Five Top Tech Takeaways: A Deep Dive into Disruption, From AI Hardware to GenAI-Powered Services

Author's Note: In this post, we explore five top tech stories, focusing on disruption and how it relates to the humane AI pin, Rabbit R1, and GenAI-powered innovations.

The humane AI pin and Rabbit R1 aim to disrupt the smartphone market, but they face challenges in delivering the convenience and functionality users demand. Disruption, as Harvard professor Clay Christensen explains in his books "The Innovator's Dilemma" and "The Innovator's Solution," is not just about introducing new technology but rather about offering a compelling product at a price point that attracts customers who have been ignored by the market. Overserved customers who find the extra features in current product lines unnecessary will gravitate towards cheaper, convenient, and "good enough" alternatives. 

HP's success with inkjet printers exemplifies the concept of disruption. Inkjet printers offered a cost-effective alternative to laser printers while outperforming dot-matrix printers in terms of quality. This innovation met the needs of users who did not require the advanced features of laser printers but sought better quality than dot-matrix printers could provide. As a result, inkjet printers successfully disrupted the market by catering to the demands of overserved customers.

GenAI-powered agents, note-taking apps, and intelligent search provide helpful features that make people's lives easier but are affordable. Take, for example, Dr. Lall's use of an AI-enabled note taker (see below). It is an excellent example of how this technology can effectively "amplify" one's effort. As I discussed in my Medium post, GenAI has the potential to be leveraged as a junior assistant, capable of drafting emails, conducting research, and performing other content-oriented tasks typically assigned to a remote virtual assistant. Consequently, these innovations can potentially disrupt the market by focusing on delivering the functionality users need at a more accessible price point.

MKBHD on Humane AI Pin: An Overhyped, Underdelivering Gadget

Marques Brownlee's review of the Humane AI Pin, a wearable AI gadget, exposed its primary flaw: it's not inherently flawed technology but rather a flawed concept. Despite the tech's shortcomings, such as slow processing and inaccuracy, the real issue lies in attempting to replace the smartphone with a device offering less functionality. Users aren't looking for a chest-worn gadget that can't match their phones, making the AI Pin an impractical solution that ultimately fails to deliver on its promise. The broader lesson here is that not all innovative ideas are worthwhile, and Humane's assumption that people need an alternative to smartphones was misguided.

Key Takeaways:

• Marques Brownlee criticized the Humane AI Pin for being an underwhelming alternative to smartphones with less utility and greater inconvenience.
• Despite its design team's good intentions, the AI Pin's limited features and inability to integrate with common tools like Google Calendar reveal its conceptual flaws.
• The AI Pin’s attempt to replace smartphones fell short, demonstrating that new tech ideas must address real user needs to be successful.

The Rabbit R1: Promising Concept, Disappointing Execution
The Rabbit R1, a new AI gadget priced at $199, fails to deliver on its promise of offering an advanced and practical AI assistant. The device is plagued by incorrect identifications, faulty integrations, and limited capabilities, particularly with apps like Uber and Spotify, which struggle to execute basic functions. Though its Large Action Model (LAM) is meant to simplify tasks across different apps, the current implementation is unreliable and often frustrating. While its whimsical design and quality microphone provide some appeal, the Rabbit R1 largely underwhelms, suggesting that AI gadgets still lag far behind smartphones in utility.

Key Takeaways:

• The Rabbit R1's AI capabilities, such as food and object identification, are unreliable and often incorrect.
• Integrations with apps like Uber, DoorDash, and Spotify are poorly executed and offer limited practical use.
• Despite its attractive design, the Rabbit R1 struggles to compete with the functionality and reliability of smartphones.

(Source: The Verge)

Amplification in Action: How AI is Saving Time for Family Physicians

Dr. Rosemary Lall, a family physician in Scarborough, Ontario, discovered a groundbreaking solution to the overwhelming administrative burden that nearly drove her to quit her practice. By implementing an artificial intelligence note-taking application called AI Scribe, Dr. Lall significantly reduced the time spent on mandatory patient record-keeping. The AI Scribe, developed by OntarioMD, automatically generates detailed SOAP notes during patient visits, which has drastically cut down on the after-visit paperwork and allowed Dr. Lall to focus more on patient care and less on administrative tasks.

Key Takeaways:

• Ontario doctor adopted AI Scribe to address the extensive administrative duties that were impacting her work-life balance.
• AI Scribe assists in creating SOAP notes, thereby reducing paperwork and saving time for physicians.
• The Ontario government is conducting a pilot program to integrate AI Scribe into more practices, indicating a move towards broader adoption of AI in healthcare management.

