Over break I read Machine Platform Crowd: Harnessing Our Digital Future by Andrew McAfee and Erik Brynjolfsson. The book explores the time we are currently experiencing in which technological advances are increasing at exponential rates, changing the entire world around us. Not too long ago I was using dial-up internet to surf the web on my family’s clunky desktop computer, but now, just less than fifteen years later, I have to my disposal a smart phone, weighing a mere six ounces, with far greater computing power than that old desktop computer. The smart phone itself has the ability to tap into even greater modern technological advances. I can use it to trade cryptocurrencies worth thousands of dollars that had not even existed ten years ago, or I can use it to arrange and pay for a ride with a person I have never met before and likely will never meet again. The times we live in now are obviously quickly evolving, but rarely before had I considered the vast effect technology is having on every aspect of the business world. McAfee and Brynjolfsson set out to not only explain how technology has molded the current landscape of the business world, but also how readers can harness its power to create the successful businesses of tomorrow. To do so, they divide all of today’s current trends into three distinct sections.
The first third of the book discusses the trend of the rapidly increasing capabilities of technology – namely the machine. As Intel co-founder Gordon Moore noticed in 1965, computing power doubles every two years as the price remains the same, a phenomenon referred to as Moore’s Law, leading to exponential increases in technological capabilities. This trend now requires us to rethink the way we view the balance between machine intelligence and human minds. While for a long time humans could count on machines to take care of the mundane and tedious tasks – record keeping, mathematics, work-aiding softwares, etc… – machines now have the ability to do much more than we had ever expected them to do, and it would be foolish to not take full advantage. The authors discuss a great variety of ways to fully utilize the increasing power of machines and their ideal balance with the human mind in many interesting ways including:
- Putting less emphasis on human judgement, and using and trusting machines more with decision making, especially as the field of machine learning continues to see great advancements.
- Moving more towards the virtualization of a business wherever possible, not only to increase both profits and efficiency, but also when the work is what the authors refer to as the four D’s – dull, dirty, dangerous, and dear.
- Understanding that technology has very little limitations and can be used in many unexpected ways including using their “creative abilities” to design functional (and surprisingly beautiful!) objects and give new perspectives differing from humans.
The middle third of the book focuses on the recent trend of these large and influential young companies appearing vastly different than the successful companies that came before them. As Tom Goodwin noted in March of 2015, “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” These four companies listed are among the most influential, successful, and rapidly growing in the world, and yet they bear nearly no resemblance to the businesses before them. McAfee and Brynjolfsson refer to these companies as platforms, modern businesses that are disturbing their industries greatly while owning little to no physical assets. These platforms are so special because they have a near-zero marginal cost for accessing, reproducing, and distributing their goods and services. As the counterpart to machines is the human mind, platforms are paired with products (goods and services). For example, Uber is the platform people use to access the product of a ride. The authors argue that today’s companies with the most success put an emphasis on both their platform and product and keep in mind the following:
- Offering digital goods when possible because they’re free, instant, and perfect, which greatly reduces costs and appears more desirable for consumers.
- Allowing outsiders to contribute complementary goods to the platform, driving up demand for the platform itself. (Example: Apple allowing third party apps on the iPhone.)
- Most platforms are two-sided (sometimes even multisided) networks (Example: Uber has both drivers and riders). Successful platforms use the power of having multiple sides to the network to have each side drive up demand from other sides for the platform.
The final third of the book discusses the current trend in the emergence of the crowd, which the authors define as the extraordinarily large and ever-growing human knowledge found online, coming in from all over the world. The counterpart to the crowd is the core, the knowledge and capabilities of established companies built up internally. Many of today’s most successful companies have called upon the crowd to increase the quality of their company in many interesting ways, using some of the following thoughts and ideas:
- Large crowds can be brought together to build large scale products, like Linux, without ever needing central, formal leadership thanks to the free, instant, and perfect aspects of digital goods.
- Companies can use the crowd to build their business in varying ways. Wikipedia benefits from people all over the world donating their time and knowledge to further along the website.
- The crowd contains a wide range of backgrounds, offering invaluable perspectives that the core could rarely ever obtain on its own.
In a book full of interesting and varying anecdotes and opinions, the one that I found the most intriguing was the potential of blockchain technology. I had heard about and had a good understanding of blockchain before reading this book because of the rise of Bitcoin, but never had I quite understood how powerful this technology is and how it can be used to do some truly revolutionary things. In the absolute simplest terms, a blockchain is a growing list of records that are linked, secured, and immutable using cryptography. For Bitcoin, the blockchain contains the complete historical record of all transactions, and has proven to be just as reliable and powerful as a ledger as its creator had predicted. This begs the question, why couldn’t this technology be used for much more? The authors explore several ways in which this technology can be leveraged. One example is with smart contracts, where the details of the contract can be kept in a blockchain. This may not initially seem like a big deal, but this offers a contract that is permanent, easily visible, and unable to be tampered with. These characteristics open up far more advantages. Because the contract is digital, a computer program can also be included on the blockchain to carry out the details of the contract, allowing businesses to know for certain their contract will be honored rather than just trusting the other party. With an immutable contract executing its own details existing, this also gets rid of the necessity for lawyers and courts. This example is just one of the many ways in which blockchain technology can truly revolutionize the way we do things and truly shows how powerful technology can really change the way in which we do things we may have considered having no other alternative.
Overall, I was thoroughly impressed with Machine Platform Crowd: Harnessing Our Digital Future. Surely many readers have given thought before about many of the things discussed in the book, but what makes the book so great is how masterfully the authors bring it all together to give a complete understanding of how all of these quickly moving trends are shaping our world simultaneously, offering consequences that are not easily predictable. Every page is densely populated with knowledge I had not even anticipated, refusing to limit itself to just a business book, and enthusiastically exploring various subjects from psychology to technology, while still making it very understandable for readers of all backgrounds. I’m sure I’ll revisit this book again at some point and absolutely recommend it to you all!