The Feeling Economy: Roland Rust on AI and New Business Opportunities

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Carl Lewis: Welcome to The Connected Enterprise Podcast. I’m Carl Lewis, your host from Vision33, and my guest is Roland Rust, a professor and author. Roland, welcome to the podcast. Please tell us about your journey, your work, and your new book.

Roland Rust: Thank you, Carl. I started as a mathematics student but transferred into business, where I thought I could use my math training. Ironically, much of the book is about how people won’t be able to use their math training anymore. I couldn’t use it in business, so I became a professor. I taught at the University of Texas at Austin, then Vanderbilt University, and then the University of Maryland. I’ve been there for 20 years, so I’m a distinguished university professor. Only a few dozen people in the university have that rank.

I’ve been working on the influence of technology on marketing. The latest and greatest in technology is artificial intelligence (AI), so I’m working with my coauthor and wife, Min-hui Huang, to figure out what AI is doing to the business world and society and how we’ll cope with it. We’re looking at it from the human side. AI will do the thinking, and people will concentrate on feelings, emotional intelligence, and interpersonal relationships.

Carl Lewis: Emotional intelligence is intriguing. I hear the phrase a lot, but I'm not sure I see it practiced much.

Roland Rust: I think we all have to work on it.

Carl Lewis: Absolutely. It seems like the pandemic has reduced time in relation to technology. I read an article about how six years’ worth of eCommerce adoption has been squeezed into one year because of COVID. The business being done on the internet now is incredible compared to what they thought it would be.

Roland Rust: Yes.

Carl Lewis: A lot of that is automated and takes advantage of technology like AI. What will our lives be like when things are fully automated? What will it take from us, and what will it give us?

Roland Rust: We have to discuss which phase we're in. In our book, The Feeling Economy, we talk about three main phases. The physical economy, which was people farming, mining, etc. Then, with the Industrial Revolution, we moved to a thinking economy, especially with Henry Ford’s assembly line and then factories becoming automated with rudimentary AI. A bad thing was that physical workers were suddenly in trouble. The coal miners in Pennsylvania, for example. They're still a bit left out. If you look at Pennsylvania or automobile manufacturing in the Midwest, many people are in trouble.

But before we've solved that problem, we have a new transition: AI taking over thinking tasks. The result of that, which we can show with data, is that people are pushed toward the feeling side. The importance of feeling tasks is increasing faster than the importance of thinking tasks everywhere in society. Unfortunately, people are dumbing down in terms of their thinking ability.

Carl Lewis: That’s interesting. I'm in the technology realm, which is still highly focused on the technical.

Roland Rust: Definitely.

Carl Lewis: What's going to change – or what should change – about that as we move through these stages?

Roland Rust: The universally accepted truth is that science, technology, engineering, and math (STEM) skills are the key to success and happiness. Our book says that's not necessarily true, that STEM is declining in importance. Wait. I said that wrong. STEM isn’t declining in importance – it’s more important than ever. But soon, AI, not people, will be doing STEM. So, someone with strong technical skills who’s emotionally abrasive will have more trouble in the upcoming world. The successful people will be those who can get along with others and deal with their emotional needs effectively. It will be a long time before computers figure that out.

There’s a lot of ongoing research in feeling intelligence in AI. To do well in feeling intelligence, you must identify emotion and respond appropriately. There's research about AI reading facial expressions and naming the emotion they’re showing. AI is also trying to communicate better so people feel they've had an appropriate emotional response. For example, chatbots. Chatbots are terrible at that. They seem cold and lacking in understanding of the context of people’s issues.

AI must get a lot better at context. But it will take decades. We figure it will take 30 years for the feeling AI to be good enough. Meanwhile, thinking AI is getting good, so people must ask, "How will we contribute value?" And what we’ll do is concentrate on the human side.

Carl Lewis: I have consulting friends who assumed they wouldn’t need to be people persons when they went to college. They're highly competent, but since they’re also a bit surly, they do a lot of their work in the closet. The pandemic fit them perfectly – but eventually, they'll be challenged to pursue careers with this human element where they have to engage with other people. Because that’s a requirement to make things happen.

