Computers and Business

1. Computers and Business David L. Olson James & H.K. Stuart Professor and Chancellor’s Chair University of Nebraska-Lincoln

2. Moore’s Law • Intel: • Noted that the number of transistors possible on integrated circuits doubled every so often • 2 years? 18 months? • Seems to apply to about everything computer—technology related • Computing speed • Storage capacity • Transmission capability

3. Computer progress(see Moore’s Law) • 1988 Intel 386D processor ran at 8.5 MIPS • First IBM PCs, Microsoft Windows • 1992 Intel 486DX ran at about 54 MIPS • PCs supported Windows 3.1 • 1999 Intel Pentium II over 1,300 MIPS • 2008 Intel Core 2 Extreme 59,000 MIPS

4. Linear vs. Exponential

5. Ray Kurzweil The Singularity is Near: When Humans Transcend Biology NY: Penguin Books, 2005 Singularity – future period when pace of technological change will be so strong that human life will be irreversibly transformed When exponential crosses linear

6. Epochs • Epoch one: Physics and chemistry • information in atomic structures • Epoch two: Biology • information in DNA (DNA evolves) • Epoch three: Brains • information in neural patterns (brains evolve) • Epoch four: Technology • information in hardware and software designs (technology evolves) • Epoch five: Merger of technology and human intelligence • integration in exponentially expanding base • Epoch six: The universe wakes up • patterns of energy & matter saturated with intelligent processes & knowledge (vastly expanded human intelligence spreads through the universe)

7. A Theory of Technology Evolution:The Law of Accelerating Returns • The nature of order: • paradigm shifts are major changes in methods and intellectual processes to accomplish tasks • Each paradigm shift follows S curve • Slow growth, rapid growth, leveling off • Under accelerating returns, paradigm shifts occur faster • 15 different lists with a lot of overlap • All show decreasing gaps in time

8. Achieving the Computational Capacity of the Human Brain • We’ve had 5 paradigms of computing: • electromechanical calculators • relay-based computing • vacuum tubes • discrete transistors • integrated circuits • Singularity representing profound & disruptive transformation in human capability in 2045 • nonbiological intelligence created will be 1 billion times more powerful than all human intelligence today

9. BRAIN Very slow Massively parallel Rewires itself Details random Emergent Imperfect Evolution Patterns important COMPUTERS Fast (electricity) Can be parallel Humans wire Deterministic Programmed Achieving the Software of Human Intelligence:How to Reverse Engineer the Human Brain

10. Genetics, Nanotechnology, Robotics • Designer baby boomers • Can we really live forever? • Somatic gene therapy • enabling us to change genes by infecting them with new DNA, creating new genes • Kurzweil speaks badly of manipulating human life • but takes 250 pills per day • Solving world hunger • we would not be creating the entire animal but rather directly producing the desired animal parts or flesh.

11. Nanobots - 2004 • used for mission-critical software systems • control nuclear-power plants • 911 • ICU • land airplanes • guide missiles

12. Artificial Intelligence • Expert systems, Bayesian nets, Markov models, neural nets, genetic algorithms, recursive search • Applications • military & intelligence, space exploration, medicine, science & math, business finance & manufacturing, speech & language, entertainment & sports

13. Singularity our destiny • We can live forever • evidently freezing an existing population that will never die nor procreate • We are becoming Cyborgs • Transfer to nonbiological experience • Change • Warfare • Work

14. Intertwined Promise & Peril • Environmentalists • world that has enough wealth and enough technological capability • should not pursue more • The many benefits of progress can always be turned to evil purposes. • The precautionary principle: • If the consequences of an action are unknown but judged by some scientists to have even a small risk of being profoundly negative, it’s better to not carry out the action than risk negative consequences. • Golden rice genetically modified to contain high levels of beta-carotene • precursor to vitamin A, needed to stop African children from going blind. • Greenpeace strongly opposes Golden rice as genetically modified.

15. Criticisms • Malthusian • exponential trends don’t last forever • Computer limits not very limiting • Software limitations • Computer instability, slow responsiveness • Intelligent algorithms are on the way • Analog processing • Computers use digital medium • Idea is to combine digital & analog

16. Criticisms • Ontology • Can a computer be conscious? • What difference – human constructs • Rich-poor divide • Technology makes rich richer • History of technology shows evolution from inefficient/expensive to efficient/cheap (cell-phone) • Holism • Biological is holistic, computers deterministic & modular • With AI can use both

17. In Conclusion… • We are building machines with • Powers far greater than the sum of their parts • By combining self-organizing design principles of the natural world • With accelerating powers of human-initiated technology • The Singularity will occur about 2040

18. Emile Zola (1901) Work • “The machines did everything….What an elevating sight: an army of obedient mechanical laborers with never-tiring stamina…that were now the worker’s friends, instead of their competitors….They liberated instead of exploiting him. While he rested, they did his work.” • Aren’t machines (computers) wonderful?

