money. So there’s this slow realisation that maybe digital-first tech companies are not going to win – because big companies are getting pretty good at change.
Taking a step back, it seems that the narrative of disrupt or die isn’t always true: a lot of the rules of business have not changed; incumbents just need to get a bit more excited about technology. Ultimately, having category expertise, knowing how to make money, having relationships, and having staff who really know what they’re doing is probably more important than tech expertise.
Watch the video clip.
INSIGHT 3: The AI craze is enabling a more flexible investment climate. This is an incentive for leaders to be bold.
Generative AI has spurn heated debates about the evolution of AI and divided experts and observers into two opposing groups: the AI cheerleaders and the sceptics. The former believe that AI is going to change everything immediately. The latter think that it’s a bubble.
History is littered with innovations that went nowhere. A handful of them however proved to be transformational – if in the long run. Only time will tell which group GenAI will join. In the meantime, there’s a growing realization that significant investment may be required to make meaningful steps with AI, hence a more flexible climate for capex – which is an incentive for leaders to be bold.
Tom’s insight reflects this situation: change is hard and expensive, and so regardless of one’s position in the debate, GenAI provides a unique window of opportunity to get the investor that you wouldn’t normally get. It is an amazing time to have an audience who normally wouldn’t listen to you.
Conclusion
These were but a handful of the many insights that Tom shared with us during Rewire LIVE. Taking a step back, it is clear that we are far from having realized the full value of GenAI – and, more broadly, AI. In the words of Tom, AI is a chance to dream really big and leave your mark on the world. It is yours for grab.
About Tom Goodwin
Tom Goodwin is the four time #1 in “Voice in Marketing” on LinkedIn with over 725,000 followers on the platform. He currently heads up “All We Have Is Now”, a digital business transformation consultancy, working with Clients as varied as Stellantis, Merck, Bayer, and EY to rethink how they use technology.
Tom hosts “The Edge” a TV series focusing on technology and innovation, and “My Wildest Prediction”, a podcast produced and distributed by Euronews. He has published the book “Digital Darwinism” with Kogan Page, and has spoken in over 100 cities across 45 countries.
With a 23 year career that spans creative, PR, digital and media agencies, Tom is an industry provocateur as a columnist for the Guardian, TechCrunch and Forbes and frequent contributor to GQ, The World Economic Forum, Ad Age, Wired, Ad Week, Inc, MediaPost and Digiday.
To find out more about Tom, visit www.tomgoodwin.co
Rewire CEO Wouter Huygen reviews the arguments for and against GenAI heralding the next industrial revolution, and how business leaders should prepare.
Is generative AI under- or overhyped? Is it all smoke and mirrors, or is it the beginning of a new industrial revolution? How should business leaders respond? Should they rush to adopt it or should they adopt a wait-and-see approach?
Finding clear-cut answers to these questions is a challenge for most. Experts in the field are equally divided between the cheerleaders and the skeptics, which adds to the apparent subjectivity of the debate.
The GenAI cheerleaders can point to the fact that performance benchmarks keep being beaten. Here the underlying assumption is the “AI Scaling Hypothesis”. That is, as long as we throw in more data and computing power, we’ll make progress. Moreover, the infrastructure required for GenAI at scale is already there: an abundance of cloud-based data and software; the ability to interact with the technology using natural language. Thus, innovation cycles have become shorter and faster.
On the other hand, GenAI skeptics make the following points: first, the limitations of GenAI are not bugs, they’re features. They’re inherent to the way the technology works. Second, GenAI lacks real world understanding. Third, LLMs demonstrate diminishing returns. In short, there are hard limits to the capabilities of GenAI.
The lessons of History indicate that while there might be some overhype around GenAI, the impact could be profound – in the long run. Leaders should therefore develop their own understanding of GenAI and use it to define their vision. Shaping the future is a long-term game that starts today.
Watch the video (full transcript below).
The transcript has been edited for clarity and length.
Generative AI: the new magic lantern?
