Batten Briefing: Innovation in the Age of Smart Machines

BAT TEN BR IEFI N G INSPIRING THE WORLD THROUGH ENTREPRENEURSHIP AND INNOVATION

JAN 2015

Innovation in the Age of Smart Machines: THE POWER OF PEOPLE AND TECHNOLOGY INNOVATORS' ROUNDTABLE, SPRING 2014. CHARLOTTESVILLE, VIRGINIA.

contributor

Malgorzata Glinska Senior Researcher, Batten Institute glinskam@darden.virginia.edu

A

stonishing digital technologies and unprecedented connectivity are making

the impossible possible. Think the Vulcan mind meld is pure fantasy? Michael Chorost, technology theorist and writer, may well disagree. After losing his

hearing, Chorost received cochlear implants—tiny computers that trigger auditory

nerves to recreate the sensation of hearing. Chorost views the devices inside his head as a step toward a future in which a combination of implanted nanowires and optogenetics will allow meaningful communication between brains.3

Technological marvels are enhancing our lives in profound ways. They are also increasing our anxiety.

You’ll be paid in the future based on how well you work with robots.”1 Kevin Kelly, Futurist, cofounder of Wired magazine

47%

of U.S. jobs are highly susceptible to automation.2

INNOVATORS' ROUNDTABLE REPORT

Some warn that machines are coming to steal our jobs. As MIT’s Eric Brynjolfsson

and Andrew McAfee outline in their recent best seller The Second Machine Age, along with the benefits, technological progress will leave many without work as cognitive

tasks are increasingly automated.4 In many cases, the authors argue, artificially intelligent machines can make better decisions than humans.

So what does this mean for organizations and the individuals who work in them?

Recent advances in digital technologies are disrupting markets and reshaping indus-

tries. Companies are not only under extraordinary pressure to find new opportunities

for growth; they have to make sense of today’s rapidly evolving technology. This Batten

Briefing explores several questions: What implications do recent technological advances have for business leaders? What skills will be necessary for working alongside smart

machines? Will people still matter? And, most importantly, how can we best prepare for a fast-changing world?

Self-Driving Cars and Bionic Ears: SIXTY YEARS AGO, science-fiction writer Isaac Asimov published a short story

featuring automobiles with positronic brains that didn’t require a human driver. In

2012, two MIT professors, Erik Brynjolfsson and Andrew McAfee, took a spin in

THE INTERNET OF THINGS (IoT)

an autonomous car pioneered by Google. As they put it, the experience was “es-

pecially weird,” because only a few years earlier they were certain it was not pos-

sible.5 While computers were good at structured tasks—such as dispensing cash or

installing auto parts—Brynjolfsson and McAfee reasoned, they could not adequately handle the unstructured data—real-time information about changing road condi-

tions—that driving involved. Today, Google and leading car manufacturers are committed to bring self-driving technology to the general public by 2020.

The IoT is a growing ecosystem of everyday physical objects connected to the Internet.

Thanks to embedded low-cost sensors and ubiquitous wireless connectivity, almost anything—street lights, wind turbines, refrigerators, cars, gas and electric meters and even bottles of pills—can identify itself to and communicate with the environment and

Recent advances in digital technologies—any devices that have computer hardware, software and networks at their core—are truly the stuff of science fiction. Thanks to cognitive computing, we have smart machines that understand and reproduce hu-

man speech and can draw reasoned conclusions by mining unstructured data, such as text and audio. Computer systems, such as IBM’s Watson, can beat humans at chess

and other highly structured games. They can also answer unstructured queries on a wide range of topics.6

with other objects on the network.

1

Kelly, K. 2012. “Better than Human: Why Robots Will—

and Must—Take Our Jobs.” Wired. http://www.wired. com/2012/12/ff-robots-will-take-our-jobs/ (Accessed 4 August 2014.)

2

Frey, C.B., and Osborne, M.A. 2013. “The Future of Em-

The big change coming is AI and ‘deep learning.’

AI takes technology up the thinking chain so much that, in the future, humans will be needed to do only innovation, creativity and critical thinking.”

