An interview with Erik Brynjolfsson and Andrew McAfee MIT Center for Digital Business The Second Machine Age: An Industrial Revolution Powered by Digital Technologies Transform to the power of digital Erik Brynjolfsson and Andrew McAfee The third characteristic is the combinatorial nature of innovation. The Second Machine Digital innovations can be combined and recombined to create even more Age is the time when value. And that’s a very encouraging machines are now able thing; a larger base of inventions means an even larger set of raw materials for to take over a lot of the next wave of innovations. This is very unlike traditional inputs that yield cognitive tasks that diminishing returns. humans can do. New Digital Erik Andrew Technologies, the Capgemini Consulting: What are Brynjolfsson McAfee the defining characteristics of this Industry and the Second Machine Age? Director of the Principal Research Neglect of Operations MIT Center for Scientist at MIT Erik Brynjolfsson and Andrew Digital Business Center for Digital McAfee: We see three defining trends Capgemini Consulting: From Business in the Second Machine Age. an industry perspective, what are the key technologies that The first is an exponential improvement in organizations should keep a close computational power,communications eye on? technologies, data storage and even Technology in software. Some technologies are even Erik Brynjolfsson and Andrew Top Gear improving faster than Moore’s law McAfee: We believe companies should (Moore’s law is the observation that, pay close attention to two areas when over the history of computing hardware, it comes to technology development Capgemini Consulting: What is the the number of transistors on integrated – machine intelligence and the global core premise of the “The Second circuits doubles approximately every network of people and machines. Machine Age”? two years). Machine intelligence is the idea that Erik Brynjolfsson and Andrew by including different combinations of McAfee: There have been two big The second characteristic of this age is digital technologies, we can now allow turning points in human history. The the digital nature of core technologies. machines to do cognitive tasks that first was the industrial revolution, where Digital technologies have unusual they could never have done before. machines replaced muscle power. The economics compared to the economics Take language and voice recognition. Second Machine Age is the time when of atoms – they can be copied at For the very first time in history, we machines are now able to take over a lot virtually zero cost, transmitted almost can talk to our machines and have of cognitive tasks that humans can do. instantaneously and resultant copies them understand what we are saying It started roughly around the time IBM’s are perfect, identical copies of the and carry out our instructions. People Deep Blue computer in 1997 beat Gary original. The idea that you can perfectly have been working on language, Kasparov in a chess match. That year replicate goods for free, obviously motor control and problem solving for also witnessed median incomes peak leads to some very unusual economics decades. However, very little progress in the United States, and a subsequent compared to the “textbook” perception. had been made until just the past 5 or rise in productivity. The Second Machine An increasing number of industries have 10 years, which is when things started Age will be a bigger transformation and software at their core and, therefore, are picking up very rapidly. And part of that have greater impact than even the first characterized by these economics of is due to the exponential improvement industrial revolution. digitization. in technologies, in particular the power of Big Data. Erik Brynjolfsson and Andrew McAfee problems. In the past, only a relatively to ignore. However, we cannot brush small share of humanity was engaged in it under the carpet anymore. When a The Second Machine Age problem solving. In the coming decades, technology increases wealth, there is almost all of humanity can be partners no guarantee that this abundance will will have greater impact in this problem-solving enterprise. And be shared evenly (or even that people than even the first that will multiply the opportunities for will secure any share of it). It’s possible invention and innovation and creativity, that some people would be made worse industrial revolution. disproportionately, and will also lead to a off, not just in relative terms, but even big acceleration in the rate of inventions. in absolute terms. And, unfortunately, Organizations need to tap into this since about the late 1990s, that’s what’s massive source of brainpower. happened, not just in the United States, Similarly, robotics has greatly improved in but in almost every OECD country: To summarize, we believe organizations recent times and robots today are good in France, in Japan, even in Sweden. should focus on leveraging technologies with both gross and fine motor control. Inequality has grown significantly and around machine intelligence, big data Take the example of Baxter – a two- the median worker has not kept up, and connected networks. armed robot that operates at an hourly and in many cases has fallen behind. rate of just $4! Or consider Google’s Capgemini Consulting: From While there are many causes, three of self-driven car. A few years ago, it our research, we found very the most important ones are the way would have been impossible to imagine few companies are exploiting technology creates winners and losers, that machines could even accomplish new digital technologies in their between high skill vs. low skill workers, operations. What is your take on something like this. But today, we have between capital and labor, and between this? crossed that threshold. And finally, superstars and everyone else. Increased machines have become remarkably Erik Brynjolfsson and Andrew inequality is not an inevitable outcome good at solving unstructured problems. McAfee: Indeed, we think that is the of technology, but a combination of An example of that is what IBM’s Watson most important challenge before us technology and the state of our current did with the TV show “Jeopardy”. The – despite technology rushing ahead, institutions. The challenge ahead of us supercomputer defeated two of the our organizations, societies and is to rethink our institutions so that we show’s greatest champions. Watson is governments are not adapting rapidly. get more people participating. We’re now being applied at call centers, for One of the key issues is that CXOs optimistic that this can be done, but it’s legal advice, investment advice, medical don’t fully appreciate and understand not going to happen automatically. diagnosis, and many other kinds of the power of these new technologies. unstructured problems. Many don’t even realize that they are in the midst of this tidal wave of change. There are some who realize it though. However, they don’t know what to do CXOs don’t fully We believe next. And finally, for those that initiate change, the big challenge is in making appreciate and organizations should that change. So, for all those reasons, we’re faced with lagging organizations understand the power of focus on leveraging and institutions. these new technologies. technologies around Many don’t even realize machine intelligence, Jobs, Skills and that they are in the big data and connected Wealth in the Second Machine Age midst of this tidal wave networks. of change. Capgemini Consulting: Looking forward, what is your view on the The other key area that we believe holds impact of digital technology on great potential for both organizations the economy? and the society at large is the networking of all people on the globe. Erik Brynjolfsson and Andrew For the first time in history, we are McAfee: If you look at society as networking together billions of brains, a whole, there is a secret about all the humans on the planet, to solve economics that people used to prefer Erik Brynjolfsson and Andrew McAfee We cannot stop technology from destroying jobs. The solution is to harness technology to simultaneously create new and different jobs. about the example of Chess and how Capgemini Consulting: In “Race Deep Blue defeated Gary Kasparov in Against the Machine”, you argued The education industry the World Chess Championship. The that digital technologies were World Chess Champion today is not destroying a sizeable chunk of has been one of the a machine. And it’s not a human. The jobs. Do you still share this view? slowest ones to best chess player is a team of humans Erik Brynjolfsson and Andrew and computers working together. A McAfee: As we’ve said, and shown, incorporate technology. team of humans and computers can in our first book, digital technologies defeat any computer or any human are going to automate and eliminate working alone. And that underscores millions of jobs, even as digital creates Capgemini Consulting: How can the point that humans and computers other jobs. And this trend will continue. individual and organizational skills have complementary and distinct skills be upgraded to compete in the In fact, technology has always been and capabilities that, when they work Second Machine Age? destroying jobs and has always been together, can be more powerful than creating jobs. The solution is not to try Erik Brynjolfsson and Andrew they are individually. to stop technology from destroying jobs. McAfee: We have to transform our skills as we always did in the past, but we have The solution is to harness technology to Capgemini Consulting: What are simultaneously create new and different to do it even faster. We have to start with some areas where technology can jobs. In the year 1800, over 90% of education.
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