Jeanne Ross, Director & Principal Research Scientist at the MIT Sloan School’s CISR
From Information Management
Given the hype around artificial intelligence, you might be worried that you’re missing the boat if you haven’t yet invested in cognitive computing applications in your business. Don’t panic! Consumer products, vehicles, and equipment with embedded intelligence are generating lots of excitement. However, business applications of AI are still in the early stages.
Research at MIT Sloan’s Center for Information Systems Research (CISR) suggests that small experiments in cognitive computing may help you tap the significant opportunities AI offers. But it’s easy to invest huge amounts of cash and time in failed experiments so you will want to carefully target your investments.
The biggest impact from cognitive computing applications is expected to come from automation of many existing jobs. We expect computers to do—faster and cheaper—many tasks now performed by humans. Progress thus far, however, suggests that we have significant obstacles to overcome in our efforts to replace human intelligence with computer intelligence. Despite some notable exceptions, we expect the displacement of human labor to proceed incrementally.
The business challenge is to determine which applications your company is ready to cash in on while resisting the lure of tackling processes that you can’t cost-effectively teach machines to do well. We have studied the opportunities and risks of business applications of cognitive computing and identified several lessons. These lessons offer suggestions for positioning your firm to capitalize on the potential benefits of cognitive computing and avoid the pitfalls.
Kristine Dery, Research Scientist, Center for Information Systems Research
Companies today need a new approach to managing digital talent.
Gone are the days when they can easily recruit and retain full-time employees to staff every project. When you look at the employment landscape, a lot has changed from even five years ago — and it’s only going to change more over time.
For starters, there is a shortage of talent with the necessary digital and social skills required by a lot of companies, especially in the tech sector. Companies need flexibility to scale their workforce up and down, depending on project requirements. Having expensive talent sitting on the bench is not a sustainable option.
We’re also seeing more interest among workers in freelance work. According to Forbes, up to 35 percent of people are choosing freelance work in the U.S. However, constantly onboarding new freelance talent for every project isn’t efficient.
Companies facing these changes need to become “future ready.” This means focusing on creating an employee experience that will attract the sort of talent you need when you need it. The most successful companies will take a flexible approach to work and workers. Rather than only assigning full-time employees to projects, companies with a hybrid workforce can curate talent depending on their project needs. They can engage people — both employees and freelancers — to both broaden and reinvigorate their talent pools.
Executive Director of the MIT Leadership Center, Hal Gregersen
From Harvard Business Review
Almost everyone on this planet is a worker in some way, but only a minority deserve to be called craftspeople. This is especially true of leaders. We don’t often think of leaders as artisans, but like good craftspeople, good leaders go about their work thoughtfully and purposefully.
These good leaders want every piece they produce to be the best it can be, and to bear their stamp. Some even go a step further. They reflect on their craft and articulate what they do that is special or distinctive. Doing this delivers the great benefit of making it, to at least some extent, teachable. They like to develop the skill in others.
Lawrence Schmidt, Assistant Professor, Finance
Events surrounding the failure of Lehman Brothers 10 years ago nearly brought down the world’s financial system. While much of the dust has settled, economists and policy makers still seek to better understand the forces that led a set of seemingly small losses on mortgage-backed securities tied to the U.S. housing market to trigger the worst global financial crisis since the Great Depression.
A strong candidate is the series of “runs”—large-scale, rapid withdrawals of short-term funding—that took place throughout 2007-08. The most dramatic run occurred on money market funds (MMFs) immediately following Lehman’s collapse. In a week, investors withdrew more than $300 billion from this market. This figure likely would have been larger had the Treasury not taken the unprecedented step of offering temporary guarantees to MMFs.
What causes runs? One economic theory posits that runs are the result of, and exacerbated by, investors’ self-fulfilling beliefs about other investors’ actions. The nature of banking is fragile. The bank keeps cash on hand to meet depositors’ daily needs, but it will lose money and may fail if it runs out of cash and is faced with the difficult task of selling its loans on short notice. Suppose, though, a depositor is worried a “run” might take place. If she believes that others are asking for their money back she is incentivized to do the same. First out wins; last out loses. If, however, others are not in a panic, that depositor will wait it out and the bank survives.