Anyone recognizes this? If you look closely, not much has changed since. Because this is a basic slide projector. It’s the Magic Lantern, invented around 1600. But it was not only used as a slide projector. It was also used by charlatans, magicians, people entertaining audiences to create illusions. This is the origin of the saying “smoke and mirrors”. Because they used smoke and mirrors with the Magic Lantern to create live projections in the air, in the smoke. So the Magic Lantern became much more than a slide projector – actually a way of creating illusions that were by definition not real.
You could say that Artificial Intelligence is today’s Magic Lantern. We’ve all seen images of Sora, OpenAI’s video production tool. And if you look at OpenAI’s website, they claim that they’re not working on video production. They actually intend to model the physical world. That’s a very big deal if that is true. Obviously it’s not true. At least I think I’m one of the more sceptical ones. But those are the claims being made. If we can actually use these models to model the physical world, that’s a big step towards artificial general intelligence.
Is GenAI overhyped? Reviewing the arguments for and against
If AI is today’s Magic Lantern, it begs the question, where are the smoke and where are the mirrors? And people who lead organizations should ponder a few questions: How good are AI capabilities today? Is AI overhyped? What is the trajectory? Will it continue to go at this pace? Will it slow down? Re-accelerate? How should I respond? Do we need to jump on it? Do we need to wait and see? Let everybody else do the first experience, experience the pains, and then we will adopt whatever works? What are the threats and what are the risks? These are common questions, but given the pace of things, they are crucial.
To answer these questions, one could look to the people who develop all this new technology. But the question is whether we can trust them. Sam Altman is looking for $7 trillion. I think the GDP of Germany is what? $4 trillion or $5 trillion. Last week Eric Schmidt, ex-Google CEO, stated on TV that AI is underhyped. He said the arrival of a non-human intelligence is a very, very big deal. Then the interviewer asked: is it here? And his answer was: it’s here, it’s coming, it’s almost here. Okay, so what is it? Is it here or is it coming? Anyway, he thinks it’s underhyped.
We need to look at the data, but even that isn’t trivial. Because if you look at generative AI, Large Language Models and how to measure their performance, it’s not easy. Because how do you determine if a response is actually accurate or not? You can’t measure it easily. In any case, we see the field progressing, and we’ve all seen the news around models beating bar exams and so on.
The key thing here is that all this progress is based on the AI scaling hypothesis, which states that as long as we throw more data and compute at it, we’ll advance. We’ll get ahead. This is the secret hypothesis that people are basing their claims on. And there are incentives for the industry to make the world believe that we’re close to artificial general intelligence. So we can’t fully trust them in my opinion, and we have to keep looking at the data. But the data tells us we’re still advancing. So what does that mean? Because current systems are anything but perfect. You must have seen ample examples. One is from Air Canada. They deployed a chatbot for their customer service, and the chatbot gave away free flights. It was a bug in the system.
That brings us to the skeptical view. What are the arguments? One is about large language modelling or generative AI in general: the flaws that we’re seeing are not bugs to be fixed. The way this technology works, by definition, has these flaws. These flaws are features, they’re not bugs. And part of that is that the models do not represent how the world works. They don’t have an understanding of the world. They just produce text in the case of a Large Language Model.
On top of that, they claim that there are diminishing returns. If you analyze the performance, for instance, of the OpenAI stuff that’s coming out, they claim that if you look at the benchmarks, it’s not really progressing that much anymore. And OpenAI hasn’t launched GPT-5, so they’re probably struggling. And all the claims are based on these scaling laws, and those scaling laws can’t go on forever. We’ve used all the data in the world, all the internet by now. So we’re probably hitting a plateau. This is the skeptical view. So on the one hand we hear all the progress and all the promises, but there are also people saying, “Look, that’s actually not the case if you really look under the hood of these systems.”
As for questions asked by organization leaders: “What do I need to do?” “How fast is this going?” Here, the predictions vary. In the Dutch Financial Times, here’s an economist saying it’s overhyped, it’s the same as always, all past technology revolutions took time and it will be the same this time. On the other hand, a recent report that came out saying this time is different: generative AI is a different type of technology and this is going to go much faster. The implication being that if you don’t stay ahead, if you don’t participate as an organization, you will be left behind soon.