Edward D. Hess, Darden School of Business

ployment: How Susceptible Are Jobs to Computerization?” http://www.oxfordmartin.ox.ac.uk/downloads/academic/ The_Future_of_Employment.pdf (Accessed 3 May 2014.)

3

Chorost, M. 2011. World Wide Mind: The Coming

Integration of Humanity, Machines, and the Internet. New York: Free Press.

4

Brynjolfsson, E., and McAfee, A. 2014. The Second

Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W.W. Norton & Co. 5

Brynjolfsson, E., and McAfee, A. 2014.

6

Regalado, A. 2014. “IBM Expands Plans for Watson AI.”

MIT Technology Review. 117 (2): 67-68.

7

Rotman, D. (2014). Microscale 3-D Printing. MIT Tech-

nology Review. 117 (3): 38-41.

8

Knight, W. 2014. “Agile Robots.” MIT Technology

Review. 117 (3): 30-32.

9

2

Kelly, K. 2012.

BATTEN BRIEFING INNOVATORS’ ROUNDTABLE REPORT

Simultaneously, 3-D printers are evolving well beyond creating low-cost items for consumers’ homes. A team at Princeton University recently employed microscale

3-D printing technology and a combination of biological tissue and electronics to print a bionic ear.7

And let’s not forget the robots. Atlas, a humanoid robot developed by Boston

Dynamics, has an exceptional sense of agility and balance, enabling it to walk across rough terrain.8 And there’s a new generation of industrial workbots, such as Bax-

ter from Rethink Robotics, that humans can train to perform simple manual tasks without having to write endless lines of code.9

THE FUTURE IS NOW Welcome to the Second Machine Age, as Brynjolfsson and McAfee call it, a

transformative period in which computers, robots and other digital technologies

are acquiring skills and abilities once unique to humans, and they are doing so at an extraordinary pace. We’re in the early stages, Brynjolfsson and McAfee argue, but

already these technologies are performing not just routine tasks with rule-based ac-

tivities but also jobs defined by pattern recognition and non-routine cognitive tasks, such as financial analysis.10

Innovation is about bringing novel insights together and experimenting with new combinations of ideas. Technology helps us to combine ideas on a grand scale.”

Michael Lenox, Darden School of Business

According to a 2013 Economist Intelligence Unit (EIU) report, BUSINESS LEADERS WORLDWIDE ARE PAYING SPECIAL ATTENTION TO THE INTERNET OF THINGS.

91%

of senior managers surveyed

by EIU believe that the IoT will change the way their company conducts business in a meaningful way.

In addition to asset and energy management, companies are increasingly using the IoT as a source of growth opportunities from existing products and services.14

The driving force behind these breakthroughs is the convergence of three powerful

IoT’S EXPLOSIVE GROWTH

trends.11 The first is an exponential increase in the power of computing. Computers

The number of autonomous objects

cheaper, too. For example, the fastest supercomputer in 1975 cost $5 million. In

is expected to reach approximately

are getting better faster than any other technology in history. And they’re getting 2013, the equally powerful iPhone 4 cost $400.12

connected to the Internet 15

212 billion in 2020.

The second trend is the unimaginable quantities of digital data that are available owing to the proliferation of inexpensive sensors embedded in physical objects and the

connection of those objects through wireless networks, a phenomenon known as the Internet of Things. The data these sensors collect about objects—from smartphones to refrigerators to jet engines as well as about the individuals using them—can be transmitted, stored and copied at near-zero cost.

The third trend is the combining and recombining of digital technologies in ways

that multiply their impact and create the next wave of innovations.13 For example,

the Internet combined with advances in cloud computing could enable new, powerful tools for automating knowledge work on mobile devices.

Technology is reshaping every aspect of our lives.

Let’s examine the implications of digital technologies for organizations and business leaders. And let’s take a look at how new technologies are changing the nature of work and what skills will be necessary to thrive in the Second Machine Age.

10

Brynjolfsson, E., and McAfee, A. 2014.