Roland Rust: It's true. I was in a mathematics doctoral program, and people who get PhDs in math have difficulty talking to real humans. I hate to over-generalize, but the scary thing in the doctoral program was that I was the most normal person in the program. That scared the hell out of me! I'm a math geek, but I’ve learned to develop my interpersonal relationship skills. Israeli scholars did a survey that empirically investigated the networking of the people in the field, and I was the third most networked person.

Carl Lewis: I've always been from the other perspective. I started in religious studies to be a pastor or minister. I had people skills, but it was challenging for me to learn the other things. I’m good at technology, but my people side is the driving force in my life and career. I can’t wait to get back to conferences. I love the large room with all the people walking around. I'm at home there. An old boss was an accountant, and the most I could do was get him to sit in the room and have people come to him. He wouldn’t work the room.

Roland Rust: I can understand both sides.

Carl Lewis: I also hate to over-generalize, but when I consider the feeling economy, I think females might have an advantage.

Roland Rust: Yes. Min-hui says that all the time. In the physical economy, most women weren’t pulling plows or lifting heavy objects – they were at home providing unpaid services to the men, like housework and childcare. Women were basically second-class citizens in the physical economy.

The thinking economy created an opportunity for women because women can think, too. There was a tremendous increase in women’s status in society in the 20th century. Women also started leading countries. One interesting fact is that the most women-friendly countries also have a GDP per capita that's several times the world average – more evidence that as women move forward in society, the economy improves. The thinking economy, anyway, where men and women are mostly equals.

But in the feeling economy, women will have an advantage because their brain is basically wired for nurturing, etc. – the exact skills required in the feeling economy. So, men who want to succeed must accept their feminine side and not worry that being empathetic and nurturing is feminine. They must say, "Well, that's how to be successful in the feeling economy."

Carl Lewis: We often call those soft skills. It's a challenge in many industries. We've seen more women enter IT, and customers compliment us on our female technical people and the relationships they cultivate. It's evident that customers appreciate soft skills.

Roland Rust: And in the tech industry, many people aren't prepared for that. We’ll have to retrain toward soft skills. We assume people will start with enough STEM skills to do the job and then, to move forward, will need the people skills. Some people will still be purely technologists, but very few – and their skills will be world-class.

Carl Lewis: Especially in people-facing work. There may always be jobs you can work by yourself. For many developers I've known, it’s, "Tell me what you want, and I'll create it. I'll be a magician; I’ll show up and it will work." There may be work like that out there, but it seems like that’s the work that can be automated. I have many examples of how we used to do it versus how we do it now, and everything is a much more personal experience than it used to be.

Retraining people for soft skills is intriguing because I think some of us are born with a certain DNA structure that leans toward people skills, and some of us aren’t. If those skills aren’t innate for someone, can we teach them? Can someone without friendliness chemistry be more friendly?

Roland Rust: I think it's possible. The only reason we believe it isn't is that our education is set up for thinking. If we're trying to train people to be empathetic and have more emotional intelligence, we need to offer courses about that. Much of it will be executive education because many people who are already in high positions or have been working for a while will need to change their skills.

Carl Lewis: It seems like even at the youngest of ages, schools and things are set up more toward STEM skills.

Roland Rust: It's true. And people are supposed to work individually so much. In my classes, I try to train students by having them work in groups a lot, creating reports or presentations. I form the groups randomly, so people are with people who aren’t like them. I don't want everyone to have the same background. That's not how the work world works anymore.

Carl Lewis: How long will it take society to recognize the impact of AI and change how we educate so we're working with children in groups more and putting more emphasis on "citizenship skills," "life skills," "family skills," "people skills," etc. versus science, math, etc.? Those are essential parts of the building blocks, but I don't remember my education teaching that stuff. If it happened, it was almost by accident. Or it’s what your parents were supposed to teach you. That won’t cut it in the future when these things are must-haves versus nice-to-haves when you’re applying for jobs.

