On The Horizon Weekly - Genius

Missing Digital Productivity Gains | Self-Organizing People | Ecosystem Carnivores

New York NY – 2019-06-11 – Remember how digital technology adoption was going to massively boost productivity? So what happened? The missing ingredient might be understanding Genius and how to manage it.

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From On The Horizon

The Limits of Digital: Ideas, Creativity, and Cultural Reformation Despite the proliferation of digital technologies, we’ve recently got little to show for it in terms of productivity gains, and the overall economy appears more sluggish than you’d expect. Stowe Boyd has covered the concept that finding new ideas is getting more expensive: it takes more and more researchers to maintain sectors where innovation has been steady. Stowe examines analysis of Digital Abundance and Scarce Genius, where MIT researchers Seth G. Benzell and Erik Brynjolfsson posit and try to model the scarcity of ‘genius’ that’s preventing higher adoption of transformative technologies.

As the term ‘genius’ implies, the authors lean toward the interpretation that the G factor is the relative scarcity of human superstars, those who can come up with new ideas, new syntheses of the novel and the established — those that can go where today’s AI cannot yet reach on its own. […]

Whether it’s the genius to come up with these ideas or manage the harnessing of them, Stowe thinks,

There is still enormous wiggle room in these formulations about G from Gallup, and Benzell and Brynjolfsson. If it boils down to human genius that still begs the question of what sort of genius and how is it articulated with the non-geniuses in the organizations involved? Are these people creating intellectual property? Are they more knowledgeable in exploiting value from ‘virtual real estate’, the creation of internet-based platforms and their ecosystems?

The G factor could be people creating intellectual property, or they could be more knowledgeable in extracting value for internet-based platforms and their ecosystems.

Benzell and Brynjolfsson cede the possibility that G is not actual human superstars, per se. They explicitly reference the research of [economist Nicholas] Bloom and his colleagues, granting that a dearth of ideas may be all or part of G. However, the authors remain impartial as to whether the G factor is superstars, ideas, intellectual property, a larger investment in the transition to a digital organization, or accession to ownership of virtual real estate (such as a niche-dominant platform ecosystem).

In theory, systems – and companies – have a strong incentive to counteract any scarcity of G. Hiring new superstars, transforming to digital business operations, harvesting platforms – all of these are happening. Just not fast enough to spur productivity and economic growth. Stowe concludes:

The final implications are likely to lie in the ‘near adjacent’ (nearby domains that are interacting with the area of our focus) and not just the intensification of what has come before. After all, what we have done so far has led us to the current productivity impasse. And in the near adjacent lie truly novel solutions for more G, such as more advanced AI, intended to produce more new ideas (or more rapidly reject bad ones).

To me, smarter AI sounds like the extension of the current narrative, and less of a breakthrough than a second answer for G. Instead, I look to the broad dissemination of the protocols, practices, and technologies that underlie platform ecosystems, and a transition of global businesses into massively-connected assemblages of interdependent organizations united by ecosystem economics. This could be the new stage of ‘replicability at low or even zero cost’ expansion of these economics, but one that relies on the adoption of new ways of work by people, teams, and organizations, rather than the singularity of some next stage in AI intellect.

I’d rather bet on organizations made of people, even if we do get AI working on sifting through the idea pile for us.

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In Untelling the Dominant Economic Story Stowe looks at How Putting Shareholders First Harms Investors, Corporations, and the Public, where David Sloan Wilson (interviewing Lynn Stout) debunks several central aspects of conventional business thinking, notably that companies copy best practices from successful competitors. In fact, most focus on optimizing shareholder value and paying their executive elite in the face of empirical evidence that putting employees first demonstrates long-term success.

Stowe applies that logic to multi-participant platform ecosystems:

A final observation: in any sufficiently diverse and scaled business ecosystem, made up of dozens, hundreds or thousands of interdependent contributing business entities, trying to maximize advantage for a single group of shareholders – such as the shareholders of the ecosystem orchestrator – will poison the ecosystem, even when the end customers are happy with the service provided.

