People used to be valued for knowing a trade. Then came the industrial revolution and those skills became devalued. Machines took over physical labor and most people either did simple, repetitive tasks or managed those who did.
By the late 20th century, a knowledge economy began to take hold. Workers became valued not for their labor, but for specialized knowledge, much of which was inscrutable to their superiors. Successful enterprises became learning organizations.
Now, we are entering a new industrial revolution and machines are starting to take over cognitive tasks as well. Therefore, much like in the first industrial revolution, the role of humans is again being rapidly redefined. Organizations will have to change the way that they learn and managers’ primary task will be to design the curricula.
First Principles vs. Experience
Knowledge, strangely enough, has been a source of fierce debate for over two thousand years, beginning with a disagreement between Plato and his most famous student, Aristotle.
Plato believed in ideal forms. To him, true knowledge consisted of familiarity with those forms and virtue (which, in a modern terms would have been closer to ability than to morality) was a matter of actualizing those forms in everyday life. Plato would have felt comfortable as a factory manager whose workers carried out instructions to the tee.
Aristotle, on the other hand, believed in empirical knowledge, which you gain from experience. In contrast to Plato, we can imagine Aristotle as a Six Sigma black belt, constantly analyzing data in order to come up with a better way of doing things.
Both methods, the indoctrination of principles and the collection of data have played a role in learning organizations. The difference now is that much of the learning is being taken over by machines.
How Machines Are Learning To Take Over
Not so long ago, we depended on human knowledge for many things, such as setting up travel itineraries, trading financial instruments and buying media that are highly automated today. As we progress, new areas, such as making medical diagnoses, legal discovery and even creative output are becoming mediated by computers.
Perhaps not surprisingly, the algorithms blend Platonic and Aristotelian approaches just like humans do. Initially, their thinking is driven by time honored principles supplied by human experts (sometimes called “God parameters”). Then, as more information comes in, the computer begins to learn from its own mistakes, getting better and better at its task.
This process continues at accelerating speeds. Much like the rise of the knowledge economy empowered knowledge workers, because they had expertise that their bosses didn’t, computers are now coming up with answers that knowledge workers themselves can’t understand. That will prove incredibly disruptive in the years to come.
It also presents a particularly thorny problem: How can organizations empower employees whose skills are being outsourced to the cloud?
Consequences of An Algorithmic Age
Just as the first industrial revolution transformed business and society, this new algorithmic age will bring not just efficiency, but significant, cultural changes. While the future is uncertain, some of the shifts are already becoming apparent:
Bayesian Strategy: The knowledge economy coincided with the rising influence of business strategists. Highly trained executives would analyze business conditions and devise intricate plans for the future. Managerial performance, therefore, was widely evaluated as a function of their ability to “execute the plan.”
However, good strategy is becoming less visionary and more Bayesian. Strategic plans will play a similar role to “God parameters” that will be honed through an evolutionary process of simulation and feedback. Strategists, to a great extent, will become hackers rather than planners.
Brands as Open API’s: One little noted consequence of the knowledge economy is the rise of intangible value, which often far exceeds tangible assets in corporations. Brands, therefore, became tightly controlled assets that were nurtured and protected.
That’s beginning to change as brands are becoming platforms for collaboration rather than assets to be leveraged. Marketers who used to jealously guard their brands are now aggressively courting outside developers with Application Programming Interfaces (API’s) and Software Development Kits (SDK’s). Our economy is increasingly becoming a semantic economy.
Firms ranging from Microsoft to Nike to The New York Times have also created accelerator programs, where young companies get financial, managerial and technical support to come up with new innovations (and potentially, enhance the business of their benefactors).
The Human Touch: While much of the discussion about the rising tide of technology focuses on cognitive skills, Richard Florida argues that social skills will be just as important. Many of the fastest growing professions are those which emphasize personal contact.
As computers take over more of the work, the role of humans will increasingly focus on caring for other humans.
Flying By Wire
Pilots don’t fly planes anymore, not really. Whereas they used to have direct control over the aircraft, now they fly by wire. Today, their instruments connect not to the airplane’s mechanism, but to computers which carry out their commands, modulated by the collective intelligence gained from millions of similar flights.
In essense, pilots perform three roles: they direct intent (where to go, how fast, when to change course), manage knowledge and (rarely) take over during emergencies. Professionals in other industries will have to learn to perform their jobs in a similar way.
The function of organizations in the industrial age was to direct work. The function of organizations in the algorithmic age will be to focus passion and purpose.
Managers, rather than focusing on building skills to recognize patterns and take action, will need to focus on designing the curricula, to direct which patterns computers should focus on learning and to what ends their actions should serve.