Machine, Platform, Crowd: Harnessing Our Digital Future

Machine, Platform, Crowd is a must read book. It does an excellent job of analyzing the forces that are digitally transforming our world and providing a playbook for how to thrive in this new world order. As the title suggests, the book looks at three mega trends. First, the growing capabilities and scope of machines, examples include robots, Internet of Things devices and automation. Second, the growing role of platforms rather than just products. Finally, the power and emergence of the crowd – from open source software projects to social media inspired movements and global communities. Given my background in technology and communications I found the second part of the book - Product and Platform - to be fascinating. A vast number of industries and organizations have been, and will be, impacted by the rise of platforms and the authors provide several well researched case studies. One of the areas that the authors focused on is the media industry including newspapers and music. To provide a model for understanding the changes that are happening the authors introduce the framework of ‘Free, Perfect and Instant’ and explain how the combination of the three accelerate change. As the authors note, some platforms are created by companies (Airbnb, Craigslist, etc.) while others are created by a collection of organizations such as the Internet and the world wide web. While each of the three trends is powerful and unique in and of itself, by analyzing the three trends together the authors provide a unique and compelling perspective on how to not just survive but to thrive in the new digital world. It is very readable and filled with lots of case studies. Highly recommended for anyone trying to understand our hyperconnected, digital world.

Good book, but very dated, Written in 2017, many of the mentioned companies are no longer around.

Even years after its publication this is still a relevant, excellent primer about Today's modern economy. The authors provide an educational narritive of tools used, trends driving change and finally components that make up Today's economy. The book roughly divides into 3 sections. The First covers the emerging tools (i.e. artificial intelligence, robotics, 3d printing, etc). The second explores the trends using the tools (e.g. platforms, crowd, decentralization, etc). The third covers the components of the economy (e.g. markets, firms). In short there is alot to digest in this book as the authors put the pieces together that make up the 2nd machine age. The first section is a slower read to digest the concepts behind each tool but necessary to understand the paradigm shift each tool brings and the body of knowledge that drives them. The second section becomes more focused , more interesting discussing the trends that harness the 2nd machine age tools. The third section was the most enjoyable brining it all together into the "so what" conclusions of the authors (and the personal ones that you will form). If you are looking for a place to start, a primer to learn about technology and modern economy this is a good place to start. Is there anything missing? The authors focus more on the upside and much less on the downside (i.e. the "governance" and "risk management" of these advances). To be fair the authors don't completely ignore the negatives but they also don't give equal coverge to them either. The negatives ultimately have economic costs either in loss or in managing, reducing or eliminating loss. Managing the dimensions of risk are significant (e.g. operational, reputational, legal, credit, market and so on) As the authors state the modern economy is incresingly becoming more complex, moving faster and requires greater agility to respond as these tools and trends become more prevalent. That also applies no less to managing and balancing the risk with the reward of these advances, something to think about as you read the last section. Something FAGMA and other companies are increasingly devoting more resources to as their business models are being challenged for the negative impacts perceived or caused.

Full disclosure I am Erik's brother, and after having read MPC, I am proud to brag about that. MPC is a tour de force. Firstly it is extremely dense, in that every sentence, paragraph, page, chapter, and part is packed full of new information and deep analytical insights. Secondly, it is extremely scientific, not in the sense of being academic or theoretical, but in the sense of being objective, observation and data driven. Thirdly it is tremendously impactful and contemporary. Most of the examples, and there are hundreds, relate to things that are happening here now and inevitably in the future. As an aside, after having read the first introductory chapter, I told a powerful CEO friend of mine that he needed to read the book now because "it will make the hair on your arms stand on end". Put another way the detailed descriptions and phenomena discussed in the book will disrupt trillion dollar companies, along with millions of individual jobs and careers. (That's mostly good as as book discusses.) Fourthly, the book is very well written, and a readable page turner, with only a few easily decipherable acronyms. Kudos to Erik, Andrew, and anyone else who contributed to this book in anyway. Lastly to you the review reader, stop what you're doing now and get a signed book from Erik (as I did at one of his speaking events), and buy a Kindle and Audible version of the book (as I also did) and start reading it now before the train pulls out of the station.

