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BOOK REVIEW: The digital power of machines, platforms and crowds

Machine, Platform, Crowd: Harnessing Our Digital Future, by Andrew McAfee and Erik Brynjolfsson

AUTHORS Andrew McAfee and Erik Brynjolfsson are directors of the MIT Centre for Digital Business. In a sentence, this means that you are unlikely to find better informed, more accessible guides to the future of business and its key innovation driver, technology.

“Over the next ten years,” they conclude, “you will have at your disposal 100 times more computer power than you do today.” Millions of people are working in jobs that create goods and services our grandparents could never have imagined. Billions of brains and trillions of devices will soon be connected to the internet, not only able to access humanity’s collective knowledge, but also able to contribute to our knowledge.

We are living in what is the most creative and disrupted period in human history – so far. This mind-bending reality is a function of the emergence of (for example) effective artificial intelligence in areas as different from each other as health care, transportation and retailing.

There are three primary contributing forces driving our revolutionary advances: machines, platforms and crowds.

Machines of the first industrial revolution amplified people's physical strength in ways unimaginable for centuries. We could move faster and further than we could ever have imagined, do tasks that would have required armies of labourers with just a few people, and produce more goods per minute than people were previously able to produce in years.

Machines and mental ability

Machines of the second industrial revolution will do for people’s mental ability what the first industrial revolution did for muscle power. Whereas 100 years ago, an advert for a computer was a job-ad for a person who could compute, an advert for a computer today is for a device that can not only compute but think fast, collate, analyse, diagnose and even create.

This power is well illustrated by the success of a computer built to play the Go board game. This game is deemed the most complex game the world has ever seen. It is estimated that there are about 210170 (that is, 2 followed by 170 zeros) possible positions on a standard Go board. This is many times the atoms in the observable universe. Add to this, not even the top human Go players understand how to navigate this absurd complexity, or how they make smart moves.

Where there is a rule structure, we have some levers to create computers to perform outrageously complex tasks. But how do you program a computer when no human can articulate these strategies?

DeepMind, a company specialising in machine learning - a branch of artificial intelligence - published a paper describing AlphaGo, a Go-playing application that had found a way of dealing with the paradox of people not knowing how or what they know.

The system is designed to learn the unknowable on its own, and how to use the learning. It does this by studying millions of positions to create only those moves it thought most likely to lead to victory.

In 2015 AlphaGo won a five-game match against the European Go champion 5–0. In 2016 AlphaGo beat the best human Go player on the planet 4–1.

This astounding ability can now be applied to complex medical problems way beyond what even a group of the finest medical minds could solve, and then made available to millions of practitioners. And, of course, this process can be applied to many more ‘impossible’ problems.

The second contributing force driving our revolutionary advances is ‘platforms.’

Consider that Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the world’s most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.

The idea of platforms is not a new one. A shopping mall is a platform that allows for the aggregation of the shopping experience. It enables sellers to interface with customers by providing a user-friendly platform that enables getting to the shops through parking facilities, and staying there longer by including food outlets.

Platforms need to be digital

The difference today is that the platforms no longer need to be physical: they are also digital. Unbound by physical assets and infrastructure, digital platforms can grow scarily fast. Airbnb doubled the number of nights booked through the site in 12 months. Apple, through its iPhone and iPad, created a digital platform and grew into one of the largest companies on the planet in less than a decade.

It is precisely because these and so many other platforms are such “indescribably thin layers”, that they can have such an impact.

Through the extraordinary power of our new machines, and the explosive multiplier effect of platforms, we can benefit from the third contributing force driving our revolutionary advances – crowds.

Humanity has for a long time aggregated knowledge (for example) through collections of wisdom in book form in libraries. The authors call this aggregation ‘core’ to distinguish it from the ‘crowd’. The difference is not size: the Library of Congress in Washington holds 30 million of the world's estimated 130 million books.

The internet provides a similar aggregation service, only in a spectacularly more varied form – text, video, music, contributed by large, varied crowds of people. Billions of them.

This ability to aggregate can be used for evil such as propagating hate or crime. But it can also be used for good, as is evident from its ‘crowd-funding’ potential, as an example.

Indiegogo is an online crowd-funding community which showcases a wide variety of creative and entrepreneurial ideas. Contributors can ‘back’ a film they think has potential, and for their contribution they could be invited to an early screening, or if they supported a product, they could be among the first to receive it.

They are in effect ‘buying’ a product that doesn’t exist yet. This is the real value: they are backing a venture that might never exist without their votes of confidence. And they are providing the most powerful and desperately sought, reliable market intelligence, as well as a non-traditional marketing method.

The three factors - machines, platforms and crowds - illustrate three great trends that are reshaping the business world.

Technological progress will test a firm’s ability to survive, and survival is shortening. In 1960, S&P 500 companies used to last 60 years; now they last less than 20. This book is a guide for business people on how to navigate ‘destruction’ successfully.

The real question is not what technology will do to us, but how can we use this tool called technology. Tools don’t decide what happens to people – people do. Technology only creates options; success depends on how people take advantage of these.

And here is why you should read this book: understanding the implications of these developments for your own business can make the difference between thriving or merely surviving.

If you read only one book this year, I recommend this one. You will need to work this book, but the benefit will far outweigh the effort.

Readability:    Light ----+ Serious
Insights:        High +---- Low
Practical:         High -+--- Low

  • Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Executive Update. Views expressed are his own.

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