Sunday, January 29, 2012

Models for Winning the Race with Smarter Machines?


The Winter 2012 issue of the Sloan Management Review addresses the question how to win the race with ever-smarter machines. New business models are required. How well does this article offer answers how to acquire such models? 

Examples of innovative business models are offered from Zara, Staples, University of Washington, Assurant Solutions and CVS. In the case of Zara, the innovation is in leveraging the opinions of managers, with computers acting in an auxiliary manner. In the case of Staples, the primary objective is to evaluate personal views. In the case of the University of Washington computers engage results from participants. Assurant Solutions speeds up communications. CVS streamlines the processing the ordering process.

In each of the cited case computers are deployed in auxiliary ways of improving only a part of the business process. This is done for firms that represent only a minute fractional share of the global economy. In each case it took well-focused management to implement the desired changes for processes that are only a part of what constitutes a whole.

What are then the models for “winning the race”? First, it is a matter of scope. There are now close to a billion “smart machines”. They are located almost exclusively in pre-industrial and emerging-industrial countries where the examples cited in the article will not apply for decades to come. Brynjolfsson and McAfee do not deal with that.

The most neglected part of this article is in its omission of how the suggested innovations can be implemented. In the cited examples management was able to concentrate on an incremental improvements by organizing to make smart investments in technology in a limited area. Only after you have executives who have sufficient influence to combine separate functions that a new unified process can get hold. Winning the race is primarily an organizational challenge.  The technology is readily available. 

Technology is cheap and is universally accessible. It takes unified management, not access to computers, to start winning the race for progress. It took the unifying long-term leadership of leaders such as Bezos (Amazon) and Smith (FedEx) to push information technologies into race-winning innovations. Executives like Bezos and Smith are a rare occurrence. They are not the rule, but an exception, in guiding the development of computerization.

Today’s business world is still fractured into millions of organizational enclaves. Unification, even of small parts of an enterprise, is proceeding at the speed measured in decades of human generations, not at the pace dictated by the months of Moore’s Law.

The pace of the race with smarter machines, in pre-industrial and emerging-industry enterprises, will be dictated by political methods, not by entrepreneurial means. The race with smarter machines will be increasingly managed by the power of the government because the benefits of computerization will continue to accrue primarily to the economical elite and not to the population as a whole.  

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