TrueValueMetrics ... Impact Accounting for the 21st Century

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AUTOMATION JUST AT THE BEGINNING Managing the Bots That Are Managing the Business ... We are just at the beginning of the transformation from an economy dominated by human workers to one dominated by electronic workers. Peter Burgess COMMENTARY Early in my adult life, I developed a deep interest in 'management'. I am not sure what it was that sparked this interest, but, looking back it could well have been the opportunity I had to travel with the Cambridge University Canada Club to North America during two summer vacations while I was at University. For these two years two planeloads ... early Boeing 707s ... ferried around 300 students from London to New York in early June and back again in early September. We were not allowed to 'work' in the USA, but could do so in Canada. The first year, I got a job working for the Foundation Company of Canada in Montreal and the second year for the Austin Motor Car Company of Canada in Toronto. My very first lesson as a first time employee in Canada was that the 'expectation' of productive work from employees was an order of magnitude higher in Montreal than it had been in my ... quite limited ... experience in the UK. I turned up 'on time' the first day and was almost immediately fired. I was on time to 'clock in' but NOT at my work station in my safety gear and ready to work at the 'start time'. Not long before while I was still at school, Esso ... now Exxon ... built at new refinery at Fawley near Southampton in the UK. Unlike most other major construction projects in the UK, the Esso Fawley project was completed on time and without strikes. An English union leader was asked why there were no strikes and work-stoppages during the construction, and his reply was simply that the American managers 'got out in't (in the) field ... saw the problems ... then 'got shoulder under' and helped fix the problems'. This contrasted with the British 'manager' that arrived to the office late, left early and thought that a problem would solve merely by writing a memo blaming someone else ... especially the 'workers'! I remembered this when I was given the job of VP Manufacturing at a company in the USA some years later. I was asked what would be my first priority and my immediated response was to get my 'office' moved from an upstains office block location to the middle of the factory floor in the center of everything and with glass walls! I also moved a daily 'factory management meeting' from 10.00 am to 7.20 am ... the factory started at 7.00 am ... so that the problems for the day could be identified and then actually fixed by 10.00 am. I also embraced something I called 'management by walking around' ... because, though I have training in accountancy, and can read financial reports, they may tell you the results, but they don't tell much about the reasons for the results. A number of quite small changes and the factory production almost doubled in the first month of my management involvement. Using engineering to improve productivity ... or using technology ...has been going on and massively accelerating since the start of the industrial revolution. I do not expect there will be much of a slow-down in technological innovation but more likely even more acceleration. However, what I want to see is the powerful people who manage things to set themselves better goals and then do things to achieve better goals. I am concerned that the business world is still operating with a mindset and with management goals that are more suited to 1850 than 2050. Bluntly put ... more profit for owners / investors does not automatically translate into a better quality of life for people, for society, nor a more sustainable environment, but in fact is now tending to do the exact opposite ... which is unsustainable. I keep reminding myself that the global population was 1.7 billion in 1901 and then 7.1 billion a little more than 100 years later ... with much of the scientific community talking about the need for 3 planets to support all of this population at a decent standard of living. A lot of change is going to be essential ... but rather little sign that it is going fast enough! Peter Burgess
Managing the Bots That Are Managing the Business We are just at the beginning of the transformation from an economy dominated by human workers to one dominated by electronic workers. MIT SMR FRONTIERS ... This article is part of an MIT SMR initiative exploring how technology is reshaping the practice of management. Magazine: Fall 2016 Written by Tim O’Reilly May 31, 2016 Editor’s Note: This article is one of a special series of 14 commissioned essays MIT Sloan Management Review is publishing to celebrate the launch of our new Frontiers initiative. Each essay gives the author’s response to this question: “Within the next five years, how will technology change the practice of management in a way we have not yet witnessed?” Science fiction writer William Gibson once said, “The future is already here. It’s just not very evenly distributed.” You don’t need to wait five years to see how technology will change the practice of management. You just need to study companies that are already living in the future that remains around the corner for everyone else. You must also reframe what you see so that you aren’t blinded by what you already know. Consider Google, Facebook, Amazon.com, or a host of more recent Silicon Valley startups. They employ tens of thousands of workers. If you think with a 20th century factory mindset, those workers spend their days grinding out products, just like their industrial forebears; only today, they are producing software rather than physical goods. If, instead, you step back and view these organizations with a 21st century mindset, you realize that a large part of the work of these companies — delivering search results, news and information, social network status updates, and relevant products for purchase — is performed by software programs and algorithms. These programs are the workers, and the human software developers who create them are their managers. Each day, these “managers” take in feedback about their electronic workers’ performance — as measured in real-time data from the marketplace — and they provide feedback to the workers in the form of minor tweaks and