The human race is entering an era of exponential technological growth unmatched by anything before in its history. The rate of technological evolution is now accelerating by the nanosecond. Most advances to date have focused on the augmentation of the mind, or information analysis and processing. Advancements in these areas continue to move forward rapidly, and humanity now faces a scenario in which our technologies are breaking out of their boxes, migrating from the cyber world to the physical world. The CyberPhysical Era has begun and with it the robotic Internet of things (RIoT) economy.

The technological changes now coming online with robotics and artificial intelligence will disrupt far more businesses than did the first information revolution, which was dominated by personal computers, the Internet, and mobile devices. The emergence of this new age will bring great opportunity to those who successfully navigate the swelling tides of the new blue ocean. But with great opportunity also comes great risk -both economic and existential. 

The knowledge accumulated by the emergent Internet of Things -- or the less commonly used, albeit more accurate term Internet of everything -- is then utilized by the technological ecosystem to evolve. The proliferation of learning machines and the expansion of their intelligence now moves at speeds that for many observers, appears as surreal as science fiction.

In the book “Race Against the Machine” by MIT professors Erik Brynjolfsson and Andrew McAfee, a chessboard is used as an example to describe the evolution of technology, specifically robotics and AI, an idea which they borrowed from Ray Kurzweil. In the story, the inventor of chess shows his new game to his emperor. The emperor is so impressed by the game that he grants the inventor the right to select his own reward. The inventor asks for a quantity of rice to be calculated as follows: One grain of rice is put on the first square of the board, two on the second, four on the third, and so on, with each square doubling the number of grains as the previous. The emperor agrees, thinking the reward too small. Much to his chagrin, he later sees that the doubling results in incredibly large numbers. The inventor ends up with 18 quintillion grains of rice, an amount which makes Mount Everest look like a molehill. The point of the story is that in an age of exponential technological growth, things only get really interesting in the second half of the chessboard. We are now on the second half of the board. And things are getting very interesting, indeed.

Businesses of all types have been impacted by the moves already taken on the first half of the chessboard during the IT revolution that started in the 1980s. One example is what happened to photography with the advent of digital photography, which brought about the demise of some companies and emergence of others. This scenario is now happening in AI and robotics. Intelligent, easy-to-use machines dedicated to the service of humans are being developed and are becoming accessible to the majority of consumers in terms of cost. These robot systems will spell the end of many jobs and businesses, but create new jobs and businesses for those positioned for the change. For employment, however, the net result will be negative, and mass unemployment will become an issue with which governments must contend.

The key difference between the intelligence revolution and the information revolution, however, is the rise of cyberphysical systems. The technology now improves itself and learns from mistakes. The digital genie is now out of the cyber bottle, whether as a classical humanoid robot, an autonomous car, a nanobot implant or a robotic chef system.

In the Cyberphysical Era we will see AI and robotics (AI-enhanced robots, or AI bots) permeate the physical world. The AI bots in the RIoT system will be components of a “hive mind,” and use onboard processors as well as the cloud to learn from each other, not unlike a real-time Wikipedia for AI bots, thus magnifying their efficiency and growing its knowledge base. This year, IBM and Softbank gave birth to the first generation of AI bots by fusing Watson AI and Pepper, the service robot. While at the University of Cambridge, scientists have created a “mother robot” that builds smaller robots, and selects the fittest for survival, and rearranges the rest.

Two keys are required for businesses to prosper in the RIoT economy. The first is technological capability, which Korean companies possess in abundance. The second is diverse staff with international networks and experience in building cross-border partnerships in emerging technology businesses such as service robotics. The second key is used in places like Silicon Valley and Berlin to create future businesses. In Korea, however, companies must work harder to build this ecosystem to attract such talent. This involves much more than simply rezoning or calling an area a “Silicon Valley of …” Indeed, it is neither the name nor the geographic location that makes a Silicon Valley, but the interplay of diverse ideas that creates future businesses.

The path to failure, unfortunately, is far easier to travel. Investing in companies with little to offer in terms of new solutions to old problems is one. One example involves large investments made into a company building a social robot that was popular on a crowdfunding website. Although the robot has enjoyed a substantial funding relative to its potential, it does little more than what tablets and phones already do. But this is par for the course in most service robotics.

Businesses can avoid such pitfalls by working with professionals that know the business and understand how these emergent technologies can be used for lofty yet realistic outcomes. This is the way to most efficiently allocate resources in RIoT-related companies that have the greatest potential to disrupt existing business models or create entirely new business models.

By Robert Cheek

Robert (Robb the Robot Guy) Cheek is a research analyst and editorial head at HMC Investment Securities, the investment banking arm of the Hyundai Motor Group. He can be reached at r.cheek@hmcib.com. -Ed.