Roland Rust: Definitely.

Carl Lewis: We were discussing timing. AI has been a big topic for the last three or four years, and it's been accelerated this past year. Did you say it could be five or seven years before AI enters the feeling arena?

Roland Rust: Oh, no. There's ongoing research, but I think AI with general intelligence, feeling skills, and empathetic ability will take decades. That gives humans an area of opportunity. There will be a window when we have an advantage over AI – and we better take advantage of it because we won’t have the same advantage in thinking skills.

Carl Lewis: Wow. Like you said, chatbots are one piece. I've seen worse-than-terrible chatbots because everything sounds like a computer is reading words instead of a person. There’s no nuance.

Roland Rust: They don’t understand the emotions or context of the person talking, and they can’t combine it with the other things the person has done in the relationship with the company, so it's a real problem. AI will get better and better at it, but it will be decades before it takes over.

But it’s already taking over the thinking part. We analyzed government data between 2006 and 2016. It seemed like AI hadn't kicked into gear yet, but it lined up with our predictions: the feeling tasks are getting more important while the thinking tasks are getting less important (or at least staying the same). And the mechanical and physical tasks are gone.

Carl Lewis: You mentioned that when the physical economy went out, people got left behind.

Roland Rust: Yes.

Carl Lewis: Even now, we see certain industries – like coal, oil, and gas – as industries that will be replaced eventually. It seems that with each transition, the number of people who get left behind grows in exponential ways.

Roland Rust: Yes, it does seem like it.

Carl Lewis: There are more of them and our means of reincorporating them into the new economy, whatever it is, is one place we struggle.

Roland Rust: Well, we’ve never had a nationwide or worldwide plan to retrain people, so when the steelworkers went out of work, they were in trouble. We didn’t have a plan to get them back into society by retraining them with useful skills. That's what they needed. We’ll need it even more in this transition because so many people are in the thinking economy.

Carl Lewis: There's a lot of routine office work AI can take over, and those jobs will go away because it will just make sense for them to be automated. Many businesses I work with want to automate AP and HR processes and basic business functions. And that stuff happens behind the scenes anyway – customers don’t see it. It's part of the hidden business transactional process. But today, people are doing those jobs. That's something that intrigued me about your book. People are still doing those jobs because occasionally, they still have to talk to people. Machines can automate tasks, but that's their limitation.

Roland Rust: AI can change things in several ways. You mentioned people losing their jobs because of AI, and that happens. But more frequently, AI can do some tasks, but not all of them. Typically, AI can take over the thinking tasks but not the intuitive ones. The result is that the human gets upgraded because the human is doing what AI can’t do.

It's harder for AI to do feeling intelligence than thinking intelligence, so once you have AI thinking about the thinking tasks, the feeling tasks become the humans’ jobs.

Carl Lewis: That’s a good way to think of it. Perhaps the problem is that right now we put a lot of emphasis on thinking tasks.

Roland Rust: Yes.

Carl Lewis: The emphasis could switch, and we could be more creative and create more feeling-oriented tasks. And the humans in the process become repurposed.

Roland Rust: That's right – repurposed and upgraded. Typically, it will be a higher-level job. For example, consider the customer service representative who used to be there. Now, you talk to a chatbot. If the chatbot can't solve your problem, typically, the problem will go to the supervisor. There's a human up there eventually, and since they’re taking on the tough problems, it's a more skilled person.

Carl Lewis: It’s fascinating to think about how life will change. Roland, how has the pandemic affected you as a professor working with students? What's life like these days?

Roland Rust: I’m in Zoomland. My teaching is on Zoom, my research meetings are on Zoom, everything's on Zoom. That's just how it's working. One outcome of the pandemic is that people will be doing more of this than before the pandemic, even after the pandemic has gone. If it ever leaves!

Carl Lewis: Thank you, Roland. Your book is very intriguing, and I encourage people to look it up. Again, it’s called The Feeling Economy. I appreciate you joining us.

Roland Rust: My pleasure, Carl.

Carl Lewis: And until next time, everyone stay connected.