11

Freeland, C., et al. 2014. “Inequality, the Second Machine

Age and the 401(k) Society.” NPQ. http://onlinelibrary. wiley.com/doi/10.1111/npqu.11455/pdf (Accessed 20 September 2014.)

12

Manyika, J., et al. 2013. “Disruptive Technologies:

Advances that will Transform Life, Business, and the Global Economy.” McKinsey Global Institute.

13

Freeland, C., et al. 2014.

14

Witchalls, C. 2013. “The Internet of Things Business

Index: A Quiet Revolution Gathers Pace.” Economist Intelligence Unit Report.

15

MacGillivray, C., Turner, V. and Lund, D. 2013. “World-

wide Internet of Things (IoT) 2013–2020 Forecast: Billions of Things, Trillions of Dollars.” IDC. Doc. #243661.

3

Digitize or Die: IN 2011, MARC ANDREESSEN, the Netscape cofounder turned venture capital-

DISRUPTIVE TECHNOLOGIES TO WATCH Technology news is full of incremental developments, but few of them are real breakthroughs. The 2013 report from the McKinsey Global institute identifies 12 technologies that are reinventing the notion of what’s possible and can have tremendous impact on industries and economies. The report estimates that the applications of those technologies have the potential to drive direct economic impact on the order of $14 trillion to $33 trillion per year by 2025.16 It’s worth noting that most of the technologies on this list are either enabled or enhanced by information technology (IT).

• Mobile Internet • Automation of knowledge work • The Internet of Things • Cloud technology • Advanced robotics • Autonomous and near-autonomous vehicles

• Next-generation genomics • Energy storage • 3-D printing • Advanced materials • Advanced oil and gas exploration and recovery • Renewable energy

Source: McKinsey Global Institute

ist, published the Wall Street Journal piece “Why Software Is Eating the World,” a description of how forward-looking companies are innovating and transforming themselves through digitization.

To illustrate the phenomenon, Andreessen gave a dramatic example of the “suicide of Borders and corresponding rise of Amazon.” Although Amazon was outselling traditional brick-and-mortar bookstore chains, the leaders at Borders didn’t think

online book sales were strategically important. Borders perished. Amazon—essentially a software company—became the largest bookseller in the world.17

Andreessen’s now-famous statement is hard to dispute—software is, indeed, eating

the world. More and more industries end up creating value not from physical offer-

ings—like mobile phones or jet engines—but from the services and data delivered by software. “The emergence of software-enabled devices—the Internet of Things—not only allows companies to rethink how they can use such devices to improve the cus-

tomer experience but also changes the business model,” said Jeremy Hutchison-Krupat, an assistant professor of business administration at the University of Virginia Darden School of Business.

The lesson: Companies in industries viewed as existing mainly in the physical world must digitize or risk extinction. “In the future, all companies will be software com-

panies,” George Colony, the CEO of Forrester Research, a technology research firm, told the audience at the recent Le Web conference in Paris. “They’ll be competing with Google, Microsoft and SAP.”18

They’ll also be competing with newcomers. Thanks to digitization and the ubiquity

of online access, it’s shockingly easy and inexpensive to launch a business and reach billions of customers in the global economy. Digital startups are popping up everywhere, reshaping entire industries.

Take Uber, a company launched in San Francisco in 2010 that is now poised for

global domination. The web-based car-booking service is built around a smartphone app that connects users who need a ride with vetted drivers for hire. The Silicon

Valley darling doesn’t own any vehicles; it makes money by taking a 20% cut of each fare.

Just as Uber is disrupting the big city taxi monopolies, Bitcoin is doing the same to 16

Manyika, J., et al. 2013.

17

Andreessen, M. 2011. “Why Software Is Eating the

World.” The Wall Street Journal.

18

Rooney, B. 2014. “Tech Europe: Today’s CEOs Need to

Grasp Technology.” The Wall Street Journal Europe.

4

BATTEN BRIEFING INNOVATORS’ ROUNDTABLE REPORT

the banking industry and Airbnb to the hotel industry.