The argument for generative AI is that the infrastructure is already there. It’s not like electricity, where we had to build power lines. For generative AI, the infrastructure is there. The cloud is rolled out. Software has become modular. And the technology itself is very intuitive. It’s very easy for people to interact with it because it’s based on natural language. All of those arguments are the basis for saying that this is going to go much faster. And I think some of us recognize that.
Looking ahead: how leaders should prepare
There’s a difference between adopting new tools and really changing your organization. When we think about the implications, at Rewire we try to make sense of these polarized views and form our own view of what is really happening and what it means for our clients, for our partners, and the people we work with. We have three key takeaways.
The first one is that we firmly believe that everybody needs to develop their own intuition and understanding of AI. Especially because we’re living in the smoke and mirror phase. It means that it’s important for people who have the role of shaping their organization to understand the technology and develop their own compass of what it can do, to navigate change.
The second is that you need to rethink the fundamentals. You need to think about redesigning things, re-engineering things, re-imagining your organization, asking what if, rather than adopting a tool or a point solution. You must think how your organization is going to evolve, what will it look like in five years’ time and how do we get there?
The third, is that yes, I agree with the fact of this Andrew McAfee, the economist that says generative AI is different because it goes faster. To a certain extent that’s true. But not to the point where full business models and full organizations and end-to-end processes change. Because that’s still hard work, it’s transformational work that doesn’t happen overnight. So the answers are nuanced. It’s not one extreme or the other. It is a long-term game to reap the benefits of this new technology.
Demystifying the enablers and principles of scalable data management.
In the first instalment of our series of articles on scalable data management, we saw that companies that master the art of data management consider three enablers: (1) data products, (2) organizations, and (3) platforms. In addition, throughout the entire data management transformation, they follow three principles: value-driven, reusable, and iterative. The process is shown in the chart below.
Exhibit 1. The playbook for successful scalable data management.
Now let’s dive deeper into the enablers and principles of scalable data management.
Enabler #1: data products
Best practice dictates that data should be treated not just as an output, but as a strategic asset for value creation with a comprehensive suite of components: metadata, contract, quality specs, and so on. This means approaching data as a product, and focusing on quality and the needs of customers.
There are many things to consider, but the most important questions concern the characteristics of the data sources and consumption patterns. Specifically:
- What is the structure of the data? Is there a high degree of commonality in data types, formats, schemas, velocities? How could these commonalities be exploited to create scalability?
- How is the data consumed? Is there a pattern? Is it possible to standardize the format of output ports?
- How do data structure and data consumption considerations translate into reusable code components to create and use data products faster over time?
Enabler #2: organization
This mainly concerns the structure of data domains and clarifying the scope of their ownership (more below). This translates into organizational choices such as whether data experts are deployed centrally or decentrally. Determining factors include data and AI ambitions, use case complexity, data management maturity, and the ability to attract, develop, and retain data talent. To that end, leading companies consider the following:
- What is the right granularity and topology of the data domains?
- What is the scope of ownership in these domains? Does the ownership merely cover definitions, and does it (still) rely on a central team for implementation or have domains real end-to-end ownership over data products?
- Given choices on these points, what does it mean for how to distribute data experts (e.g. data engineers, data platform engineers)? Is that realistic given the size or ability to attract and develop talent or should choices be reconsidered?
Enabler #3: platforms
This enabler covers technology platforms - specifically the required (data) infrastructure and services that support the creation and distribution of data products within and between domains. Organizations need to consider:
- How best to select services and building blocks to construct a platform? Should one opt for off-the-shelf solutions, proprietary (cloud-based) services, or open-source building blocks?
- How much focus on self-service is required? For instance, a high degree of decentralization typically means a greater focus on self-service within the platform and the ability of building blocks to work in a federated ways.
- What are the main privacy and security concerns and what does that mean for how security-by-design principles are incorporated into the platform?
Bringing things together: the principles of scalable data management
Although all three enablers are important on their own, the full value of AI can only be unlocked by leaders who prudently balance them throughout the whole data management transformation. For example, too much focus on platform development typically leads to organizations that struggle to create value as data (or rather, its value to the business) has been overlooked. On the other hand, too data-centric companies often struggle with scaling as they haven’t arranged the required governance, people, skills and platforms to remain in control of large scale data organizations.