(Source: Global News)

OpenAI's Sam Altman Foresees an AI Assistant Revolution

In an interview with MIT Technology Review, OpenAI's CEO Sam Altman discussed his vision for AI tools that will significantly integrate into our daily lives, much like smartphones. He envisions AI as a “super-competent colleague” that can manage various tasks seamlessly, adapting to users' needs and learning from interactions without feeling intrusive. While he doubts that new hardware will be necessary for this paradigm shift, Altman suggests consumers might still appreciate a specialized device. He remains optimistic about overcoming the challenges of sourcing training data for future AI models and anticipates that multiple versions of AGI will excel in different areas. He hinted at ongoing development of future models but declined to disclose specifics about GPT-5's release date.

Key Takeaways:

• Sam Altman sees the "killer app" for AI as a highly capable virtual assistant that can tackle tasks independently.
• Despite the challenges in sourcing training data, Altman remains hopeful about finding new methods for advancing AI capabilities.
• Altman anticipates several versions of AGI that will vary in their abilities but did not provide a timeline for GPT-5.

(Source: MIT Technology Review)

Apple Plans to Bring AI to iOS: Intelligent Search and Beyond

Apple is preparing to introduce significant enhancements to its Safari web browser, including integrating an AI-powered tool called Intelligent Search. Set to launch with Safari 18, alongside iOS 18 and macOS 15 later in 2024, these updates aim to enhance user experience through advanced content blocking, a Web Eraser feature for removing specific webpage elements, and AI-driven content summarization capabilities. These improvements are part of Apple's broader strategy to implement more secure and efficient AI technologies in response to the growing influence of generative AI tools in the tech industry.

Key Takeaways:

• Apple's Safari 18 will feature Intelligent Search, utilizing on-device AI for advanced browsing and text summarization.
• The Web Eraser tool in Safari will enable users to selectively erase webpage content, enhancing privacy and user control.
• Apple continues to align its software capabilities with AI advancements, positioning Safari as a more competitive and secure browser option.

(Source: AppleInsider)

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist who is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else. This post was written with the assistance of an AI language model. The model provided suggestions and completions to help me write, but the final content and opinions are my own.

Will auditors go the way of horses?

In late 2015, MIT Professors Erik Brynjolfsson and Andrew Mcafee penned an article entitled, will "Humans go the way of horse labour?"

The article explores how the mechanization of farm labour serves as a model of exploring the automation of knowledge work citing the work of Nobel Prize-winning economist Wassily Leontief. They state:

"In 1983, the Nobel Prize-winning economist Wassily Leontief brought the debate into sharp relief through a clever comparison of humans and horses. For many decades, horse labor appeared impervious to technological change. Even as the telegraph supplanted the Pony Express and railroads replaced the stagecoach and the Conestoga wagon, the U.S. equine population grew seemingly without end, increasing sixfold between 1840 and 1900 to more than 21 million horses and mules. The animals were vital not only on farms but also in the country’s rapidly growing urban centers.

But then, with the introduction and spread of the internal combustion engine, the trend rapidly reversed. As engines found their way into automobiles in the city and tractors in the countryside, horses became largely irrelevant. By 1960, the U.S. counted just 3 million horses, a decline of nearly 88 percent in just over half a century. If there had been a debate in the early 1900s about the fate of the horse in the face of new industrial technologies, someone might have formulated a “lump of equine labor fallacy,” based on the animal’s resilience up till then. But the fallacy itself would soon be proved false: Once the right technology came along, most horses were doomed as labor."

The MIT Professors are not alone in sounding the alarm when it comes to how automation can impact labour. Others includes Thomas Piketty, Douglas Rushkoff, Martin Ford and Nick Carr. 

If the techno-distopians are right, then there will need to be a fundamental alteration of the way the economic system is structured to address the unemployed masses. Such masses are not likely going to take such things lying down. For example, in response to the Great Depression there were mass demonstrations in Washington DC where thousands protested their plight. In January 1932, Cox's Army of 25,000 assembled in the capital to protest their poverty. Later that year, the Bonus Army of 43,000 marched on Washington in the summer to demand the US government pay the bonus promised early:



Alternatively, if the techno-utopians are right, such as Peter Diamandis and others at Singularity university, then such  protests won't be necessary: the system will make changes proactively to ensure that the gains made from exponential technologies are made available to the majority.

The point is that either way actions must occur at the political level to make the changes necessary to  address the deeply embedded economic architecture.

Consequently, working within the status quo leads to one actionable option: "Race with the Machine".

Prior to penning the article I cited above, MIT Professors Erik Brynjolfsson And Andrew Mcafee proposed that the path forward requires "man and machine" to work together:

This is essentially how IBM's cognitive system, Watson, was positioned when it comes to doctors and medicine: doctors delegate the task treatment research to Watson, while they determine what is the right treatment for their cancer patients. For example, doctors and Watson were able to work together and determine what the correct treatment was for a 60 year old Japanese patient. 

How can this be applied to financial audit? 