WHY COMPANIES SHOULD EMBRACE SOFTWARE Mary Meeker, a Silicon Valley venture capitalist whose annual reports on Internet

trends have earned her the title “the queen of the net,” argues that a high-speed network of mobile devices, wearables, cameras, sensors, social media, cloud computing

and other digital technologies is putting everything up for “re-imagination.” Meeker estimates that the total market value of the ten industries most vulnerable to change over the next few years is more than $36 trillion.19

The emergence of software-enabled devices—the Internet of Things—not only allows companies to rethink how they can use such devices to improve the customer experience but also changes the business model.”

Companies have a choice—they can wait and react to change, or they can try to

capture the disruptive opportunities presented by the latest technological advances.

Digital technologies can help companies not only create better products and services and reimagine their business models and platforms but also completely redefine our notion of the corporation. As Michael Lenox put it, “In the future, an organization may be an innovation house that outsources everything else.”

What does this mean for business leaders?

Now more than ever, all business leaders must invest in their own technology

knowledge. They should closely follow technology trends and know what their most tech-savvy customers are doing. They should think carefully about how specific technologies could affect their businesses and be able to identify the

Jeremy Hutchison-Krupat,

potentially disruptive ones.20

Darden School of Business

As Chamath Palihapitiya, the former Facebook executive turned venture investor, argues, executives must be able not only to understand the technologies—such as sensors and autonomous cars—that can affect their economic output but also to build technical proficiency into the way they manage their organizations.21

Business leaders also need to understand how the fast-changing technology applies to their customers. CEOs, especially, should keep abreast of the changing nature of

their companies’ relationship with customers. As Forrester’s Colony said, most For-

tune 500 CEOs are unlikely to understand the tech-savvy, social-media-empowered customer who’s always connected.22

In the past, the purpose of computing was to help optimize transactions in human

resources, finance and sales. As digital technology is becoming a core component in

the quest for innovation and new opportunities for growth, it should become top of mind for business leaders, including CEOs.

19

Meeker, M. 2012. “2012 Internet Trends.” KPCB website.

http://www.kpcb.com/insights/2012-internet-trends. (Accessed 4 August 2014.)

20

Manyika, J., et al. 2013.

21

Manyika, J. 2013. “Managing Disruptive Technology: A

Conversation with Investor Chamath Palihapitiya.” http:// www.mckinsey.com/insights/high_tech_telecoms_internet/ managing_disruptive_technology_a_conversation_with_investor_chamath_palihapitiya (Accessed 12 September 2014.)

22

Rooney, B. 2014.

5

The Digital-Physical Blur: IN ITS 2014 TECHNOLOGY VISION REPORT, Accenture, a global management

consultancy, identified six emerging IT trends that will have the biggest impact on

Today, innovation is faster, more targeted, more customized.”

Jeremy Hutchison-Krupat, Darden School of Business

companies and other organizations in the coming years.

The number one trend is the “digital-physical blur.”23 As software and hardware

fuse into one entity, boundaries between the digital and the physical are becoming

increasingly fluid. (For example, smartphones don’t have buttons; they have icons on a touch screen.) The ever-growing numbers of software-empowered physical objects

are coming online, creating an increasingly intelligent ecosystem—more than just an Internet of Things. This ecosystem augments our actions and automates processes, increasing our control over the physical environment.

Boundaries are increasingly fluid in many dimensions, not just between hardware

and software. For instance, it’s not just physical objects that are part of the IoT—in-

We use next-generation sequencing and other technologies to analyze individual tumors’ genomic information, which helps with cancer diagnosis and treatment.

Every person is unique.

Technology is helping oncologists to personalize cancer treatment as opposed to chemo for all.”

Hugh O’Dowd, SVP, Novartis Oncology

23

Daugherty, P., Biltz, M.J. and Banerjee, P. 2014. “Accenture

Technology Vision 2014: From Digitally Disrupted to Digital Disrupter.” Accenture Technology Labs. www.accenture. com/technologyvision (Accessed 20 September 2014.)