Authors McAfee and Brynjolfsson are directors of the MIT Centre for Digital Business. In a sentence, this means that you are unlikely to find better informed, accessible guides to the future of business and its key innovation driver, technology. “Over the next ten years,” they conclude, “you will have at your disposal 100 times more computer power than you do today.” Millions of people are working in jobs that create goods and services our grandparents could never have imagined. Billions of brains and trillions of devices will soon be connected to the Internet, not only able to access humanity’s collective knowledge, but also able to contribute to our knowledge. We are living in what is the most creative and disrupted period in human history – so far. This mind-bending reality is a function of the emergence of (for example,) effective artificial intelligence in areas as different from each other as health care, transportation, and retailing. There are three primary contributing forces driving our revolutionary advances: machines, platforms and crowds. Machines of the first Industrial Revolution amplified peoples’ physical strength in ways unimaginable for centuries. We could move faster and further than we could ever have imagined, do tasks that would have required armies of labourers with just a few people, and produce more goods per minute than people were previously able to produce in years. Machines of the second Industrial Revolution will do for people’s mental ability what the first Industrial Revolution did for muscle power. Whereas 100 years ago, an advert for a computer was a job-ad for a person who could compute, an advert for a computer today is for a device that can not only compute, but think faster, collate, analyse, diagnose and even create. This power is well illustrated by the success of a computer built to play the Go board game. This game is deemed to be the most complex game the world has ever seen. It is estimated that there are about 210170 (that is, 2 followed by 170 zeros) possible positions on a standard Go board. This is many times the atoms in the observable universe. Add to this, that not even the top human Go players understand how to navigate this absurd complexity, or how they make smart moves. Where there is a rule structure, we have some levers to create computers to perform outrageously complex tasks. But how do you program a computer when no human can articulate these strategies? DeepMind, a company specializing in machine learning - a branch of artificial intelligence - published a paper describing AlphaGo, a Go-playing application that had found a way of dealing with the paradox of people not knowing how or what they know. The system is designed to learn the unknowable on its own, and how to use the learning. It does this by studying millions of positions to create only those moves it thought most likely to lead to victory. In 2015 AlphaGo won a five-game match against the European Go champion 5–0. In 2016 AlphaGo beat the best human Go player on the planet 4–1. This astounding ability can now be applied to complex medical problems way beyond what even a group of the finest medical minds could solve, and then make this available to millions of practitioners. And, of course, this process can be applied to many more ‘impossible’ problems. The second contributing force driving our revolutionary advances is ‘platforms.’ Consider that Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the world’s most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. The idea of platforms is not a new one. A shopping mall is a platform that allows for the aggregation of the shopping experience. It enables sellers to interface with customers by providing a user-friendly platform that enables getting to the shops through parking facilities, and staying there longer by including food outlets. The difference today is that the platforms no longer need to be physical: they are also digital. Unbound by physical assets and infrastructure, digital platforms can grow scarily fast. Airbnb doubled the number of nights booked through the site in twelve months. Apple, through its iPhone and iPad, created a digital platform, and grew into one of the largest companies on the planet in less than a decade! It is precisely because these and so many other platforms are such “indescribably thin layers”, that they can have such an impact. Through the extraordinary power of our new machines, and the explosive multiplier effect of platforms, we can benefit from the third contributing force driving our revolutionary advances – crowds. Humanity has for a long time aggregated knowledge (for example) through collections of wisdom in book form in libraries. The authors call this aggregation ‘core’ to distinguish it from the ‘crowd’. The difference is not size: the Library of Congress in Washington holds 30 million of the worlds estimated 130 million books. The Internet provides a similar aggregation service only in a spectacularly more varied form – text, video, music, contributed by large, varied crowds of people. Billions of them. This ability to aggregate can be used for evil such as propagating hate or crime. But it can also be used for good, as is evident from its ‘crowd-funding’ potential, as an example. Indiegogo is an online ‘crowd-funding’ community which showcases a wide variety of creative and entrepreneurial ideas. Contributors can ‘back’ a film they think has potential, and for their contribution they could be invited to an early screening, or if they supported a product, they could be among the first to receive it. They are in effect ‘buying’ a product that doesn’t exist yet. This is the real value: they are backing a venture that might never exist without their votes of confidence. And they are providing the most powerful and desperately sought, reliable market intelligence, as well as a non-traditional marketing method. The three factors, machines, platforms and crowds, illustrate three great trends that are reshaping the business world. Technological progress will test a firm’s ability to survive, and survival is shortening. In 1960, S&P 500 companies used to last 60 years, now they last less than 20. This book is a guide for business people on how to navigate ‘destruction’ successfully. The real question is not what technology will do to us, but how can we use this tool called technology. Tools don’t decide what happens to people – people do. Technology only creates options; success depends on how people take advantage of these. And here is why you should read this book: Understanding the implications of these developments for your own business can make the difference between thriving or merely surviving. If you read only one book this year, I recommend this one. You will need to work this book, but the benefit will far outweigh the effort. Readability Light ----+ Serious Insights High +---- Low Practical High -+--- Low *Ian Mann of Gateways consults internationally on leadership and strategy, and is the author of the recently released ‘Executive Update.