Firstly, the scope of the audit is driven by optimizing the cost-benefit curve. Consequently, there is a potential to get greater assurance for the same amount of resources allocated. Keep in mind that if auditors had to audit all transactions,  the organization could go bankrupt just trying pay the audit bill. Consequently, auditors only look at transaction on a test basis.

However, with the increased datafication of an organization's interactions with stakeholders, there is an opportunity - that didn't previously exist - to analyze these interactions for audit insights.

Take for example a Business to Consumer (B2C) company, like Dell, that interacts with its customers via social media. In 2005, there was an infamous spat between a CUNY journalism professor, Jeff Jarvis, and Dell computers (original post here). Jarvis was irate over the customer service and has been an Apple customer since. Such conversations can be mined for potential audit implications. In this particular instance, it could be a means to assess the adequacy of the sales returns allowance - developing a model based on how many other customers have complained via blogs, twitter or other social media about the B2C company and then assessing whether the provision is adequate.

Previously, such an analysis would be cost prohibitive and wouldn't make sense for the auditor to even considering such a thing. For example, the B2C company would need to record all conversations and then have auditor listen to thousands of hours of conversations to see whether such an issue actually exists.

This is not to say that it is currently feasible to run such an analysis.  Tools that aggregate, standardize and analyze such unstructured text could be argued to be in their infancy. However, datafication combined with further advances in social analytic tools (see video below for an example) in is the first step to a world where such analysis could be feasible.

The second separate but related issue is the role of the regulators in opening or closing the gate on innovation.

Some may mistakenly believe that this due to the regulated nature of audit. However, audit is not the only arena where innovation is shaped by the “regulator”. In fact, the success or failure of innovation  depends on how the incumbents who govern the landscape make way for the new technology (or not).

Take for example the rise of the iPhone in the corporate environment. What allowed consumerization to take place (i.e. allowing users to connect their favourite smartphone devices to the network instead of the corporate devices) was that Microsoft took an open approach to licensing it Exchange Active Sync. They could have created a walled garden that allowed Windows Phone only to connect to their email server, however, they paved the way for iPhone and Android to connect their devices to the corporate email server. Microsoft as the "regulator" of which mobile device can connect to its mail server enabled the iPhone and Android to displace our beloved BlackBerries from the corporate environment. Had Microsoft saw more profit in walling off the market for its own devices the ability for Apple iDevice to disrupt corporate IT would have been stifled if not suffocated.

On the opposite side, David Sarnoff of RCA squashed FM radio in order to protect his AM Radio technology and pave the way for television. The inventor, Edwin Armstrong, who initially was Sarnoff's friend, had mistakenly shared his technological innovations with him only to be betrayed by him. FM Radio technology had the potential to share data, such as faxes, back in the 1930s. One can only imagine the state of the wireless technology had RCA allowed this technology to flourish. 

Similarly, in 1934, AT&T blocked the answering machine for fear that it would undermine their business because "ability to record voice would cause business people to shun the telephone for fear of having their conversations recorded". So although much innovation came out of AT&T's Bell labs, the point is that it was effectively acting as the "regulator" which determined which innovations were permitted in the telecommunications industry and which ones were not. 

Consequently, the regulators (e.g. SEC, PCAOB, AICPA, etc.) will have a significant role to play on how innovation will unfold with the arena of audit. It is ultimately they who are going to weigh and assess what constitutes reasonable assurance actually is.  

Where are the regulators currently at? 

Well it seems that they are looking to technology to actually improve audit quality. In a May 2017 speech, PCAOB Board Member Jeanette M. Franzel noted in the section "Impact of Technology on Audit" that:

"If managed and implemented properly, these developments have the potential to enhance the value of the audit process and increase audit quality." [emphasis added]

To be sure it's not all rainbows and unicorns. Board Member Franzel did see "potentially disruptive changes will present challenges and threats across the auditing profession". However, at least there is an appetite to explore how such technologies can improve audit quality, expand what more can be done within audits and enable auditors to race with the machine.

Author: Malik Datardina, CPA, CA, CISA. Malik works at Auvenir as a GRC Strategist that is working to transform the engagement experience for accounting firms and their clients. The opinions expressed here do not necessarily represent UWCISA, UW, Auvenir (or its affiliates), CPA Canada or anyone else.

Cloud vs corporate IT: Insights into how the share-economy will play out?

When thinking about disruption we often attempt to look to the past for how it will affect our future. However, we can also explore how disruptive tech is impacting our world today.