19. Martin Ford(2009) Create Space Independent Publishing Platform • The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future • What if technology progresses to the point where a substantial fraction of the jobs now performed by people are instead performed autonomously by machines or computers? • People who rely for jobs for income the same as those who buy the products produced

20. Productivity Paradox • Economy hasn’t had expected productivity gains from computers • Greenspan – no noticeable benefit • Brynjolffson– of course they benefit

21. Erik Brynjolfsson and Andrew McAfee 2011 Digital Frontier Press Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy • Computer progress advancing exponentially • AFFECT ON • Jobs • Skills • Wages • The Economy

22. US • Great economic changes • Wages too high • Outsourcing • Computer programming (service) to India • Manufacturing to China • Technology • Robotics – no health benefits, no vacations, no complaints • Computers • ERP systems replacing multiple legacy systems • Layoff most human IT people • Business Analytics • BIG DATA

23. World Wide Web • Innovations • eBay & Amazon Marketplace • Over 600,000 earn living by new products for worldwide market • Apple’s App Store, Google’s Android Marketplace • Easy to implement mobile applications, distribute them • Threadless • Customers create & sell t-shirt designs • Heartland Robotics • Robots-in-a-box • Small businesses can access inexpensively

24. Examples of Innovation • Crowdsourcing • Amazon • Cloud • Innocentive • Commercialized research & development

25. Amazon collaborative systems Crowdsourcing: Mechanical Turk Cloud: EC2

26. Amazon.com • Many unprofitable years in the 1990s • Now highly successful • USER PARTICIPATION • Reader reviews, ratings • Personalized suggestion system • Once toyed with personalized pricing • CLOUD • Can rent storage, software

27. Mechanical Turk • 200,000 participants • Use free time to work for customers • Amazon the broker • Started in 2006 • EXAMPLE • Powerset search site wanted feedback • Through Mechanical Turk, got 100 people to rate results for 2 hours, at $2/hour • Powerset then started Dolores Labs to assess accuracy and speed of Mechanical Turk participants. • Cost $2,000, estimated $30,000 for full-time staffers • Typical worker • Guitar teacher supplements income by 15 hours of work on Mechanical Turk at $3/hour

28. Mechanical Turk Hits

29. Mechanical Turk Examples • Select correct spelling for given search terms • Evaluate website suitability for a general audience • Rate search results for given key words • Evaluate product similarity • Select appropriate category for given products • Categorize an article’s tone • Translate from one language to another

30. Informed Consent Form

31. EC2 • Elastic Compute Cloud • Users can link over web • Utility (web service) • SOA useful, not necessary • Pay/use • Has very large capacity • Competitor to Google, IBM, Microsoft • At least one case where Amazon servers went down, causing grief to users

32. EC2 Operations • Users bid on unused computing capacity • Pay by the hour • Amazon has a fluctuating spot price set by supply & demand • If bidder exceeds spot price, job run and charged • If bid lower than spot price, job terminated until spot price drops to bid price • Enables customers to cap costs

33. EC2 Products • As of April 2010 • 16 Amazon cloud computing products • Services (processing, disk storage, database) • SimpleDB • Simple Storage Service (S3) • Users can store and retrieve large amounts of data at any time • Can make stored data private, public, or targeted • Authentication devices used for security • Billed on monthly pay-by-use basis • In 2010 opened Singapore data center

34. InnoCentive Web-based business Link those with problems (businesses, NGOs, public sector organizations) With those willing to work (over 160,000)

35. Description • Eli Lilly and Company start-up • Spun off to be independent company • CHALLENGES • Ideation challenges - broad questions seeking new ideas. • Theoretical challenges - detailed solution requirements. • Usually, intellectual property rights transfer from the solution provider to the client organization, although some clients prefer a non-exclusive perpetual license. • Reduction to Practice (RTP) challenges - high level of detail • Require solvers to submit validated solutions in the form of original data or physical samples. Clients are allowed to test proposed solutions. Intellectual property rights are always transferred to the client in RTP challenges. • eRFP challenges - requests for proposals to the world. • When solvers submit proposed solutions, clients evaluate responses and select solvers for further details. Terms of subsequent contracts are negotiates for scope of work, duration, etc.

