Essay: Review of ‘Machine, Platform, Crowd: Harnessing Our Digital Future’

Machine, Platform, Crowd: Harnessing Our Digital Future, by Andrew McAffee and Erik Brynjolfsson, is a creative and captivating novel, identifying and explaining three trends that are changing the way business is completed. This book carefully walks you through examples of the business world and the changes that are shaping the industry. These three trends are simply stated as machine, platform, and crowd. Technology, due to the rise of Big Data, has had a deep impact on business and has been the major driver of each of these trends. Overall, this novel is about the possibilities created by the technological revolutions that have occurred over the past one-hundred years. Our business environment is quickly changing and these trends are specifically influencing business processes, offerings, and organizations. Big Data has made these shifts possible and will have an even further influence on the trends discussed.
First, the book discusses the coming together of minds and machines to change and improve business processes. Humans have two different styles of reasoning, System One and System Two. System One is essentially decision-making based on intuition and is fast and automatic, while System Two makes complex computations and, as a result, is slow and concentrated. People tend to make decisions with their System One, but this system is typically biased and can lead to poor decision-making. It has been discovered that the highest success rates occur when only algorithms and data are taken into account, with human beings, even the most qualified, taken out of the equation. With the rise of big data and the increase of machine learning and artificial intelligence, business is now more capable than ever before to make a move toward decisions driven solely by data. After years of funding and unsuccessful research, machine learning is finally producing results, and at an impressive rate. This can be attributed to the machines’ access to an innumerable amount of data, the affordability of hardware, and the constant improvement of algorithms. Because of these factors, machines have more data with which to “learn” from, and technology and information is available to more and more researchers, encouraging experimentation and advancement. Currently most machines are practicing “supervised learning,” where they are trained with a set of questions and the corresponding answers before they are asked to make any conclusions of their own. Big data has driven this type of machine learning, allowing systems to learn from an exorbitant amount of data and improving the accuracy of their results. The future of these systems will be “unsupervised learning,” in which the systems learn on their own by analyzing patterns and determining the answers based on the information in front of them. This type of learning requires no training and is most like the way humans learn; However, “unsupervised learning” is far from being perfected and will require significant research and experimentation before it becomes common-place. As this machine learning and artificial intelligence become more pervasive in society, so will robotics. Gill Pratt, CEO of the Toyota Research Institute, states “Today, technological developments on several fronts are fomenting a similar explosion in the diversification and applicability of robotics. Many of the base hardware technologies on which robots depend—particularly computing, data storage, and communications—have been improving at exponential growth rates” (121). This is expected to lead to a robotic Cambrian Explosion, or a short period of time in which most automatons will appear. These robots can be used for tedious or dangerous labor, but there are also great strides being made in computer creativity. Despite these advancements, computers lack an understanding of the human condition and, therefore, the best work will be created by a combination of machines and people, with machines working side by side with humans, rather than instead of them. Ultimately, the rise of data, machine learning, and artificial intelligence will affect every business process, but those people that can combine now necessary quantitative skills with the emotional and social intelligence that computers lack will become the most valuable assets to businesses and their processes.
Next, the book discusses the relatively new idea of using platforms. This explores the transformation of offerings and how platforms are revolutionizing the original concept of a product, causing a disruption among typical business industries. This disruption occurs due to the internet and technologies that “allow distribution of a free, perfect copy of information goods from one place to another, or from one place to many, virtually immediately” (173). Digital information is now cheaper and infinitely faster, putting traditional products at a competitive disadvantage. The key to these platforms and the distribution of this information is networks. Networks are what allow users to connect with each other across the world and they are what make platforms so valuable. The more consumers that use a platform, the more valuable it becomes to each individual user. This is known as the Network Effect. Another driver of the demand for platforms has actually been their counterparts – complements. Complements in this sense are products that pair well with a platform. Their low prices increase the value of the platform and therefore also increase its demand. These complements often come from sources other than the owners of the platforms and can provide information, motivation, and influence that the platform otherwise would not have. With a careful screening process these complements to platforms can improve the overall user experience, as well as provide significant financial incentives for the platform such as data collection and revenue potential. A final key to success for platforms is being a first mover to the domain. As mentioned above, the Network Effect is very powerful and can easily deter consumers from switching platforms. It is imperative that the platform be one of the first to launch in the industry, as many consumers will fall to multihoming, or the refusal to use more than one platform at a time. Platforms are not only staying within the realm of digital information, however. They are also taking on business problems that involve physical goods and services. These types of platforms are called O2O, or online-to-offline, platforms. “Because they can add new members quickly, control the customer experience, leverage preexisting capital and labor resources, and use data and algorithms to improve matches, O2O platforms can scale rapidly and compete aggressively. Investors see the potential of O2O and have been willing to fund aggressive expansion plans” (251). Overall, platforms are at an advantage due to their small operating costs and practically limitless opportunities.
Finally, technology has allowed the world to interact as a crowd. It has brought people together online and, therefore, has also brought with it the ability to share information and opinions. Ultimately, this effect of “the crowd” changes the structure and activities of organizations. The crowd contrasts what is known as “the core,” or the major types of businesses and institutions that influenced the pre-internet era. Unlike the core, the crowd is much larger, messy, and uncentralized, but provides valuable information that is easily accessible. This is not to say that the crowd does not have structure, but the structure is imposed by the users rather than a higher power. Although some people originally suggested centralization when creating the networks that make up the crowd, this was not adopted due to the nature of the platform. By keeping the crowd decentralized, people are able to choose what is important to them and that is reflected within the networks, not the other way around. Crowds are revolutionizing business and by following the principle of noncredentialism, accepting the idea that people do not need to have the “right” credentials to contribute, they are improving innovations and performance. Ultimately, research has proven that the crowd outperforms even the most qualified experts. This is due to two factors: the core’s hierarchies and processes can prevent it from excelling, while crowd is able to bypass certain steps; and the core is often slow to adopt to change or new knowledge or perspectives. Companies are beginning to see the value of the crowd and are able to employ “several principles that appear to be important, perhaps even essential, for bringing the crowd together to accomplish something significant. These include openness, noncredentialism, verifiable and reversible contributions, clear outcomes, self-organization, and geeky leadership” (302). By working with the crowd to improve and innovate, companies are able to maintain the structure that allows them to succeed long-term, which decentralized collaborations often lack, while leveraging the advantages of the collection of opinions, information, and perspectives that the crowd can bring to a project. Companies already look vastly different than they did one-hundred years ago, and they will continue to change, but the core of these institutions will remain for a very long time.
In conclusion, the business world is rapidly changing with the evolution of technology. This technology, when interacting with machines, platforms, and crowds, can make deep impacts on businesses as a whole. These impacts can best be explained as the changes made to processes, offerings, and organizations and, ultimately, the rise of big data is what has made these changes possible – there are now limitless possibilities to what can be accomplished in the business industry. Effects on machines, platforms, and the crowd will continue to evolve with advancements in technology. It is by having clear goals for the future and taking advantage technology’s opportunities that business men and women will be able to lead their organizations to further success and improvements, always adapting to the changing world around them.