Cognitive Computing: What executives should know about Watson

Watson is listening, talking, thinking and learning. Self-learning IT systems that communicate with human beings and computer systems in real time, memorize former interactions and draw conclusions independently now electrify the IT industry. Experts believe Cognitive Computing heralds a new computer era. Their vision is for cognitive and comprehensive systems to replace today’s computers.

“Leaders are not dealing sufficiently with the opportunities and barriers presented by these cognitive technologies.“

Horst Neller, Managing Partner at Signium Germany

Ken Jennings had already won the US quiz show “Jeopardy!” 74 times, earning record sums. But then Watson came along. Competing against Jennings and another champion, IBM’s cognitive computer system clearly won three shows in 2011. Programmers had fed the system with large amounts of data beforehand from a variety of sources including encyclopaedias and media, allowing Watson perform to a very high level. In contrast to contestants on typical German quiz shows, “Jeopardy!” contestants need to find the correct question to a given answer within five seconds. No problem for Watson.

Five years have passed since its first high-profile appearance. Five years, during which Watson has learned even more. It was the beginning of a new era, the cognitive era, announced Ginni Rometty, President of IBM, at the Consumer Electronics Show in Las Vegas at the beginning of this year. Up until then, about 80 % of all data could not be read because the data was not structured, that is, it was only available as images, videos or sound, and could not be processed by computers. According to IBM, Watson is able to read and understand millions of pieces of this audio visual data in seconds.

Experts agree: Cognitive computing heralds the beginning of a new computer era. In the future, cognitive systems, that is, systems which understand, which cannot only listen and speak, but also think and learn by experiencing their environment, will increasingly replace programmable computers. This technology register nuances in human semantics and interact with people. For the first time, people therefore do not need to submit comply with the fixed rules of a computer, but can communicate with it in a more natural manner than in the past.

The humanoid robots provide organisations with huge amounts of data, so-called big data, including sensor data from machines, information from customer management or the weather forecast. Thanks to artificial intelligence, these systems are able to connect the pieces of information to support humans in their conclusions and decisions. The US market-research company IDC predicts that half of all consumers will have come into contact with services working with cognitive computing solutions by 2018. According to experts, almost all industries have potential to harness this technology for performance improvement; whether the pharmaceutical industry, the retail sector, logistics, insurance or, for instance, financial services & consulting.

At CeBIT, the world’s largest IT trade fair, Watson recently showed what it is capable of: The smart supercomputers facilitate maintenance by using sensor data to predict when a machine part needs to be replaced. They improve customer service, as they automatically analyse an e-mail sender’s mood and immediately suggest appropriate responses. They present tailor-made offers to customers, since they get to know their buying habits better each time.

In order to adapt the cognitive solutions to different industries with specific requirements, programmers develop individual solutions. IBM and SAP are, for example, currently working on a self-learning computing platform for insurance companies which combs through large numbers of damage reports to uncover irregularities. Was the driver only distracted or did he or she intend to deceive the insurer? Self-learning IT systems can answer these kinds of questions faster and more easily than clerks.

Data is the new oil, believes Kevin Plank, CEO of the US sportswear manufacturer Under Armour. He says that those who know how to read and analyse data are those who will win. Watson will help business performance by analysing user data of Under Armour wearables and providing customers with insights into their fitness, nutrition and sleeping habits.

Many companies do not seem to have realized yet that the big data stored on the servers in their data centres is a really valuable resource. According to a survey by the digital association Bitkom, only up to 21% use modern methods of data analysis for enhancement of performance in areas such as production planning, customer analysis or risk management, among other things. Automotive manufacturers and insurers are pioneers in this area. Employees can hinder digital transformation, but companies’ management and leadership teams can equally be at fault – often sticking to default / familiar work routines as well.

Neller doubts: “that neither the German economy itself nor the mid-sized enterprises at the heart of the German economy can afford to neglect this development”. The fourth industrial revolution – industry 4.0 – and cyber-physical systems have progressed further than many would believe. “The disruptive technologies enable brand new business processes. Not only the IT specialists but the entire management of companies have to deal with this. Executive Search professionals focussed on clients with technology-based, complex products and services need to put this on top of their agendas.