36. Challenges by Discipline • Business and Entrepreneurship • Chemistry • Computer Science and IT • Engineering and Design • Food and Agriculture • Life Sciences • Mathematics and Statistics • Physical Sciences • Requests for Partners/Suppliers

37. Examples5 Oct 2010

38. Purported ValueAdvertises for Seekers (clients) in categories: • Corporationsmight benefit in keeping pace with the dynamic competitive landscape by tapping into the creative talents of those who register as Solvers. InnoCentive argues that since no firm can afford to hire all the best people, an army of hundreds of thousands of individuals are available for ideas. Companies are encouraged to have their employees participate in an open culture of innovation. • Not for Profit organizations might benefit because they have limited staff and budget for research, and InnoCentive offers a platform that only requires payment when useful solutions are found. • Governments might benefit because they also face limited resources due to lower tax bases and higher deficits. • Solvers benefit by taking advantage of opportunities to work on problems sufficiently worthwhile for InnoCentive clients to pay.

39. TRENDS • Networked global economy • Open • Wal-Mart; IBM; Nike • Digitization • Moore’s Law • computing power doubles every 18 months • Metcalfe’s Law • Value of a network increases with square of number of users • Coase’s Law • As transaction costs decrease, firm complexity diminishes • Firms tend to expand until marginal cost of internal transactions = external marginal cost

40. Friedman (The World is Flat) • THREE CONVERGENCES • New players (through global access) • BRIC • New playing field (Web economy) • Global warming • Green emphasis • Cultural conflicts • Ability to develop new ways

41. Megatrends • Energy supply • Peak Oil • Global warming • Complexity • Unintended consequences • Globalization • Japan; Asian Tigers; BRIC • Digitization • Enterprise systems • Paradox: More Integrated Systems ˃˃ Fewer Systems People • DEREGULATION/PRIVATIZATION • Home mortgage crisis • COMMODITIZATION OF PROCESSES • Software as a service

42. Convergence Revolution

43. Evolution & Organizational Innovation

44. New Products/Processes • Component/Product convergence • iPad, Smartphone • Functional convergence • BPR • Matrix organization • Temporary supply chain linkages

45. E-Globalization • Develop Corporate Global Mindset • Build Global Competitive Advantage • AGGREGATION • Seek economies of scale & scope • McDonalds, IBM, Microsoft • ADAPTATION • Maximize local relevance • Mini-IBMs by country, Google China • ARBITRAGE • Exploit differences in national, regional markets • US Headquarters-Chinese factories-Indian call centers-US retail • Organizational convergence

46. Technology Convergence • BIOTECHNOLOGY • Drugs – convergence of pharmaceuticals, agriculture, chemical • Neural technology – convergence of biology, computer technology • MRI/PET scanning – convergence of engineering, biology • NEURAL SCIENCE • NANOTECHNOLOGY • Evidence: • Cell phones – convergence of internet access, music, photography, telecommunications • Microelectromechanical systems (MEMS)

47. Industry Convergence • Two or more previously distinct industries become direct competitors or cooperators • Apple vs. music distributes • Walt Disney – travel convention • FUNCTIONAL • Products of 2 industries linked • PCs & TV • COMPLEMENTARY • Multiple objects of value from 1 location • Travel & lodging (air tickets & hotel rooms, rental cars) • Commercial & Investment banking (post-Glass-Steagall)

48. Industry Convergence Examples • News • Newspapers – disappearing • Network TV swamped by Cable Networks • CNN, ESPN, directTV • Telecom • AT&T breakup • EDUTAINMENT • Education & entertainment • INFOTAINMENT • Information & entertainment

49. Biological & Artificial System Convergence • Application of microtechnology to business • MINIATURIZAATION = computer chips, health care, gene splicing • VISUALIZATION – X-ray, material chemistry • MANIPULATION – virtual reality & tactical feedback • EVALUATION – partition test medium (genome project) • Biotechnology • Genetic modification – US/European debate • Nanotechnology • The science of the very small • SINGULARITY • Ray Kurzweil (2005) • Computers surpass human knowledge

50. Innovation Through Open Systems • Web 2.0 • Openness, participation, collaboration • Service oriented architecture • Strategy to turn applications & information sources from different organizations into SERVICES accessible via Web • IBM: On Demand Business • Hewlett-Packard: Adaptive Enterprise • Dell: Blade computing