24

Barnes, B. 2014. “At Disney Parks, a Bracelet Meant to

Build Loyalty.” NYTimes.com.

6

BATTEN BRIEFING INNOVATORS’ ROUNDTABLE REPORT

creasingly, we all are, thanks to smartphones, tablets and wearables such as Google

Glass. We are using technology to make decisions in the tangible world on the basis of information we get online. We often act on that information in real time.

This creates a huge opportunity for companies to innovate. According to Accenture, one way traditional businesses can innovate is by using digital-physical systems to create new, immersive user experiences.

Disney is a case in point. In 2013, the company introduced the MagicBand, a rubber wristband with an embedded transmitter that gives guests a better experience and

more personalized interaction with Disney employees. If parents opt in, the employee playing Cinderella could read MagicBand data via hidden sensors and greet the

child by name. The technology also lets Disney-park visitors “touch to pay” for food

and merchandise and make plans with other guests. It gives them preferential places in lines. It also transforms their dining experience by allowing them to preorder food.24

NEW OPPORTUNITES TO INNOVATE In the manufacturing realm, General Electric is fueling its new wave of growth

by investing in the Industrial Internet. The company, which sells $60 billion a year in power-plant turbines, jet engines, rail locomotives, medical scanners and other

equipment, manages more than 100 million data-gathering sensors, or “tags,” embedded in its products.25

By combining intelligent sensors, networking technology, cloud computing and analytics software, GE is able to gain insights from vast amounts of industrial-machine data to achieve production efficiencies, better performance, increased safety and

asset optimization. For example, by studying raw feeds from sensors in a jet engine,

GE’s engineers can anticipate when it might fail, spotting dangerous conditions well in advance of the problem. GE is selling data services of this kind to its customers from many industries.26

GE is also using connectivity and software to inject “new behavior” into machines, with a goal of transforming manufacturing. A good example is a field of “smart”

THE POWER OF THE INDUSTRIAL INTERNET The Industrial Internet is revolutionizing the services GE provides its customers, helping them to become more efficient and productive. The company estimates that by connecting machines, data and people, a mere one percent efficiency improvement can create billions of dollars in savings in all industries. For example, over 15 years, just one percent fuel savings in aviation could save $30 billion.

wind turbines that communicate and move together in response to changes in wind.27

In a race to take advantage of recent technology advances, digital startups such as

Instagram, Airbnb and Uber may have been first out of the gate. Large established companies, however, are catching up. Disney and General Electric are just two

global powerhouses making a push to transform themselves into digital businesses.

1% Reductions in Fuel = Aviation Savings

$30B

Power Savings

$66B

in System Inefficiencies = Rail Savings

$27B

Healthcare Savings

$63B

in Capital Expenditures = Oil & Gas Savings

$90B

Savings reflected over a 15-year period Source: GE, 2013 Annual Report

25

Hardy, Q. 2013. “An Internet for Industry.” The New York

Times.

26

King, R. 2012. “Industrial Internet Will End Downtime,

GE Hopes.” The Wall Street Journal.

27

Regalado, A. 2014. “GE’s $1 Billion Software Bet.” MIT

Technology Review. 117 (4): 76-77.

7

Work in the Second Machine Age: IN THE FALL OF 2013, economist Carl B. Frey and information engineer Michael A. Osborne at the University of Oxford published a blood-curdling paper, “The

Future of Employment,” in which they argue that over the next two decades, nearly

half of U.S. jobs (47%, to be precise) are at high risk of being automated and 19% are at medium risk. If Frey and Osborne are right, 66% of the U.S. workforce—including many white-collar employees—will lose their jobs to computers.28

Technology has been displacing workers since the Industrial Revolution—the First

If we can drive innovation, we will always create new jobs. But we must think in terms of sustainability. We need to teach MBAs about sustainability instead of having unlimited growth.”

Machine Age—which began in the late 1700s. The steam engine and its descendants

Kurt D. Bettenhausen, SVP, Siemens

Experts believe there will be, as long as there are unfulfilled human needs. We just

Corporate Technology

automated routine manual labor. The computer revolution of the 1990s changed that. Suddenly, it wasn’t just muscle work—or “unskilled jobs”—that was being

handed over to machines but also routine cognitive tasks performed by knowledge workers.