We could call this the Uber Fallacy, since that company operated for most of its early years with fallacy driving its decisions. As you would expect, the relationship between Uber and its drivers has been skewed from the very beginning, and has yet to be resolved.

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Wheatley and Kellner-Rogers on Self-Organization and Leadership. Stowe remembers an old article by Margaret Wheatley and Myron Kellner-Rogers proposing that using the metaphor of an ecosystem to describe a business was more effective than thinking of it as a machine.

We are still living through the ramifications of this wrenching transition, and it will likely take an additional twenty years for a wholesale transition to visualizing — and realizing — business through the lens of ecosystems, and the shift away from clockwork logic toward self-organization and emergent order.

Companies as self-organizing systems have three conditions, they say: 1) a shared sense of identity, 2) information, and 3) relationships via pathways rather than static org charts. The leadership role is to create the conditions for the self-organizing people.

And the threats? First, the top-down, linear mindset that starts with a step-by-step plan toward self-organization. How much do leaders trust their employees?


Elsewhere

At its developers’ conference, Apple introduced an application and site registration system with a privacy-oriented spin to compete with those from other platform providers like Google and Facebook, as described in this Reuters story Apple asks developers to place its login button above Google, Facebook. Ben Thompson points out that identity management is a critical platform lock-in component Apple’s Audacity.

The login system is pretty heavy-handed, as is Apple’s app store revenue-sharing requirements, and, as Business Insider points out Apple is being sued by a pair of app makers, and the timing could not be more awkward. But the company has also eased off on some issues, as the New York Times reports Apple Backs Off Crackdown on Parental-Control Apps.

All this reminds me of a conversation I had with Stowe.

DC: The platform owner would seem to be the alpha carnivore in an ecosystem. What will be other roles that companies can play and still thrive in a given ecosystem? Do you think the structure of ecosystems and the role of the platform will vary much by industry, or will the core components be pretty similar?

SB: Yes, the principal orchestrator of a platform has a unique role and gains non-linear benefits as a result. But all members of the ecosystem — as a general rule — benefit as the ecosystem grows, and their payment for that growth approaches zero as a function of size. So while it may appear that vendors selling on Amazon’s platform are competing for customer attention and orders, the fact is they benefit from customers being able to search against a broad array of goods: the customers are strongly attracted to larger platforms, and that value is shared by all vendors. These dynamics will hold up across most public platform ecosystems. In private ecosystems, things can be more parochial, but across the board the increasing value of the ecosystem has to be shared, or it won’t attract participants[…]

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FedEx Says It’s Ending Express Shipping Service for Amazon And sometimes, as shown in this New York Times piece, the ecosystem loses those participants.

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The Verge lays out Google’s plans to build out a streaming games platform ecosystem: Google’s Stadia Game Service Is Officially Coming November: Everything You Need to Know

I’m working on a series on what we can learn from the platform ecosystems that developed in the tech industry. Tech industry ecosystems usually bring together developers and customers in an n-sided marketplace, building off network effects and delivering a high degree of platform lock-in, frequently in a winner-takes-all environment. The platform provider generally aims to provide developers with scalable technology via APIs and development tools, distribution to a desirable customer base, a revenue stream to tap into, and, in consumer markets especially, a lot of the user experience.

Stadia looks like it’s following this model, but its success is far from assured, according to Paul Tassi: Xbox One And PS4 Don’t Need To Fear Google Stadia, Which Is Mired In Contradictions. Not to mention, it probably won’t be viable for most mobile customers, due to its huge data streaming requirements, as PC Gamer points out: Stadia 4K streaming will use up 1TB of data in 65 hours.

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Last week, we talked a lot about Uber. Its primary Chinese competitor is hitting new geographies, as reported by TechCrunch: China’s Didi kicks off expansion in Latin America with moves into Chile and Colombia. Meanwhile, Uber appears to be chasing a niche opportunity: Uber Copter to Offer Flights From Lower Manhattan to J.F.K.

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The Fiat Chrysler/Renault merger is off, but that’s not all that ails the automotive industry, according to the Times’ Jack Ewing The Car Industry Is Under Siege. Maybe it’s time for a more open ecosystem approach?


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