Leaders’ digest: the AI backlash, green failures and what’s next for Next?
The AI backlash begins
More than 1,000 people, including Elon Musk, Apple co-founder Steve Wozniak and Yoshua Bengio, one of the ‘godfathers of AI’, have signed a letter calling for a pause in the training of AI due to concerns about the impact it could have on humanity.
The letter, issued by the non-profit Future of Life Institute, warns of the “profound risks to society and humanity” posed by AI systems as they become increasingly capable of exhibiting “human-competitive” intelligence. As a result, it calls for a six-month halt to the “dangerous race” to develop AI technology that is more powerful than OpenAI’s GPT-4, while experts jointly develop and implement safety protocols. And, if a pause can’t be hastily enacted, governments should step in.
“Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable,” the letter says.
The launch of ChatGPT late last year has led to a groundswell of investment and interest in AI. Microsoft has integrated the technology with its Bing search engine, while Google has rushed through the launch of its own offering, Bard.
But experts have been warning of the threat. AI researcher Professor Erik Brynjolfsson, has highlighted the material risks such rapid developments present. “We need to catch up and keep control of these technologies,” he advises.
There are benefits to business in terms of improved productivity, for example. But AI is only as good as the data on which it is being trained. Companies needs to consider this when working out how – and when – to use it.
Crew becomes Diageo’s captain
Diageo, the international alcoholic drinks conglomerate, has appointed Debra Crew as its new chief executive officer. She will succeed Sir Ivan Menezes, who is due to step down on 30 June after 10 years in the role.
The move will make Crew just the ninth woman to lead a FTSE 100 company and the first to head Diageo, which is behind drinks brands including Guinness, Johnnie Walker, Gordon’s and Baileys cream liqueur.
Crew joined Diageo in July 2020, overseeing its business in North America, before becoming chief operating officer two years later. Previously, she worked at PepsiCo, Kraft Foods, Nestle and Mars. She has an MBA from the University of Chicago.
Diageo’s decision is a welcome show of faith in women in executive positions. Crew is highly experienced and qualified. It’s encouraging to see a FTSE 100 firm give her a chance – but similar progress across the index is still lacking.
In any case, Crew’s in-tray at Diageo in the summer will not be light. Despite a 15% hike in operating profits to £3.2bn, sales growth has slowed due to high inflation and the cost-of-living crisis. The alcohol industry, too, must adapt to evolving consumer trends, including people generally drinking less.
UK stumbles in green race
The government’s long-awaited energy strategy for “powering up Britain” has been branded as “lacklustre” by environmental campaigners over its lack of new commitments.
The strategy was intended to provide a response to the High Court case taken out against the government last year by a coalition of campaign groups, comprising Friends of the Earth, ClientEarth and the Good Law Project, over its net-zero plans.
In more than 2,800 pages of documents released today (30 March), the government set out its commitment to invest in carbon capture technologies, small nuclear reactors, green hydrogen, electric vehicle charge points and offshore wind infrastructure. But there were few new announcements.
Also missing from the documentation was the carbon emissions each policy would save, leading critics to call it “half-baked”. This makes it particularly challenging to judge whether the changes will help the UK meet its net-zero targets; it is currently set to miss its carbon budgets in both 2032 and 2037.
With the US taking serious strides forwards in its green infrastructure investment, primarily through Joe Biden’s $369bn (£298bn) Inflation Reduction Act, many businesses in the UK’s green sector may be tempted to move abroad, unless the UK can match the levels of subsidies and incentives available on the other side of the Atlantic.
What’s next for Next?
Next is considered a bellwether for the British retail sector, so when the fashion and homeware brand announces its financial results, other businesses tend to take note.
The company posted better-than-expected pre-tax profits on Wednesday – up 5.7% to £870m. However, they came alongside a caveat. “The year ahead looks like it will be challenging,” Next CEO Lord Simon Wolfson said, as he budgeted for a drop in earnings and a 1.5% decline in sales. His words of warning triggered a 4.3% drop in the company’s stock price.
The FTSE 100 chief is renowned for his cautious outlook and Next regularly posts results that exceed its forecasts. Better-than-expected Christmas trading figures meant that the retailer was able to uplift its profit guidance at the start of this year and recent acquisitions of Cath Kidston, Made.com and Joules have also aided its growth.
However, the next 12 months may prove more difficult. Uncertainty around inflation, which took a surprising jump to 10.4% this month, and the cost-of-living squeeze are continuing to give business leaders like Lord Wolfson headaches. “The combination of inflation in our cost base and top line sales, which are likely to edge backwards, is uncomfortable,” he said. This could mean that retailers, investors and consumers continue to feel the pinch in the year ahead.