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Berkeley Roundtable on the International Economy University of California, Berkeley
Beyond the Hype: Platforms and AI
in the Era of Intelligent Tools and Systems
John Zysman Co-director, BRIE
Professor Emeritus, UC Berkeley
[email protected] www.brie.berkeley.edu
Global Economic Symposium Kiel, Germany September 11, 2018
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BRIE:
Berkeley Roundtable on the International Economy (Brie.berkeley.edu)
& WITS:
Work in An Era of Intelligent Tools and Systems (Wits.berkeley.edu)
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My (assigned) Task:
Overview of the Digital Transformation
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Intelligent Tools and Systems:
A New Set of Tools!
• Diffusing through economies and societies • Changing how we work, earn, live
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In the Era of Intelligent Tools and Systems: Array of “Tales”, Labels, and Hype:
• Blockchain/Crypto-Currency
– (Con? Or the end of Banks? Limited uses?)
• Robots – (End of Jobs or the end of drudgery? Transformation?)
• Platforms – (Promise of the internet delivered or a winner takes all
economy?) • AI
– (Mankind as pets or just another phase in the digital story?)
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Lurking Behind the Hype and Labels: Base Technologies
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Computing Power
Digital Networks,
Cloud Computing
1 2
Big Data
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Focus Today
Consequences for
Work and Competition
• Platforms (Digital Platforms)
• AI (Artificial Intelligence – machine learning)
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Situating the Platform Story:
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Platform basics: Think of Shopping Malls
Two Sided (Digital) Mall/Markets:
– Who is Able to Connect with Whom, and how • Firms/buyers (Amazon) • Drivers/clients (Uber) • Apartments/clients (AirBnB
– Changes who is competing and about what in most industries
• New Entrants, new offerings • Often disrupts markets
Some platforms are winner take all, or most
• XXX
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Platforms: The Hyped Labels Sharing Economy: Who Shares What with Whom? • Sharing Platforms transfers risks and capital costs from firms to workers • Disruptions and social rules:
– Sometimes regulation serves a purpose, sometimes it block innovation – The “Uber Mantra”: Don’t ask permission. Ask forgiveness
Gig Economy: Temporary work began before digital platforms • Platforms make Temporary work visible and “measurable”
• Temp work/contracting • Professionals are independent contractors
• What do we count? • Old practices on line • New workers?
• Consequences of Gig and Sharing: • Small portion of the labor market
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Platform Power: Powerful beyond the Hype
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B to C (FANG)
B to B (Industrial Internet?)
1 2
• US & China dominate Ø The Cloud
• Europe?
• Yet to be settled Ø Industry v. Software
• European possibilities Ø Industrial platforms
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Stock Market Valuation – Top 10 (Permissioned theft from Martin Kenney )
Nov 2017 • Apple (iTunes) $881B • Alphabet/Google $821B • Microsoft $726B • Amazon $676B • Tencent $571B • Facebook $552B • Berk Hath $536B • Alibaba $526B • J&J $390B • ExxonMob $377B
2002 • Microsoft • General Electric • ExxonMobil • Wal-Mart • Pfizer • Citigroup • J&J • Shell • BP • IBM
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Situating the AI Story:
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AI: Accelerates Growth and Power
A tool in the ongoing Digital Revolution
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AI: Accelerates Growth and Power
but Just One Element
”…at their core, all the various types of AI technologies share a common goal—to procure, process, and learn from data, the exponential growth of which enables increasingly powerful AI breakthroughs “
Olaf Groth and Mark Nitzberg (Solomon’s Code)
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The AI Revolution: Take the Original Ingredients,
Add Algorithms and Stir (hence narrow applications)
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Computing Power
Networks and the Cloud
1 2
Big Data
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Why Algorithms and Stir?
• What is an algorithm – Instructions for the computer
• Certainly AI has clever instructions about how to “learn” from data patterns – Those “algorithms” aren’t entirely new
• Computing Power, Communications, Data
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Flavors of AI
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For Tomorrow, if at all For Today
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Flavors of AI
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For Tomorrow, if at all For Today
1 2
• Singularity? • Robots smarter than people?
• Fear: People as Pets?
