Irving Wladawsky-Berger

Virtual Work Interactions, Context, and Related Subjects

I just read Tripping Down a Virtual Reality Rabbit Hole,- a very interesting NY Times column by technology journalist Farhad Manjoo.  Manjoo recently spent a few weeks testing the Occulus Rift and the HTC Vive, two of the most powerful VR devices on the market. 

“The whole point of virtual reality is to create a fantasy divorced from the physical world,” he wrote.  “You’re escaping the dreary mortal coil for a completely simulated experience: There you are, climbing the side of a mountain, exploring a faraway museum, flying through space or getting in bed with someone way out of your league…  There are some great games on these systems… There are also several useful experiences, like designing your Ikea kitchen in V.R.”

“But if you’re not a gamer and you’re not looking for a new kitchen, V.R. is, at this point, just too immersive for most media.  A few minutes after donning my goggles, I came to regard my virtual surroundings as a kind of prison… I suspect that V.R. will be used by the masses one day, but not anytime soon.  I’m not sure we’re ready to fit virtual reality into our lives, no matter how excited Silicon Valley is about it.”

Manjoo’s reaction brought to mind the work of Karen Sobel-Lojeski, who’s long been studying technology-mediated interactions.  She’s in the faculty at Stony Brook University as well as the founder of the workplace consulting firm Virtual Distance International.  To be effective, she argues, our technology-based interactions must take place within the proper context, defined as “everything around us that helps us to understand who we are, where we are, and what our role is.”  The way VR works, - at least for now, - is by cutting off all real-world context to better immerse us in its simulations, - an experience that as Farhad Manjoo discovered, can be very unsettling.

FinTech and Financial Inclusion

In early June I spent a few days in Mexico City.  The main purpose of the trip was to participate and give a keynote at the 2016 Cumbre de Directores (Director’s Summit), a conference sponsored by Endeavor Mexico in collaboration with the IPADE Business School.  Endeavor is a global not-for-profit organization dedicated to long-term economic growth by supporting high-impact entrepreneurship in over 25 cities around the world, including Mexico.  The Director’s Summit is Endeavor Mexico’s major annual meeting, bringing together over 400 entrepreneurs and senior executives.

My talk was focused on the changing nature of innovation in the digital economy.  A major part of the talk included a discussion of innovations in the digital payments and financial services ecosystem.  My keynote was followed by two separate FinTech panels, where different entrepreneurs discussed the importance of FinTech in Mexico as well as their individual companies’ efforts in the area.  That same evening I attended and spoke at a reception sponsored by Angel Ventures Mexico, an early stage VC firm where I also heard quite a bit about FinTech startups.  My overall impression is that there’s considerable FinTech activity in Mexico, a large portion of which is aimed at financial inclusion.

Every year, the World Bank publishes the Global Findex database, a measure of financial inclusion around the world, including how individuals save, borrow, make payments and manage risks in over 140 countries.  According to their latest report, - Global Findex 2014, - 62 percent of adults worldwide have an account at a bank, at another type of financial institution, or with a mobile money provider, - up from 51 percent in 2011.  The 2014 report also noted that 2 billion adults remain without an account around the world, a 20 percent decrease from the 2.5 billion unbanked adults in 2011. Technology advances, particularly the rapid growth in mobile devices and digital financial services, are the major reasons for these dramatic improvements.

The Global Findex database includes data for each individual country.  Their 2014 data for Mexico showed that about 39 percent of adults had accounts with financial institutions, - a significant improvement over the 27.4 percent of adults with accounts in 2011.  But, Mexico still lags many of its peers in Latin America.  Over half of all adults have financial accounts in Latin America as a whole, significantly above Mexico’s figure.

Platforms and the New Rules of Strategy

Last week I wrote about one of the talks at the annual conference of the MIT Initiative on the Digital Economy, - Only Humans Need Apply by Tom Davenport, based on his recently published book of the same title.  I would now like to discuss another excellent talk at the same conference, - How Platforms Change Strategy by Boston University professor Marshall Van Alstyne, also based on a recently published book, Platform Revolution: How Networked Markets are Transforming the Economy and How to Make Them Work for You, co-authored with Geoffrey Parker and Sanjeet Choudary.  The three also published a related article in the April issue of the Harvard Business Review.

Van Alstyne started out his presentation by noting that back in 2007, seven firms controlled 99% of handset profits: Nokia, Samsung, Ericsson, Motorola, LG, RIM and HTC.  That same year, Apple’s iPhone was born and began gobbling up market share.  By 2015, only one of the former incumbents had any profit at all, while Apple now generated 92% of the industry’s global profits.

What happened? “Is it likely all 7 incumbents had failed strategies, run by clueless management, lacking execution capabilities?,” he asked.  “Or was something more fundamental happening?…  Nokia and the others had classic strategic advantages that should have protected them: strong product differentiation, trusted brands, leading operating systems, excellent logistics, protective regulation, huge R&D budgets, and massive scale.  For the most part, those firms looked stable, profitable, and well entrenched.”  How can we explain their rapid free fall?

We all know the answer to Van Alstyne’s rhetorical questions. “Apple (along with Google’s competing Android system) overran the incumbents by exploiting the power of platforms and leveraging the new rules of strategy they give rise to.  Platform businesses bring together producers and consumers in high-value exchanges. Their chief assets are information and interactions, which together are also the source of value they create and their competitive advantage.”

Learning to Work with Our Increasingly Smart Machines

A few weeks ago I attended the annual conference of MIT’s Initiative on the Digital Economy.  The day-long conference featured a number of interesting talks on the impact of digital technologies on business, the economy and society.  Tom Davenport, - Babson College professor and IDE Fellow, - gave one such talk on technology and jobs, based on his recently published book Only Humans Need Apply: Winners and Losers in the Age of Smart Machines, co-authored with HBR editor Julia Kirby.

Davenport started his talk by noting that over the past two centuries we’ve seen three distinct stages of automation, based on the kinds of jobs that were replaced by machines.  The machines of the first automation era “relieved humans of work that was manually exhausting,” making up for our physical limitations, - steam engines and electric motors enhanced our physical power while railroads, cars and airplanes helped us go faster and farther.

Next came the automation of jobs involving routine tasks that could be well described by a set of rules and were thus prime candidates for IT substitution.  “Era Two automation doesn’t only affect office workers.  It washes across the entire services-based economy that arose after massive productivity gains wiped out jobs in agriculture, then manufacturing.”  It threatened many transactional service jobs that “are so routinized that they are simple to translate into code,” from bank tellers to airline reservations clerks.

We’ve now entered the third era of automation.  Our increasingly smart machines are “now breathing down our necks…  This time the potential victims are not tellers and tollbooth collectors, much less farmers and factory workers, but rather all those knowledge workers who assumed they were immune from job displacement by machines,…” including, - as Davenport and Kirby poignantly remind us, - “People like the writers and readers of this book.”