By Joe Mariani
A prosecutor stands before the defendant accused of price fixing and gouging consumers. She forcefully argues that the defendant did “knowingly and intentionally defraud his customers.” To which he only replies, “Prove it.” This may seem like nothing more than a bit of bravado from a bad courtroom melodrama, but in the current digital age – the 4th Industrial Revolution – it may actually take on greater meaning for businesses and all of us.
|Information is Everything
In the 4th Industrial Revolution connected technologies such as the Internet of Things (IoT) allow for the creation and sharing of information about physical objects in the world to such an extent that now the information itself is often the most valuable part of a product or service. Take a piece of milling machinery for example. In the past, its value was largely determined by its physical properties: revolutions per minute, hardness of the lathe tip, and others. However, in a connected factory of today, its information content can be even more valuable by predicting when it will need maintenance, determining the quality of products and so on.To create this information companies rely on sensors and a network of technologies to create digital data about things in the world. Everything from machinery to workers to customers can be sensorized and used to generate data. The problem is that creating digital data alone is not sufficient to have the valuable information. Often we gather data that we do not even look at. In one instance, only 1 percent of data collected from nearly 30,000 sensors on an oil rig was even examined.1 For data to become information, it must be processed and used to support some decision. We are all awash in huge volumes of digital data, only a fraction of which we typically transform into valuable information. But this introduces a problem, because, while it can be easy to outsiders to see if data is stored on a server somewhere, it is almost impossible to say if that data has been seen and used by a person to make a decision. That is digital epistemology, and the challenge of the 21st century. It is difficult to be able to “know what someone knows.”The Bad with the Good
Epistemology may be interesting only to philosophers, but “digital epistemology” may shake the foundations of many of our business and social institutions. This is because many of our laws require knowledge or intent to prove a transgression. For example, the Americans with Disabilities Act requires that an employer make reasonable accommodation for a “known” disability.2 But what if the evidence for that disability was captured by a worker’s wearable sensor? At what point does the employer having that raw data become “knowing”? And it is not just a data collection problem either. With artificial intelligence playing a larger role in all aspects of business, proving that individuals meant to break the law can be difficult.3 For example, if a seller puts in place an algorithm to help set the best price possible, and that algorithm results in all prices being artificially elevated, have the sellers “knowingly” colluded to fix prices or is it just an unintended consequence of the algorithms?
Toward a New Regulatory Regime?
Still, whether you are a company harnessing the new digital technology or a government looking to better serve citizens, the first step should be to build an understanding of the information used to make decisions on a daily basis. This can help not only identify where digital epistemology may challenge the organization, but may also uncover where existing, unused information can help improve operations with little additional effort. In this way, businesses and institutions alike adjust proactively to those shifts and ride the wave of technology-driven change rather than being drowned by it.
1 Manyika, James et al. Unlocking the Potential of the Internet of Things. McKinsey Global Institute. June 2015.
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