In short, how the key enablers are combined is as important as the enablers on their own. Hence the importance of developing a playbook that spells out how to bring things together. It begins with value, and balances the demands on data, organization and platform to create reusable capabilities that drive scalability in iterative, incremental steps. This emphasis on (1) value, (2) reusability and (3) iterative approach lies at the heart of what companies who lead in the field of scalable data management do.
Let’s review each of these principles.
Principle #1: value, from the start
The aim is to avoid two common pitfalls: the first is starting a data management transformation without a clear perspective on value. The second is failing to demonstrate value early in the transformation. (Data management transformation projects can last for years, and failing to demonstrate value early in the process erodes the momentum and political capital.) Instead of focusing on many small initiatives, it is essential to prioritize the most valuable use cases. The crucial – and arguably the hard bit – is to consider not only the impact and feasibility of individual use cases but also the synergies between them.
Principle #2: reusable capabilities
Here the emphasis is on collecting, formalizing and standardizing the capabilities from core use cases. Then, re-use them for other use cases, thereby achieving scalability. Reusable capabilities encompass people capabilities, methodologies, standards and blueprints. Think about data product blueprints that include standards for data contracts, minimum requirements on meta data and data quality, standards on outputs and inputs, as well as methods on how to organize ownership, development, and deployment.
Principle #3: building iteratively
Successful data transformation progress iteratively towards their ultimate objectives, with each step being the optimal iteration in light of future iterations. Usually this requires (1) assessing the data needs of the highest-value use cases and developing data products that address these needs. Then, (2) considering where it impacts the organization and taking steps towards the new operating model. The key here is to identify the most essential platform components. Since they typically have long lead times, it's important to mitigate gaps through pragmatic solutions - for example ensuring that technical teams assist non-technical end users, or temporarily implementing manual processes.
Unlocking the full value of data
Data transformations are notoriously costly and time consuming. But it doesn't have to be that way: the decoupled, decentralized nature of modern technologies and data management practices allow for a gradual, iterative, but also targeted approach to change. When done right, this approach to data transformation provides enormous opportunities for organizations to leapfrog their competitors and create the data foundation for boundless ROI.
This article was written by Freek Gulden, Lead Data Engineer, Tamara Kloek, Principal, Data & AI Transformation, and Wouter Huygen, Partner & CEO.
In this first of a series of articles, we discuss the gap between the theory and practice of scalable data management.
Fifteen trillion dollars. That’s the impact of AI by 2030 on global GDP according to PwC. Yet MIT research shows that, while over 90% of large organizations have adopted AI, only 1 in 10 report significant value creation. (Take the test to see how your organization compares here.) Granted, these numbers are probably to be taken with a grain of salt. But even if these numbers are only directionally correct, it’s clear that while the potential from AI is enormous, unlocking it is a challenge.
Enters data management.
Data management is the foundation for successful AI deployment. It ensures that the data driving AI models is as effective, reliable, and secure as possible. It is also a rapidly evolving field: traditional approaches, based on centralized teams and monolithic architectures, no longer suffice in a world of exploding data. In response to that, innovative ideas have emerged, such as data mesh, data fabric, and so on. They promise scalable data production and consumption, and the elimination of bottlenecks in the data value chain. The fundamental idea is to distribute resources across the organization and enable people to create their own solutions. Wrap this with an enterprise data distribution mechanism, and voilà: scalable data management! Power to the people!
A fully federated model is not the end goal. The end goal is scalability, and the degree of decentralization is secondary.
Tamara Kloek, Principal at Rewire, Data & AI Transformation Practice Area.
There is one problem however. The theoretical concepts are well known, but they fall short in practice. That’s because there are too many degrees of freedom when implementing them. Moreover, a fully federated model is not always the end goal. The end goal is scalability, and the degree of decentralization is secondary. So to capitalize on the scalability promise, one must navigate these degrees of freedom carefully, which is far from trivial. Ideally, there would be a playbook with unambiguous guidelines to determine the optimal answers, and explanations on how to apply them in practice.
So how do we get there? Before answering this question, let’s take a step back and review the context.
