Put your trust in crowd sourcing and big data, McAfee urges keynote crowd

MIT's Andrew McAfee says the idea that companies should focus on their core competencies is coming into question.

Ditch conventional wisdom and write a new business playbook based on artificial intelligence, crowd sourcing, and public platforms, tech guru Andrew McAfee told the keynote crowd at Modex Tuesday morning. McAfee, a principal research scientist at the Massachusetts Institute of Technology's Sloan School of Management and co-founder of the school's Initiative on the Digital Economy, shared some lessons from his most recent book, Machine, Platform, Crowd. The book should actually have been named "business advice we shouldn't believe any more," because the extreme rate of change in today's digital economy is transforming some basic assumptions about how companies succeed, McAfee said.

That change is impacting businesses at every turn, beginning at the fundamental process level, where conventional wisdom holds that computers should be used for routine mathematical decisions while humans make the judgment calls, he said. However, recent advances in big data and artificial intelligence have allowed computers to outperform humans at making complex decisions, such as the Google DeepMind computer that recently beat the world's best player of the ancient, strategic board game "Go."

The trend can also be seen at the company level, where firms have traditionally been encouraged to focus on their core competencies and delegate the rest to outsiders. That advice has now been overturned by the performance of crowd-sourced initiatives in areas like genome coding and stock picking, where undiscovered experts—known as "diamonds in the dark"—have outperformed traditional experts, he said.

Finally, the rise of the digital future has made tracks at the industry level, where a series of examples have put the lie to the age-old assumption that there is no substitute to building up a deep knowledge of one's precise niche. Witness ride-hailing apps like Uber, home-sharing platforms like Airbnb, and Apple Inc.'s decision to open the iPhone app store to public developers, McAfee said. The new playbook for business success calls for a new series of operating rules and a greater confidence in the capability of machines, platforms, and crowds, he said.