Today, thanks to the exponential advances in mobile robotics (MR), machine learning (ML) and artificial intelligence (AI), many non-routine cognitive and manual tasks are increasingly susceptible to automation.29

Will there be any jobs left? need more entrepreneurs. In fact, the scarcest and therefore most valuable resource in the Second Machine Age won’t be smart machines but people who can create

new ideas, products, services and business models, write Brynjolfsson, McAfee and a Nobel-winning economist, Michael Spence, in a recent article that explores the

impact of technological advances on the global marketplace for labor and capital.30

The future is bright for entrepreneurs and innovators.

However, there’s never been a worse time to be a worker with only “ordinary” skills.

As Tyler Cowen bluntly put it, “average is over.”

For Cowen, an economist at George Mason University in Fairfax, Virginia, the

question of our times is, “Are you good at working with smart machines or not?” As he writes in his thought-provoking book Average Is Over, developed economies are bifurcating into a small educated elite and the rest.31 There will be no comfortable

“middle.” The elite—about 10% to 15% of the population—will be those with skills 28

Frey, C.B., and Osborne, M.A. 2013.

29

Ibid.

30

Brynjolfsson, E., McAfee, A. and Spence, M. 2014. “New

World Order.” Foreign Affairs. 93(4): 44-53.

31

Cowen, T. 2013. Average Is Over: Powering America Be-

yond the Age of the Great Stagnation. New York: Dutton.

8

BATTEN BRIEFING INNOVATORS’ ROUNDTABLE REPORT

that are highly complementary with computers. The ability to harness the speed and power of machine intelligence will allow the elite to be hyper-productive and super wealthy. Others will endure stagnant or falling wages, as employers will be able to measure their economic value with “oppressive precision.”

UPGRADE YOUR SKILLS AND SOFTWARE Whether Cowen and other techno-doomsayers are right in their predictions that automation will decimate jobs, it’s hard to deny that Americans are facing tough

competition from both workers overseas and machines powered by smart software.

How can we beat the forces of globalization and automation?

By upgrading our skills. We must learn how to get along with smart machines in

order to maximize the enormous value they bring to the workplace. This requires a

Excessive use of technology can make it seem like we are dumbing down our scientists. There are some fundamentals that are no longer well understood since there is a tendency to rely too much on the technology.”

high level of digital competence. According to a 2013 report from the McKinsey

Global Institute, the accelerating pace of technology change and innovation creates a growing demand for high-level technical skills.32 This includes the engineering

skills to design and program new machines.

Because the volume of unstructured data flowing from sensor networks and social

media usage is exploding, and analyzing large data sets—or “big data”—is becoming a key basis for competition, a demand for employees who can analyze large data sets will only grow.

Great technical and data analytics skills alone won’t cut it, though. Marketing, which requires deep knowledge of human psychology, will be an extremely important

Teresa Krug, R&D Director,

sector of the automated future, as will design.33 Those who know how to interact

MeadWestvaco

not only with computers but also with human beings will get the biggest cut of the pie. Mark Zuckerberg is a case in point. “He was a great programmer, but he also

knew how to set up Facebook so that it would be appealing to actual human beings,” Cowen said.34

The ability to appeal to human beings is something machines aren’t good at; it’s also an essential ingredient in effective collaboration, the management of teams and the creation of value.

Our high-tech skills won’t be worth much in the competitive marketplace without emotional and social intelligence.

Emotional intelligence (EI) involves the ability to perceive, understand and manage one’s own and other people’s feelings and use this information to guide one’s

thinking and actions. Since the 1980s, when they introduced the concept formally, 35

psychologists Peter Salovey at Yale University and John D. Mayer at the University

of New Hampshire have been the leading researchers on EI. However, it wasn’t until the publication of Daniel Goleman’s best-selling book Emotional Intelligence that EI theory went mainstream.36 Goleman’s emphasis on EI as a key ingredient of success

in life captured the attention of the general public, from parents to business leaders.