I thought it would be difficult for the authors to top their prior book - The 2nd Machine Age - which presented the underlying principles of the digital age. Yet, they have pulled this off. They do so by building on their prior work and exploring what they see as the three dominant themes of the oncoming digital age: machines, platforms, and crowds. It's a superb blend of computer science and economics suited for a managerial audience. By exploring the developments in computer science, especially machine learning and artificial intelligence, they predict that more and more human work will be done by machines and economics tells us that we need to invest more in machines. Likewise, the economics of platforms leads the authors to predict the rise of platforms over products because it engenders complementary investments that make the platform more useful. FInally, they argue for a focus on external innovation - the rise of "crowds" which has given rise to the sharing economy and encourages open innovation. What I especially like is that this is a thoughtful book, presenting a compelling set of arguments for how businesses should anticipate and prepare for the second phase of the 2nd machine age. Leveraging theory, analogy, and history, a reader should acquire a nuanced understanding of the digital world and its implications for all businesses, no matter the industry. It is also more directly targeted at business executives. It is a must read!

Warning! Red Alert! At the end of each chapter this book has summaries of the main points and questions, and in particular questions about how the content of the chapter may relate to the goings on at “your employer.” It is clearly meant to be packaged into “continued education” courses offered by the authors’ employer (the Sloane School of Business at MIT) to middle aged (hence the enormous print) middle managers on a two-week jolly / off-site / executive MBA. This, sadly, I discovered only after the book had come through the mail. I decided to read it anyway, because the authors of “Machine Platform Crowd” are who I thank for waking me up to the fact that we are living through a proper, bona-fide depression. Just like the depression that the discovery of the tractor and phosphates caused in the 1930’s, by dint of putting out of work, permanently, the 25% of the US workforce who used to work in agriculture, McAfee and Brynjolfsson argued six year ago in their 76 page monograph “Race Against the Machine” that we are living a new depression brought about by a “Second Machine Age.” (which is the title of their second, less sombre, book, incidentally) The victims this time round are educated people who do repetitive work that once upon a time (but not any more!) could only be performed by an educated human. Oh, and we’re only getting started. Sure, blame the deficits, blame the banks, blame the ninja loans, blame the Fed, blame who you like, but only for trying to solve this intractable problem in silly ways that won’t work and thereby for making things even worse. The deeper cause of the depression, however, is that the educated class has educated itself to do repetitive tasks that are increasingly done by machines. Oh, and the 1% of guys who can “run with the machines,” yeah, they are going to be the bad-guy 1 percenters. Ooops. This was a good way for the authors to become famous (and earn my respect forever) but not a terribly good way to get rich themselves! “Dismal” does not sell. Ask that Malthus fellow. Boy, have they changed tack since 2011. “Machine Platform Crowd” is to the machine age what Candide and Ingenu were to the Enlightenment, but with no trace of irony, sarcasm or, indeed, doubt about what promises to be the best of possible worlds. Let’s start with us humans. We suck at judgement, it turns out. Our Kahneman “System 1” is trash and an algorithm will always beat it. But wait. Not all is lost! That info is solid gold for those of us who are smart enough to understand that we have been doing things backwards. All we need to do is let our “System 1” free to come up with whatever garbage a billion of years of evolution have taught it to do, and then feed it all as input to the algorithm. Job done. Conversely, don’t dare take the results of the algorithm and judge them with your experience. You’ll mess it all up. Don’t meet the client. Trust that FICO score. Call up the guys at FICO and ask politely if their computer will talk to your loan officer. It may well be able to process his otherwise useless experience into an even better FICO score. (You’ve guessed right, it does not say this in the book, that’s me extrapolating, sorry) Next let’s look at the machines themselves. In the words of ZZ Top, they come in two classes: First, the kind that we program with some sensible ideas we have (example “adjectives in English absolutely have to be in this order: opinion-size-age-shape-color-origin-material-purpose-Noun” p.70) and then have the machine implement much faster than we ever could. Second, the kind that don’t need us at all and look at reams of data and come back with some answer and we just tell them how well they guessed. (That’s called “supervised learning” for those in the back who are not paying attention) The first kind has been beating idiots like me at chess since I can remember. The second kind (steered, but not quite, by a fellow Greek, let’s hear it for Demis!) did something much more awesome the other day, it beat the world champion in Go, which is apparently much harder because there are fewer atoms in the known universe (and any undiscovered parallel universes) than there are ways to lay your pieces on a Go board. Maybe. Approximately. Where’s Val Kilmer when I need him? The second kind of machine does not know what it knows or how it learned it, it embodies the Polanyi paradox. What’s new and amazing, basically, is a machine that, like me, could not tell you why it played the move, but very much unlike me, plays the correct move! All from having played many many many more times than I ever have, mostly with itself. (no, honestly, that’s what it does) And it’s finally possible today thanks to (i) Moore’s Law (ii) Amazon Web Services and (iii) the availability of “big data” to train itself on. The future is in machines that don’t know what they know, just like us, basically. Instead of asking for the “Highest Paid Person’s Opinion,” also known as the HiPPO, ask this machine. It may not know what a liver transplant is, but if it thinks you need one, stop reading