updates to their programs or algorithms. The human managers also have their own managers, but hierarchies are often flat, and multiple levels of management are aligned around a set of data-driven “objectives and key results” (OKRs) that are measurable in a way that allows even the electronic “workers” to be guided by these objectives. And if your notion of management isn’t stretched enough, consider that the algorithms themselves are sometimes the managers — of human workers. Look at Uber Technologies Inc. and Lyft Inc. as compared to an old-school taxi service. Cars are dispatched not by a person but by a “management” program that collects passenger requests in real time and serves them to the closest available drivers. Humans are still in the loop both as workers delivering the actual service and as managers who set the rules of the algorithms, test whether they are working correctly, and adjust them when they are not. Human managers are called in to deal directly with the human workers, the drivers, only under rare circumstances. While it is early in this process, you can make the case that the core function of management has gone from managing the business to managing the bots that are managing the business. Some further implications of this insight include: A typical programmer in a 20th century IT shop was a worker building to a specification, not that different from a shop floor worker assembling a predefined product. A 21st century software developer is deeply engaged in product design and iterative, customer-focused development. For larger programs, this is a team exercise, and leadership means organizing a shared creative vision. Technology is not a back-office function. It is central to the management capability of the entire organization. And companies whose CEOs are also the chief product designers (think Larry Page of Alphabet Inc., Jeff Bezos of Amazon, or Apple under Steve Jobs) can outperform those whose leaders lack the capability to lead not just their human workers but their electronic workers as well. In 20th century organizations, you gained influence by gaining budget to hire more workers. In 21st century organizations, you gain effectiveness through your ability to create more workers — of the 21st century variety. Even in jobs that are not considered “programming jobs,” the ability to create and marshal electronic resources is key to advancement. A salesperson who can write a bot to “scrape” LinkedIn for leads has an edge over someone who has to do it manually. A marketer who can build an online survey or data-gathering app has an advantage over one who has to hire an outside company. A designer/developer who can build a working application prototype is more valuable than a designer who is only able to draw a picture. Managers must become product and experience designers, deeply engaged with customers and their needs, creating services that start out as a compelling promise and get better over time the more people use them, via a “build-measure-learn” process. A service like Uber is based on a deep rethinking of the fundamental work flows of on-demand transportation (what used to be called “taxis”) in light of what technology now makes possible. Before Uber, who would have thought that a passenger could summon a car to a specific spot and know just when they were going to be picked up? Yet that capability was already lying latent in smartphones. There is an arc to knowledge in which expertise becomes embodied in products. Workers can be “upskilled” not just by training but by software assistants that allow them to do jobs for which they were previously under-qualified. “The Knowledge,” the legendary test that London taxicab drivers must pass, requires years of study, yet with the aid of Waze, Google Maps, and the Uber or Lyft app, virtually anyone can become a driver for hire, even in a strange city. There is a lot of fear about technology replacing workers, but in what I call “Next Economy companies,” technology is used to create new opportunities by augmenting workers. We are just at the beginning of the transformation from an economy dominated by human workers to one dominated by electronic workers. The great management challenge of the next few decades will be understanding how to get the best out of both humans and machines, and understanding the ins and outs of who manages whom. This article was originally published on May 31, 2016. It has been updated to reflect edits made for its inclusion in our Fall 2016 print edition. ABOUT THE AUTHOR Tim O’Reilly is the founder and CEO of O’Reilly Media and the organizer of the Next:Economy Summit. He explores the impact of technology on business, work, and society in the weekly Next:Economy Newsletter. TAGS: Artificial Intelligence, Digital, Frontiers Essay Series, Frontiers Fall 2016, Management Technology Recommended A New Approach to Automating Services ... Instead of replacing human workers, software robots are an opportunity to augment their skills. Creating Management Processes Built for Change ... Your business may have processes that work now. Does it have agile processes to help it change? Designing and Developing Analytics-Based Data Products ... The information economy is giving way to an economy focused on analytics-based data products. WHAT TO READ NEXT Related Articles ‘People Analytics’ Through Super-Charged ID Badges Humanyze helps interpret social data so that businesses can identify the best collaborative practices of the most effective people. Foundations of Analytics Strategy The authors of MIT SMR‘s 2016 Data & Analytics Research Report present their findings. Two Questions for Managers of Learning Machines What’s happening this week at the intersection of management and technology. BENNIE VORSTER \| JUNE 2, 2016 Thanks for starting this discussion topic. I think that new IT departments will consist of also people with business, sociology, political and psychology skills to name just a few. How would we manage the bots if it (“they”) write their own algorithms to ensure that the values we want are carried forward into next algorithms (“siblings” / “offspring”)? How to ensure government, economy and policy is not a gamed bot solution… Would these bots go through rebellious stages like humans? @MIT: Thanks for insightful learning place to look for answers.

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