Competing in the AI economy: An interview with MIT’s Andrew McAfee
AI has arrived, but are
companies ready for it? According to an MIT scientist, executives are
underestimating the speed, scope, and scale of the disruption it will bring.
It’s not
just some far-off dream anymore. The promises and practical applications of artificial
intelligence (AI) are here. In this interview with Andrew McAfee, principal
research scientist at the Massachusetts Institute of Technology (MIT) and
cofounder of the MIT Initiative on the Digital Economy, he explains how AI, and machine learning in particular, is quickly disrupting companies’
economic models, strategy, culture, and even the very nature of how they are
structured and run. But there are opportunities for companies that can answer
the call—and meet the needs and wants of consumers. An edited transcript of
McAfee’s remarks follows.
Today’s digital disruption: Overstated or
underappreciated?
There are billions of people
walking around with a supercomputer, by the standards of a generation ago, in
their pocket. Those devices are connected to each other and to this thing that
we call the Internet. And then, just within the past five or six years at
most, all the promises made by the artificial-intelligence community have
started to be delivered on.
So we really are living in this era
of machine learning, which is the dominant AI technology, and probably will be
for some time to come. Executives who I talk to today are a lot more aware of
previous waves of disruption, and they’re more keenly aware of the possibility
that it’s going to happen again. They’ve internalized Andy Grove’s advice that
only the paranoid survive.
However, even though they see a lot
of disruption coming, I still think that many really smart, well-managed
companies are underestimating the scale, scope, and speed of disruption this
time around.
How machine learning will change the way executives do
their jobs
There are some things about running
an organization that I don’t think are going to change, even in the face of
these crazy, powerful technologies: articulating a compelling vision that will
attract talent, customers, and stakeholders; being true to that vision; and
managing the culture that you’ve created to go tackle those visions. Those are
deeply human skills, and leaders who are good at them are going to become even
more valuable.
A lot of executives who I talk to
think that a big part of their job is making the tough calls; relying on the
experience, industry knowledge, and judgment that they’ve built up; and having
a clearer crystal ball of things that are going to happen in the industry or in
the future than other competitors have.
While I value those things, I value
them a lot less than I used to, because of two
fundamental changes that are occurring. Number
one, over and over again we’re seeing that technology is better at
human-judgment tasks than humans. To me, it’s the most unsettling by-product of
the machine-learning revolution.
And number two, I was just on a panel
earlier today with a set of machine-learning all-star geeks, and when talking
about the future of the technology, one of them said, “Well, as far as we can
see into the future. I’m talking three to five years.” And I’m thinking, “Hold
on. What? Only three to five years?” We used to think about business
generations being a lot more on the timescale of human generations—a decade or
two. He said, “Why even think about what
might be happening 36 months from now, because so much is going to change
between now and then.”
Both of these developments are
pretty profoundly upsetting to the kind of Industrial Age. I don’t mean that
disparagingly, but these are both really, really deep threats to the model of
running an organization that we’ve built up over a couple of centuries.
Should we fear giant digital natives?
Well, that depends. First, are they
facilitating or impeding competition? Economists love competition, as we
should. Are you going to fund the next social network that’s going to directly
compete with Facebook? Is that a thriving, competitive space? Probably not, as
you can make a decent case that Facebook is not having a salubrious effect on
competition, right?
Number two, how are they doing on
innovation? One of the things that we should care a great deal about is
the state of innovation;
that’s how we get more prosperous. Amazon is the world’s number-one spender on
R&D. Alphabet and Microsoft are among the top five or easily ten spenders
in the world on R&D.
Amazon has just opened to the
public a physical grocery store that has no checkout lanes or cashiers. You
fill up your bag, walk out the front door, and get a receipt minutes later for
everything that’s in your bag. No human beings are involved in the transaction.
Most of the competitors would say that there’s a little too much innovation
going on out there.
Are prices going up or down for the
things that we care about? Lower prices are good for consumers. Do we have more
options or fewer? In general, more options are better. Are we able to
communicate with more people around the world at lower cost? Cost has
essentially vanished as a consideration for expressing yourself and interacting
with people all around the world.
I think we’re ignoring some very
powerful lessons from business history, especially technology-industry history:
the pattern is dominance and then disruption. I think worrying about alleged
permanent monopolies in the technology industry is to profoundly ignore the
lessons of history.
The playbook: How can incumbents compete against digital
natives?
A lot of companies in the incumbent
economy don’t seem to be getting me out of the headache business. There are a
lot of hassles involved in most routine transactions, such as those for travel
and financial services. And while the great mantra of user-interface designers
is, “Don’t make users think,” I have to do way too much thinking in most of
those kinds of interactions.
When I look at the companies where
I’m willingly giving more of my time, energy, and money and the apps that I use
most often on my phone, it’s amazing how little they make me think and how
they’re trying to get the headaches and the transactional nonsense out of my
flow and instead start giving me something that I value.
And we still like to have
experiences. I think that is what independent bookstore owners have
realized—that going to the bookstore is not just a transactional thing. It’s not
“I want a book. I’m going to find it in a store and then bring it back to my
house.” Going to the bookstore is actually a whole experience.
I think the experience economy is
already pretty big, but as a share of the stuff that we want to do and that we
want to spend our time and money on, it’s probably going to get a lot bigger. So figure out what people actually want to do in this
weird, new world free of all of the hassles we used to experience.
https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/competing-in-the-ai-economy-an-interview-with-mits-andrew-mcafee?cid=other-eml-alt-mip-mck-oth-1804&hlkid=a7eda3ac46b74aa89f68914f33390dbd&hctky=10339950&hdpid=6ca80dfb-67dd-464c-b51b-86ea99e4e219
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