The first law of digital innovation – George Westerman

MIT Sloan Research Scientist George Westerman

From MIT Sloan Management Review

By now, most of us have heard of Moore’s law. The “law,” coined more than 40 years ago by Intel cofounder Gordon Moore, has helped to shape the pace of innovation for decades. Originally focusing on the computing power of semiconductor chips, Moore stated in 1975 that the transistor density doubles roughly every two years. As technologies and computing architectures have changed, the doubling time and the performance measure have changed, but the nature of the law has not. Computing power grows exponentially. This has been true for digital technologies in general, from processors to networking to DNA sequencing. While people are now predicting the end of Moore’s law, exponential growth in computing power continues as new technologies and architectures emerge.

The relentless march of technology is very good for companies that sell technology, and for the analysts, journalists, and consultants who sell technology advice to managers. But it’s not always so good for the managers themselves. This is because Moore’s law is only part of the equation for digital innovation. And it’s a smaller part than many people imagine.

I’d like to propose a new law. It’s one I know to be true, and one that too many people forget. We can call it the first law of digital transformation. Or we can just call it George’s law. It goes like this:

Technology changes quickly, but organizations change much more slowly.

This law is the reason that digital transformation is more of a leadership challenge than a technical one. Large organizations are far more complex to manage and change than technologies. They have more moving parts, and those parts, being human, are much harder to control. Technology systems largely act according to their instructions, and technology components largely do what they are designed to do. But human systems are very different. While it’s relatively straightforward to edit a software component or replace one element with another, it’s nowhere near as easy to change an organization.

Organizations are a negotiated equilibrium between the needs of owners (or leaders) and the needs of individuals. This equilibrium is difficult to attain and even more difficult to change. Just think of the last time you launched a major new transformation in your business. Or when your boss did. Simply saying that you’re transforming doesn’t make it so. You need to convince people that they need to change, and then you need to help them change in the right direction. If you do it right, you get them excited enough that they start to suggest ways to make even better changes.

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How do we learn to work with intelligent machines? – Matt Beane

The path to skill around the globe has been the same for thousands of years: train under an expert and take on small, easy tasks before progressing to riskier, harder ones. But right now, we’re handling AI in a way that blocks that path — and sacrificing learning in our quest for productivity, says organizational ethnographer Matt Beane. What can be done? Beane shares a vision that flips the current story into one of distributed, machine-enhanced mentorship that takes full advantage of AI’s amazing capabilities while enhancing our skills at the same time.

 

Matt Beane is a Research Affiliate with MIT’s Institute for the Digital Economy.

In the age of expanding automation, companies must redefine work – Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

MIT Sloan Visiting Lecturer Irving Wladawsky-Berger

From The Wall Street Journal 

Over the past few years, a number of papersreports and books have addressed the future of work, and, more specifically, the impact of artificial intelligence, robotics and other advanced technologies on processes that once fell within the human domain. For the most part, they view AI as mostly augmenting rather than replacing human capabilities, automating the more routine parts of a job and increasing the productivity and quality of workers. Overall, few jobs will be entirely automated, but automation will likely transform the vast majority of occupations.

Case closed, right? Not quite. Given these predictions about the changing nature of work, what should companies do? How should firms prepare for a brave new world where we can expect major economic dislocations along with the creation of new jobs, new business models and whole new industries, and where many people will be working alongside smart machines in whole new ways?

“Underneath the understandable anxiety about the future of work lies a significant missed opportunity,” wrote John Hagel, John Seely Brown and Maggie Wooll in a new report from the Deloitte Center for the Edge, Redefine Work: The untapped opportunity for expanding value. “That opportunity is to return to the most basic question of all: What is work? If we come up with a creative answer to that, we have the potential to create significant new value for the enterprise. And paradoxically, these gains will likely come less from all the new technology than from the human workforce you already have today.”

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Warren’s corporate tax ‘solution’ is fundamentally flawed – Michelle Hanlon and Jeff Hoopes

MIT Sloan Professor Michelle Hanlon

MIT Sloan Professor Michelle Hanlon

From The Hill

Sen. Elizabeth Warren (D-Mass.) recently proposed a tax on financial accounting income, which she calls her “Real Corporate Profits Tax.” This is a bad idea that will create many problems.

Warren is correct that public companies in the U.S. calculate income under (at least) two different sets of rules.

First, there are Generally Accepted Accounting Principles (GAAP) written by the Financial Accounting Standards Board (FASB). These rules are meant to reflect the economic performance of the business so that shareholders, among others, can evaluate the firm and its management.

Second, corporations calculate profits according to the Internal Revenue Code, created by Congress, to determine taxable income. The Internal Revenue Code is meant to raise revenue for the government, and in some cases, to change the ways companies behave — encouraging investment and research and development (R&D), for example.

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Globalism is under siege. Here’s how to save it — and why. – JoAnne Yates and Craig N. Murphy

MIT Sloan Distinguished Professor of Management JoAnne Yates

MIT Sloan Distinguished Professor of Management JoAnne Yates

From The Washington Post

Over the past few years, world politics have been governed by a backlash against globalization. From the Brexit mess in Britain to restrictive immigration policies and tariffs in the United States and elsewhere, global economic integration is under assault.

But such integration offers many benefits: a greater variety of less expensive goods, greater opportunities for travel and cultural exchange, a more cosmopolitan world. In this climate, nongovernmental entities may be crucial to preserving them.

Thankfully, engineers have spent the past century building just such international bodies, because they believed that economic integration must remain above politics. These organizations have long set voluntary standards to ensure integration even when the political winds blow against them. This conception of global business standards will be crucial in the years to come as we struggle to preserve the benefits of cohesive systems for international trade, even as politicians battle over how interconnected they want to be.

It is ironic that the British should find themselves in the Brexit mess, because it was British engineers who created the first of the national standards bodies. Their project, a forerunner of today’s British Standards Institution (BSI), was a product of the expansive British Empire. It was founded in 1901 to ensure that industrial products and transportation networks within the United Kingdom and across its empire would be compatible with one another. Although some government representatives were included in its processes, the engineers leading the effort believed such standards should be voluntary, not government-mandated.

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