erik brynjolfsson, mit, is your business ready for the second machine age?
DESCRIPTION
MIT’s Erik Brynjolfsson reveals the forces driving transformation in the economy. Drawing on years of research and up-to-the-minute trends, he will identify the key strategies businesses need to adapt to succeed in the years ahead. These include revamping how we evaluate strategic collaborations that combine processing power with human ingenuity, and embracing strategies that make sense in a radically transformed business landscape.TRANSCRIPT
1 MIT Initiative on the Digital Economy
The Second
Machine AgeErik Brynjolfsson
MIT Sloan School
MIT Initiative on the Digital Economy
@erikbryn
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The Second Machine Age
2
Changing the world requires two things:• Physical Power: move or transform things
• Mental Power: decide where and how
Industrial Revolution = Physical Power• Steam engine (and Internal combustion engine, Electricity)
• Mostly a complement to humans
Second Machine Age = Mental Power• Computers, Software, Big Data, Machine Intelligence
• Complement or substitute?
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State of Understanding, 2004Uniquely Human Abilities- Autonomous mobility and fine motor
control- Language and complex communication- Pattern matching and unstructured
problem solving
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Machine IntelligenceInteracting with physical world
• Fine and gross motor control
• Vision and other senses
Language
• Voice recognition
• Natural language processing
• Creating narratives
Problem Solving
• Answering unstructured questions
• Rule based analysis
• Pattern recognition and classification
We’re in the midst of the greatest “one-time” event in history!
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Interacting with physical world
• Fine and gross motor control
• Vision and other senses
Language
• Voice recognition
• Natural language processing
• Creating narratives
Problem Solving
• Answering unstructured questions
• Rule based analysis
• Pattern recognition and classification
Machine Intelligence
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Siri
Voice recognition
LionbridgeTranslation
Narrative ScienceAuthoring News Stories
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Machine Intelligence Interacting with physical world
• Fine and gross motor control
• Vision and other senses
Language• Voice recognition
• Natural language processing
• Creating narratives
Problem Solving• Answering unstructured questions
• Rule based analysis
• Pattern recognition and classification
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The Digital Frontier
Accuracy and Questions Answered on Jeopardy!
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0% 20% 30% 40% 50% 60% 70% 80% 90% 100%
10%
Percent Answered
Acc
ura
cy
11/201004/2010
10/2009
05/200912/200808/2008
05/2008
12/2007
12/2006
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The Digital Frontier
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The Digital Frontier
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What does this mean for the
economy?
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The Bounty
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$300 BILLION PER YEAR
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The Great Decoupling
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WHAT’S GOING ON?
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The Hard Truth
Digital progress makes the
economic pie bigger.
But there is no economic
law that everyone, or even
most people, will benefit.
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Three Sets of Winners and Losers
1. High Skilled vs. Low & Mid Skilled Workers
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Skill Disparities
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Polarization of the Labor MarketMid-wage workers have been hit hardest in both
employment and wages
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Three Sets of Winners and Losers 1. High Skilled vs. Low & Mid Skilled Workers
2. Capital vs. Labor
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Capital vs. Labor
Corporate Profit as % of GDP
Labor Shareof GDP 96
99
102
105
108
111
114
117
120
0
2
4
6
8
10
1947 1958 1969 1980 1991 2002 2013
Lab
or
Shar
e (
20
09
= 1
00
)
Co
rpro
ate
Pro
fits
as
% o
f G
DP
Corporate Profits After Tax as % of GDP & Non-Farm Labor Share, 1947-2013
Source: research.stlouisfed.org
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Three Sets of Winners and Losers 1. High Skilled vs. Low & Mid Skilled Workers
2. Capital vs. Labor
3. Superstars vs. Everyone Else
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Superstars
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WHAT IS TO BE DONE?
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“Digital technologies change
rapidly, but organizations and
skills aren’t keeping pace.
As a result, millions of people
are being left behind.”
Our View
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The New Grand Challenge
• Digital technologies will continue to accelerate.
• Our skills, organizations and institutions are lagging.
• Business as usual won’t solve this problem.
We need to reinvent our economy and society to keep up with accelerating technology
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The Initiative on the Digital Economy
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The New Landscape
• What challenges and opportunities do you see?
• What are your concerns and questions?
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To learn more, visit:
http://digital.mit.edu/erik
http://digital.mit.edu/ide
http://secondmachineage.com