Two Of The Most Brilliant Minds In The Business World Discuss AI,

Former long-time American Express executive Ken Chenault and President Obama’s Secretary of Commerce Penny Pritzker share their opinions on economics in the past, current,

These were among the learnings ping-ponged around the room as two of the most brilliant minds in the business world–former American Express CEO and current chairman and General Catalyst’s managing director Ken Chenault and President Penny Pritzker gathered during the Fast Company Innovation Festival in New York on Wednesday.

At the start, Pritzker served as an advisor to the then-president-elect Barack Obama in the early times of the Great Recession, when Bear Stearns started to sell off in the early days of 2008, and Dow Jones charts bled red. She recalls the event vividly. “I was on a call with Obama [when we realized], oh my God, he could be presiding over the implosion of the American financial system,” she remembers.

It has scared economists. However, according to Chenault, who was AmEx’s top executive between 2001 and 2018, today’s market slump is nothing compared to. Chenault attributes the current situation to the fact that we were too good in the immediate pre-pandemic. “The system was flush with capital and low-interest rates, and people who frankly didn’t have excellent business models said, ‘I think I’m brilliant,'” Chenault states. “[In the current economic climate, it’s not too difficult to start the business you want to have . . . But a group of firms have been excessively consuming capital, and I think they’re about to fall.”

What else is going on? “Our supply chains are completely messed up,” claims Pritzker noting that there are massive shortages of semiconductors in Asia (where Pritzker was this week). The companies that make semiconductors are selling out until 2023. Further more, the war of Ukraine “might as well be right in our backyard” due to the drastic impact on the cost of fuel and food and the Russian president’s pledge to get 300,000 soldiers adds more uncertainty for the future of world markets. And then there’s inflation, which has reached a point the Federal Reserve aims to remove one trillion dollars from the economy over the next twelve months. A move of this magnitude is not seen in forty years.

THE ROAD TO INNOVATION BEGINS AT THE WHITE HOUSE

Although the road towards a more prosperous economy needs to be clarified, Pritzker and Chenault agree that there is a bright side. This is the ideal opportunity to begin a business.

“The American Express card came out in 1958 amid a deep recession,” Chenault states. “You must be innovative, and this is a great time to do it because lots of people are frozen and reluctant to do anything. The question is, what is your idea?”

Pritzker mentions a summer flurry with legislation from the Biden Administration as a catalyst for innovation, such as legislation like the CHIPS and Science Act, which is intended to stimulate innovation in the U.S. to counter China in research and development, as well as move semiconductor production closer its home with $250 billion of investments over the next decade. The bill is also the most comprehensive infrastructure bill since Eisenhower’s presidency, with the sum of $65 billion for more advanced broadband networks that Pritzker claims are severely lacking, not only in rural America but also in libraries and schools in urban areas in cities such as Chicago. The landmark climate law known as The Inflation Reduction Act also provides $370 billion in federal funding to promote green energy development, which Pritzker believes will assist young firms to get through the “valley of death,” in which startups who aren’t able to obtain private financing aren’t able to reach commercialization.

“This is huge for American competitiveness,” she states. “It’s so exciting.”

THE PANDEMIC DIAGNOSIS

Although the pandemic may result in an explosion of innovation, it also exposed our most significant weaknesses. “It shined a very bright light on the haves and the have-nots,” Chenault says. Chenault. “People who were affluent were talking about how fantastic it was to spend time at home, but if you think about a low-income person or a single mother with children, it just ripped them apart.”

“The other thing we learned,” Pritzker states, “is we have a crucial talent shortage in the country. There’s a certain kind of expertise we’re unable to get enough of. The turnover of jobs is high, which tells us that the people aren’t satisfied.”

Pritzker says these weaknesses could result in various trends, including, for one, the rise of robots in warehouses and factories, where there are not enough workers in the workplace, and advances in cloud migration and cybersecurity to accommodate the demands of hybrid work models.

Also, “I think we’re gonna see an absolute revolution in terms of artificial intelligence over the next five years,” she adds. This will happen with wage inflation rising along with demands for more effectiveness.

“We’re going to have to learn as humans to work with AI,” Pritzker declares. “What is our role as humans? What is the role of machines?”