Consider a recent WSJ article that gave us insights in to how cloud and mobile is disrupting "classic tech":

• EMC, Intel and IBM are being disrupted. The move to cloud and mobile is impacting the ability of these companies to meet earnings expectations. For example, EMC's sales of storage products declined by 10%, while Intel has seen an overall decline in PC Market sales.
• Companies are slashing their workforce in response to such trends. The shift to cloud & mobile is resulting has resulted in the hemorrhaging of 12,000 jobs, or 11% of the workforce, at Intel alone. 
• Overall decline in revenues/profits despite strategic shifts in product mix. IBM's cloud computing business grew 34%, while Intel's data centre business, serving cloud providers grew 9% (for more on this "corporatification trend" see here). However, IBM's total revenue fell almost 5%. Intel had a tough time keeping up with rivals like ARM who posted revenue gains of 22%. This compares to 7% of which the WSJ attributes a chunk of that rise to an acquisition Intel made. 

Reflecting on these trends, is it fair to think of cloud as the original use case for the share economy? 

When we think of Uber, Airbnb, etc., we see how users can use these platforms to monetize their excess or underutilized asset by renting it to others.

However, isn't that also the story of the cloud?

Amazon, Intuit, and other cloud computing companies decided to "share" their excess computing capacity to others. In a sense, we are talking about servers instead of houses, but the concept is really the same.

And this goes to my initial point. We are living through the disruptive impacts of cloud and mobile on legacy-tech and we can quantify, analyze and understand its impact.

Given this premise what does this above tell us about the share-economy?

Firstly, better utilization of assets leads to the sale of less assets.  This should be expected as there is a more efficient use of assets leads to  (servers, car, house, etc) less market size as demand remains constant. As I had noted in the post a few months ago, Uberization of the taxicab industry would ultimately lead to a fleet of cars that are owned by a company like Google - leading to a net reduction of cars used by society. GM probably understands this concept as they have invested $500 million into Lyft; a competitor to Uber.

Secondly, it illustrates how the share-economy is subject to concentration of wealth: the cloud computing landscape is dominated by large players, including Amazon, Google and Microsoft. As noted by Douglas Rushkoff in the following video, since these innovations emerge out of the "operating system of capitalism", they inevitably result in the formation of a handful of platforms dominate the industry and capture the lion's share of the profits.


(Also check out his book that discusses this in more depth)

Thirdly, its difficult for behemoths to adjust to these types of shifts. Despite Intel and IBM investing in the disruptive technologies, it's hard for them to adjust to the dynamics of the new economy. This illustrates how much more challenging it will be for those disrupted by such platforms to re-tool and compete in the landscape.

For accountants and auditors, one such platform to watch out for is Gigwalk. As per their website, their value proposition is that by leveraging the 350,000 “professional services” workers (see graphic below) the manufacturer or other upstream supplier can get visibility into the actual retail outlet. For example, Whirlpool wanted to “Audit the presence of its Swash product on showroom floors, communicating back to corporate compliance gaps in real-time”.

And the "starter Store Audit Package" begins at $10.

Creative destruction is not inevitable, but we should learn from the lessons of these tech giants and plan prudently to meet such challenges head on.

Understanding the Audit Opinion: "He's a good guy"

One of the challenges of understanding the value proposition of an external audit is to understand the link, or more accurately the lack of a link, between the work done and the actual output to the client: the actual audit opinion.

 

Essentially, the audit firm is vouching for the financial story that the client is communicating on an annual basis. It is akin to vouching someone in social circles and saying that he or she is a "good guy or gal". 

The interesting thing is that amount "evidence" you have to present to backup your claim can change greatly depending on the context. Consider the following scenarios.  

• He's good guy to hang out with: This is the lowest risk situation due to the low impact: if the guy is actually not good it's just one night wasted. Evidence required: pretty much your word. 
• He's good guy to hire: Risk here is (your) reputation risk, if he actually is a bad employee then your reputation is tarnished. The risk on the employer is actually quite low - they can fire the guy if he's not good. Evidence required: Although ultimately it is still your word, as the employer will rely on you to know that your friend's resume is true from experience to protect your reputation. 
• He's good guy to loan money to: now it gets interesting! Here your friend is going to impart cash to your friend based on your testimony.  Evidence required: you will likely need to explain how he's paid you back, has a job or rich parents that can pay for him if he doesn't do so. 
• He's good guy to do business with: Here your friend is not only going to impart cash to your friend based on your testimony, but share their work life with him and rely on him to actually do things.  Evidence required: you will likely need to explain how he's reliable, hardworking, previous work experience, how much money he will invest in the business and need to prove these things somehow. 
• He's good guy to live with:  It's debatable whether more assurance is required in this context or the previous context. The thing with business is that you are tied in for the long run whereas most leases only go a year :). Evidence required: You need to have lived with them and provide first hand evidence about how clean there, easy to get along with and overall considerate.

I realize that this analogy is not perfect: purpose that the financial statements are issued are for the same decision and the risks of material misstatement or audit failure are the key drivers of work. However, it illustrates that the output - an opinion on an issue - remains consistent but the amount of work can vary greatly.