and call Alvin Roth now. (Kidney, liver, it’s all the same, don’t heckle! Instead, pray that it’s as well trained in recommending rare medical procedures as Demis’ Deep Mind is at playing Go with itself. I’m sure it will be fine. Better than the highest paid doctor’s opinion, you can be sure of that.) The final frontier is that machines are starting to do creative work. Exactly how they play Go without knowing why they played the move, merely that it will probably work, they can design a radiator that looks like no radiator you’ve seen before, rig up a very effective chassis for your racing car, or compose a piece of music that you are likely to enjoy. Amazingly, after all the mumbo jumbo of the first 100 pages in the book, I actually found this (fifth!) chapter to be totally fascinating and convincing. From “Machine” the book moves on to “Platform,” which actually is a tremendous section. (There are two authors at work here, basically, and this is the one I prefer) The authors start by explaining that Apple makes 110% of all money made in phones today because 1. it controls the “platform” for all the apps and 2. nobody is counting the money Google is making off of Android. Jokes aside, they make the very strong point that making devices comes down to competing on costs, whereas establishing a platform allows you to reap the positive externalities generated by every single new participant in your platform. The virtuous circle works like this: • every app that runs on an iPhone creates demand for the iPhone itself • if many people own an iPhone, this creates a bigger supply of good apps So 700 dollars is a lot of money for a telephone, but not if it can run 700 apps you’d pay a dollar each for, and things work out such that it will. And Apple no longer has to find its competitive edge in squeezing down the costs of making its beautiful devices. Next come up the “two-sided” platforms, which are all the craze. I do not remember my days of starting book2eat.com that fondly (a good 40 VC’s were aghast at the fact that I was trying to sign up both restaurants and punters at the same time, and another 200 never answered my calls or emails) but the point is that if you manage to fill more seats the word gets out and you sign up more restaurants and if you’ve signed up more restaurants punters are likelier to make a booking on your platform and this creates a dynamic that becomes irresistible. So much so, that for example a company called ClassPass (that filled exercise studios with punters who were happy to be told at the last minute where to take their yoga mat to) had to revise its pricing policy (p. 178) due to the unmitigated success of the business model in filling exercise classes! Next up is an analysis of Uber. Here I finally understood something that had always been a mystery to me: Uber’s obsession with low price is so huge because that’s where the demand curve is most elastic: All the way to the right, the demand curve is almost horizontal. People switch over from the train to Uber at some point, basically, and then all your cabs are full all of the time. The chart is on p. 213 and I totally buy it. Congestion in that city would be awful, but that’s down to the choice of the taxi example, of course. The point about why double-sided platforms love a low price is very well made. The way ratings have solved the asymmetric information problem is discussed here too, with the inevitable name-dropping of the authors’ colleague down the hall who got the Nobel Prize for first posing it. Oh, and don’t worry, Airbnb will not kill the hotels industry, because hotels cater to business travelers. Don’t forget, it’s all good! The fate of the cabbies and the longshoremen is left to the reader to ponder, but they can all go work for Travis, no? The third, final, section of the book is about “the crowd” It starts by explaining that crowdsourced software rocks, basically, and that the ingredients you need are: 1. Openness: who knows what motivates them, but people do contribute 2. Noncredentialism: good software can be written by absolutely anyone 3. Verifiable and reversible contributions: unlike a novel, you can test software quickly and undo any poor contributions 4. Clear outcomes: via a good license you can assure coders that their work will remain public 5. Self-organization: people do best the work that they WANT to do and if that leads to a fork in the code, so be it 6. Geeky leadership: it’s the kind coders will write code for Hayek and Polanyi make another guest appeareance in the chapter, but it works fine without them. A further important point about the crowd is that very often the contribution to a project that makes the big difference does not come from an expert in the field. Indeed, the knowledge that will cut the Gordian knot may come from somebody with knowledge that is “far away” from the subject, i.e. somebody who will be surplus to requirements 99% of the time and thus a team of experts could never afford to have on board: “The expert you know is not the expert you need,” basically. He’s somewhere in the crowd and that’s where you must reach for him. From there we jump to a painfully banal chapter on Bitcoin that addresses the points about cryptocurrency I could not care less about (like the mechanics of how it works, described just inaccurately enough for you not to be able to actually work it out, or the effete generalization that blockchain may be more important than Bitcoin,) barely gets into the aspects that matter (is it money? How does it provide store of value if there can be a million different otherwise scarce and deflationary varieties of Bitcoin? How will it compete if nobody will accept to be paid tax in it?) and complains that the Chinese are now dominating it. By that point, we find ourselves in a final chapter that’s nothing to do with Machine, Platform or Crowd, but is there to make the customers feel good who are attending the seminar and assures them that companies will still carry on being necessary in the future, because they are who possesses “the residual rights to control: the right to make decisions not specified in contracts.” Given that, presumably for the benefit of the same attendees, there is a need to sketch (very well, I must say, see pp 154-156) how the demand curve and the supply curve work and what happens when they intersect, one can safely say that this short paean to the firm is guaranteed to go over their head. But it must make for a warm conclusion. And now, back to work!