• Applications: • Narrow/specific – • Innovation
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A Continuation/ Not A New Revolution:
Platforms/AI and Industry Choices
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Supply Networks &
The Commodity Trap
IcT Enabled Services &
Intelligent Tools
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The Industrial Commodity Trap:
• Global Supply Chains changed competition • Competition at each Node: Commodification
– Outsourcing – Offshoring – Price competition
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Out from the Industrial Commodity Trap: Escapes from Pure Price Competition
Traditional Strategies include: – Constant very rapid product development: – Distinctive Niche Products
Some DIGITAL Additions
• IcT enabled Services : iPod!
• Platforms emerge reconfiguring production
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Escape from the Industrial Commodity Trap:
The Role of Intelligent Tools
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The ICT Transformation of Services
Intelligent Tools Throughout Production
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Information Technologies:
IcT Enabled Services
• Products, and VALUE, become embedded in networked/platform services – iPod/iTunes – Cranes and Ports – Construction – Tires – Aircraft engines
• Platforms, as discussed above – B-C, Dominated by US and China – B-B a still-Open competition
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The Ict (enabled) Production
Transformation
Intelligent Tools & Systems
( One narrative version-à Industrie 4.0 )
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THE OTHER DISRUPTOR PRODUCTION SYSTEMS
Reconfiguring Production
• How Goods and services are created produced and distributed
• The Character of Work
• Skills – Creating a German and European advantage
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Germany and the United States: Two Vantages on the Production Transformation
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Production Traditions: Germany and Europe
Software and Services: Silicon Valley
1 2
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© Fraunhofer 12
2 Industrial Transformations – Potentials and challenges
Protecting know-how and competitive advantage
Industrial technologies Mechanical Engineering
Internet o f Things Machine Learning
Traditional strengths: Hardware, industrial machines microelectronics, embedded systems, sensors, automotive
Traditional strengths: Software, networks, server, clouds, Big Data, Artif icial Intelligence, IT-Services
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Getting Beyond the Hype: Consequences of AI and Platforms?
• For labor?
• For Business?
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Getting Beyond the Hype: Intelligent Tools and Systems
A Powerful Transformation
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Much Research / Many Studies
• What Do we Know? • What Don’t We Know
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The Consequences? for
Market Possibilities, Work, and Jobs
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We Know VERY Little MOST is Speculation, Hope, Fear
1 2
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What do we actually know?
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Eliminated: Some Jobs and Tasks
Some businesses
Created: New Jobs / Tasks
New Markets
1 2 Transformed:
Most Work and Most Sectors
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What we definitely don’t know!
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When: How Fast
Created: What Market Possibilities/
Jobs
1 2
Transformed: How and What
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Transformation: Consider Autonomous Vehicles
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Long Distance Drivers Local Drivers
1 2
• Assume autonomy emerges! • Jobs lost or driver shortage • Better Jobs?
• More deliveries more drivers
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Transformation: Production and Competition
In A Japanese firm
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Production Deployment and Sales
1 2
Support
3
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Depend on Deployment Strategies
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OUTCOMES:
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How Will Intelligent Tools Be Deployed?
Crucial Questions include: • Routine: Deployment strategies influence our understanding
of what is routine. – Conversely, our understanding of what is routine shapes how
technology is deployed
• Judgments about the value of workers: – Workers as costs – Workers as ASSETTS
• Decisions about training
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The Importance of Germany To The
American Discussion
• Reality of alternative deployment strategies
• Skills and skill based products in German exports
• Deploying technology to preserve skills and produce products that embed skills
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Skills in An Era of Intelligent Tools:
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General Skills: Synthetic:
1 2
• From reading and writing • To Math and Tech
• Narrative / Interpretation • Case Specific • Basic human capacities
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Can Business and Labor Interests Coalesce? How Will Intelligent Tools Be Deployed?
Creating Competitive Advantage is Central
BUT Maintaining Long Term Advantage
Requires Skills, IP, and Strategy
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Beyond the Hype
Don’t Be Fooled By Silicon Valley
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Temptations and Risks in the Digital Economy
Unicorns & Cheshire Cats: The new logic of venture finance
• The New Circumstances
– Low entry costs for digital tools and platforms – Vast amounts of cash available globally – Many dramatic start-ups
• Contrasting outcomes – Unicorns: Some are real. They create fortunes and change industries
– Cheshire Cats: Some fade away. Just the smile of early investors remains.
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