Thursday, August 17, 2017

Book review - Machine, Platform, Crowd: Harnessing Our Digital Future



Authors: Andrew McAfee & Erik Brynjolfsson
Title: Machine, Platform, Crowd: Harnessing our digital future
Year: 2017

Andrew McAfee and Erik Brynjolfsson book is a spot-on exploration of three pillars unleashed by the digital revolution: Machine, Platform and Crowd.

1) The Machine learning is supplanting human minds (Artificial Intelligence, AI). Google’s AlphaGO AI is now able to defeat any human GO player (it took more than 3000 years for humans to understand and develop the GO knowledge !)- a development that occurred at a faster pace than almost every AI researcher had predicted - The authors see this as indicators of much larger structural economic changes to come.

2)  Multi-sided Platforms owners (like Google, Amazon, Uber, Facebook, Alibaba) are becoming so powerful that they might disrupt a large number of established corporate -all industries included. They are collecting so much data from different market segments so they can develop the right models for selection, production and distribution of products and services. 
And even more important the marginal cost of any additional digital product or service they would launch would be almost equal to zero!

3) The Crowd is increasingly augmenting and constantly on-line. One of the consequences is the decline in number of retail stores in the US market. From 2005 to 2015 the number of indoor shopping malls declined by 20 percent. 2007 was the first year in 50 that no indoor shopping mall was opened.

These 3 trends will combine the advances of Artificial Intelligence and machine learning, with the growth of interconnected digital networks (Mobile Internet and Internet Of Things).

Shift from Products to Platforms, a new pattern
The largest taxi service owns no vehicles (Uber). The biggest hotelier has no property (Airbnb). The most comprehensive retailer holds no inventory (Alibaba) and the most valuable “media” company creates some content but not much (Facebook).

Attributes of Successful Platforms 
  • They all take advantage of  the technological advances of  GPS, mobile and cloud.
  • Successful platforms are customer-centric.
  • Smart API's Open up the platforms to a broad range of contributors and contributions, enabling platforms to be at the heart of any transaction from any type.
  • Platforms are a way for companies to create marketplaces that allow both sides of the transaction to flourish. 
  • Platforms must ensure that standards are high, and also attract different sets of participants, producers on one side and consumers(customers) on the other side. 
Jobs & Productivity growth: the "Great Decoupling"
Productivity growth has been decoupled from wages because of  "concentration" of wealth in the hand of few people/companies. Andrew called it: the  Great Decoupling.

Questions from the book
The book ends every chapter with an interesting question. Here are selected ones:
  • Which key decisions or operations, if any, would you consider turning over entirely to artificial intelligence systems?
  • What would happen if your competitors start applying machine learning?
  • In your innovation and prototyping work, how are you taking advantage of the new technologies for making things?
  • Looking at the existing tasks and processes in your job or organisation, what do you see as the ideal division of work between humans and machines?
  • What are the most important digital platforms in your industry today? What do you think they will be in three years?
  • Does it make more sense for you to try to build your own platform, or to participate in someone else’s?
  • What’s your strategy for cooperating or competing with a platform that brings network effects and revenue management capabilities to your industry?
  • Are you confident that you can continue to differentiate your offerings as platforms spread? If so, why? What are your sustainable sources of differentiation?
  • How and how often do you look outside your group of identified internal and external experts for help with your challenges and opportunities?
Conclusion
Robots, robots, Artificial Intelligence and even more robots.
The book is to my opinion a bit of a repetition of the last book the second machine age.
The authors brought up the same examples from Google, Airbnb, Amazon, Facebook, etc...and even Alibaba...

So what's new in this book? The core message and probably the most important conclusion of the book is that we are underestimating the pace of technologically driven economic change - and that these changes will concentrate advantage amongst an ever narrowing segment of companies and individuals.
Clearly, the authors are surprised by the faster pace of machine learning, faster than anyone has predicted.

The book is in any case a wake-up call that make executives, business leaders or future startups think about their model.

The authors do not dare to make any humble assertion about impact on jobs (loss) other than menting economic change. Is it because there's still a lot of uncertainty? [...]. It's just starting...

I am disappointed that the authors do not provide a playbook or not even a direction on how to use these great technological advances to advance society! Not a single word about Sustainable Development, about the UN Sustainable Development Goals or positive impacts.
All they had to say is: " the technology is here, and we can make whatever we want with it ..."

Finally, Machine, Platform, Crowd is a book that should be read and discussed by executives in order to understand the ongoing change and decide on the strategy to apply in their own company/industry; and scholars and academics to get the discussions going and maybe be able to influence the course of business discussions towards a more Sustainable, Societal Business Practice.