Data management: then and now
In the 2000s, when many organizations undertook their digital transformation, data was used and stored in transactional systems. For rudimentary analytical purposes, such as basic business intelligence, operational data was extracted into centralized data warehouses by a centralized team of what we now call data engineers.
This setup no longer works. What has changed? Demand, supply and data complexity. All three have surged, largely driven by the ongoing expansion of connected devices. Estimates vary by source, but by 2025 the number of connected (IoT) devices is projected to be between 30 to 50bn globally. This trend creates new opportunities and reduces the gap between operational and analytical data: analytics and AI are being integrated into operational systems, using operational data to train prediction models. And vice versa: AI models generate predictions to steer and optimize operational processes. The boundary between analytical and operational data becomes blurred, and requires a reset on how and where data is managed. Lastly, privacy and security standards are ever increasing, not least driven by new a geopolitical context and business models that require data sharing.
Organizations that have been slow to adapt to these trends are feeling the pain. Typically they experience:
- Slow use-case development, missing data, data being trapped in systems that are impossible to navigate, or bottlenecks due to centralized data access;
- Difficulties in scaling proofs-of-concepts because of legacy systems or poorly defined business processes;
- Lack of interoperability due to siloed data and technology stacks;
- Vulnerable data pipelines, with long resolution times if they break, as endless point-to-point connections were created in an attempt to bypass the central bottlenecks;
- Rising costs as they patch their existing system by adding people or technology solutions, instead of undertaking a fundamental redesign;
- Security and privacy issues, because they lack end-to-end observability and security-by-design principles.
The list of problems is endless.
New paradigms but few practical answers
About five years ago, new data management paradigms emerged to provide solutions. They are based on the notion of decentralized (or federated) data handling, and aim to facilitate scalability by eliminating the bottlenecks that occur in centralized approaches. The main idea is to introduce decentralized data domains. Each domain takes ownership of its data by publishing data products, with emphasis on quality and ease of use. This makes data accessible, usable, and trustworthy for the whole organization.
Domains need to own their data. Self-serve data platforms allow domains to easily create and share their data products in a uniform manner. Access to essential data infrastructure is democratized, and, as data integration across different domains is a common requirement, a federated governance model is defined. This model aims to ensure interoperability of data published by different domains.
In sum, the concepts and theories are there. However, how you make them work in practice is neither clear, nor straightforward. Many organizations have jumped on the bandwagon of decentralization, yet they keep running into challenges. That’s because the guiding principles on data, domain ownership, platform and governance provide too many degrees of freedom. And implementing them is confusing at best, even for the most battle-hardened data engineers.
That is, until now.
Delivering on the scalable data management promise: three enablers and a playbook
Years of implementing data models at clients have taught us that the key to success lies in doing two things in parallel that touch on the “what” and “how” of scalable data management. The first step is to translate the high-level principles of scalable data management into organization-specific design choices. This process is structured around three enablers - the what of scalable data management:
- Data, where data is viewed as a product.
- Organization, which covers the definition of data domains and organizational structure.
- Platforms, which by design should be scalable, secure, and decoupled.
The second step addresses the how of scalable data management: a company-specific playbook that spells out how to bring things together. This playbook is characterized by the following principles:
- Value-driven: goal is to create value from the start, with data being the underlying enabler.
- Reusable: capabilities are designed and developed in a way that they are reusable across value streams.
- Iterative: the process of value creation balances the demands on data, organization and platform with reusable capabilities that drive scalability in iterative, incremental steps.
The interplay between the three enablers (data, organizations, platforms) and playbook principles (value-driven, reusable, and iterative) are summarised in the chart below.
Exhibit 1. The playbook for successful scalable data management.
Delivering on the promise of scalability provides enormous opportunities for organizations to leapfrog the competition. The playbook to scalable data management - designed to achieve just that - has emerged through collaborations with clients across a range of industries, from semiconductors to finance and consumer goods. In future blog posts, we discuss the finer details of its implementation and the art of building scalable data management.
This article was written by Freek Gulden, Lead Data Engineer, Tamara Kloek, Principal, Data & AI Transformation, and Wouter Huygen, Partner & CEO.