32

Bughin, J., Chiu, M. and Manyika, J. 2013. “Ten IT-

enabled Business Trends for the Decade Ahead.” McKinsey Quarterly. http://www.mckinsey.com/insights/high_tech_ telecoms_internet/ten_it-enabled_business_trends_for_the_ decade_ahead (Accessed 12 September 2014.)

33

Cowen, T. 2013.

34

2014. “Ghost in the Machine: Automation and the Future

of Employment.” Australian Broadcasting Corporation Transcripts.

35

Salovey, P. and Mayer, J.D. 1990. “Emotional Intelligence.”

Imagination, Cognition and Personality. 9 (3): 185-211.

36

Goleman, D. 2006. Emotional Intelligence: Why It Can

Matter More Than IQ. New York: Bantam.

9

Work in the Second Machine Age [continued]

Empathy, social and emotional intelligence, and high-level cognitive skills are criti-

cal to success now and will be even more so in the future. It’s unlikely that machines, no matter how “smart,” will master them soon. Unfortunately, not that many people

Organizations need processes for collaboration and constructive debate that rise above politics and egos. Thinking better, communicating better, making better decisions, and having a healthy regard for what one doesn’t know are essential.”

have mastered them either, observed Darden professor Edward Hess. “Most of us

Edward D. Hess, Learn or Die: Using

Hess’s most recent book, Learn or Die: Using Science to Build a Leading-Edge Learn-

Science to Build a Leading-Edge Learning Organization

have not been taught in school or on the job the cognitive and emotional skills we need,” Hess said.

High-level cognitive skills—the skills of rational thought—affect the way we plan,

evaluate critical evidence, assess risk and make decisions. As research in psychology and neuroscience attests, even intelligent people are often irrational thinkers and decision makers. Our brains are naturally lazy.37

However, as our environment evolves at breakneck speed, we need to be able to

make good decisions and collaborate effectively with others. Although it’s not easy, it’s possible and necessary to develop high-level cognitive and emotional skills.

“We can get better at embracing evidence that contradicts our views of the world,” Hess said. “We can learn to engage emotionally with other people in a way that no machine can.”

ing Organization, provides strategies to overcome our tendency to be cognitively

biased, lazy thinkers, which can inhibit learning. It also emphasizes the importance of lifelong learning for individuals and organizations.38

But learning requires attention and focus.

In the age of mobile devices and instant communication, there’s an endless stream 37

Stanovich, K. E. 2010. What Intelligence Tests Miss:

The Psychology of Rational Thought. New Heaven: Yale University Press.

38

Hess, E.D. 2014. Learn or Die: Using Science to Build a

Leading-Edge Learning Organization. New York: Columbia University Press.

39

Simon, H. A. 1971. “Designing Organizations for an

Information-Rich World.” In Martin Greenberger, Computers, Communication, and the Public Interest. Baltimore: The Johns Hopkins Press.

40

Davenport, T.H., and Beck, J.C. 2001. The Attention

Economy: Understanding the New Currency of Business.

Cambridge: Harvard Business Press.

41

Knutson, B. 2011. “Present Versus Future Self.” In John

Brockman, Is the Internet Changing the Way You Think?

The Net's Impact on Our Minds and Future. New York: HarperCollins.

42

Frey, C.B., and Osborne, M.A. 2013.

10 BATTEN BRIEFING INNOVATORS’ ROUNDTABLE REPORT

of information competing for our mind space. Our attention spans are shrinking. As social scientist Herbert Simon presciently wrote in the 1970s, “A wealth of information creates a poverty of attention.”39

More than ten years ago, the authors of The Attention Economy declared attention to be the most valuable currency of business and individuals.40 That was before Face-

book, YouTube, Instagram and Twitter. Brian Knutson, a professor of psychology

and neuroscience at Stanford University, imagines a near future in which “the In-

ternet may impose a ‘survival of the focused,’ in which individuals gifted with some natural ability to stay on target, or who are hopped up on enough stimulants, forge ahead while the rest of us flail helpless in a Web-based attentional vortex.” 41

Attention management may well be the Darwinian imperative for the Second Machine Age.