This is an amazing book. It came highly recommended by Tom Keene at Bloomberg Surveillance. So I bought it and read it and I learned so much about our ever-changing world that I did not know. It is packed with helpful, useful and vital information about the changes in our world, going on all around us, that will affect the future: jobs, markets, consciousness, all of it. This is the Technological Renaissance that is equal to or vastly superior to the Renaissance in the Middle Ages where the world woke up to what is possible. We are gifted, and challenged, to be alive in this Age, and we can make the most of our opportunities, with the help of his book. I recommend it to everyone who wants to better understand the monumental and shattering changes taking place all around us, gathering speed, and having more and more impact, over time. It has opened my eyes, and served me well. I am still digesting it.

Great book, easy to read and interesting realistic concepts . I recommend to buy it if you are studying MIT short course of Digital Business Strategy as the book is the base of it.

La primera parte de esta serie aporta una idea interesante y práctica sobre la velocidad y profundidad de los cambios tecnológicos y cómo afectarán a nuestras vidas. Este segundo libro estructura muy bien los efectos de la red y los nuevos avances en el futuro del trabajo. La conclusión es muy positiva a diferencia de otros libros que solamente ven nubes en el futuro del mercado laboral. Incluye en cada capítulo una serie de preguntas que invitan al lector a pensar sobre los efectos sobre tu propia empresa

I am glad that I purchased this splendid orchestration of our immediate future, in strong and practical terms. The ongoing AI onslaught for redefining the fundamentals of our existence was too exciting for me to learn more about the shape of things to come. The authors have done a fantastic job of how the age of data is panning out on multiple dimensions of our livelihood. There is such a remarkable elucidation buried in here, that I am sure I will be benefited with as I move forward. I believe this is a responsibly calculated way of sowing the seeds of how we can create a renewed world order, how we should welcome the long pending revision to the heavily rusting industrial philosophies which has been the bedrock of our growth economy so far. Fundamentally, I believe this publication makes us think about the fact that we are after all social beings, how could we have gone by creating an economy that doesn't recognize it?

I needed this book rather quickly. It is true that the book is a basic paperback, but it serves its purpose. Even though it was a new edition on pre-order, it was delivered way ahead of the promised date just a few days after printing. Thank you.

Constantly referring to the stories and examples. Thought provoking for any business owner or consultant. Worth a reread. The only negative is that it had an ending. One of those rare finds where you wish the book would never end. What to read next to top this one is the challenge.