JOBS SUSCEPTIBLE TO AUTOMATION WITHIN THE NEXT TWO DECADES

1 = AUTOMATION CERTAIN

.004

LEAST SUSCEPTIBLE

Elementary School Teachers

.003

.005

Recreational Therapists

Mental Health Counselors

.009

.99

Cooks, Restaurants

.96

.65

.018

Librarians

Pharmacists

.99

.98

Writers & Authors

Bartenders

.77 Tax Preparers

.86

Brokerage Clerks

.038

Insurance Underwriters

Watch Repairers

.99 .97

Accountants & Auditors

Dental Lab Technicians

.94

.042

.99

Real Estate Sales Agents

Environmental Engineers

.012

Computer Systems Analysts

.92

Chief Executives

Clergy

.007

Retail Salespersons

Telemarketers

.008

Physicians & Surgeons

Jobs HIGHLY SUSCEPTIBLE

Registered Nurses

.015

.004

MOST SUSCEPTIBLE

Software Developers, Apps

Legal Secretaries

.014

.98

Marketing Managers

.98

Loan Officers

.039 Advertising Managers

Carl B. Frey and Michael A. Osborne of the University of Oxford argue that the “safest jobs”—the ones that are impossible to automate—are associated with high levels of education and high wages.42 Those jobs require high-level cognitive skills and creative, social and emotional intelligence.

Source: Carl B. Frey and Michael A. Osborne

11

THE INNOVATORS’ ROUNDTABLE

CORPORATE MEMBERS

For the past four years, senior executives from some of the world’s largest and most innovative companies have been coming to Charlottesville, Virginia, to talk about innovation. They are members of the Innovators’ Roundtable, an initiative of Darden’s Batten Institute for Entrepreneurship and Innovation. They meet in a highly interactive and candid environment to share best practices, discuss common challenges and explore the latest

CORNING INC.

DANAHER

Gary S. Calabrese

John Boyland

Senior Vice President, ​

Vice President, Engineering R&D

Global Research

for Kollmorgen

DUPONT Karin G. Weining Innovation Excellence Leader, Corporate Marketing and Sales

EASTMAN CHEMICAL Tim Dell Vice President, Innovation, Marketing Strategic Sales

research on corporate innovation.

JOHNSON & JOHNSON

MEADWESTVACO

Neil Sadler

Teresa Krug

Global Creative Director,

R&D Director, Paperboard ​

Consumer Health Care

Materials

DuPont, Eastman Chemical, Johnson &

NOVARTIS

Johnson, MeadWestvaco, Novartis and

Hugh O’Dowd

SIEMENS CORPORATE TECHNOLOGY

The fifth gathering of the Innovators’ Roundtable, hosted by the Batten Institute on 17 April 2014 at Montalto, overlooking Monticello, brought together executives from Corning, Danaher,

Siemens. This Batten Briefing expands on

Senior Vice President,

Kurt D. Bettenhausen

the themes that emerged during the af-

Chief Commercial Officer,

Senior Vice President

ternoon discussion facilitated by Darden

Novartis Oncology

Professor Michael Lenox.

DARDEN FACULTY LEADERS

c o p y r i g h t i n f o r m at i o n BATTEN BRIEFINGS, January, 2015. Published by the Batten Institute at the Darden School of

Edward D. Hess

Jeremy Hutchison-Krupat

Professor of Business Administration,

Assistant Professor of Business

Batten Executive-in-Residence

Administration

Michael J. Lenox

Jeanne M. Liedtka

Samuel L. Slover Professor of Business,

United Technologies Corporation

Associate Dean for Innovation Programs

Professor of Business Administration

Business, 100 Darden Boulevard, Charlottesville, VA 22903. email: batten@darden.virginia.edu www.batteninstitute.org ©2015 The Darden School Foundation.

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and Academic Director, Batten Institute