Category Archives: Digital Business

Machine. Platform. Crowd. The three most influential words in the new economy?

Over the last decade, MIT Sloan researchers Erik Brynjolfsson and Andrew McAfee have become adept navigators of our digital future, and their most recent book, Machine Platform Crowd: Harnessing our Digital Future pretty much guarantees their place at the helm. The best selling authors of The Second Machine Age (2014) have taken the lead in making sense of the technological advances that are confounding the rest of the world.

In their new work, McAfee and Brynjolfsson, codirectors of the MIT Initiative on the Digital Economy, help the average citizen understand what the integration of machines, platforms, and crowds will mean to our collective tomorrow. Robots are front and center in that digital future-scape. The authors talk about restaurants in which customers order, pay for, and receive meals without interacting with human employees. Ordering, they point out, is something that a robot—or a computer interface—can accomplish very adeptly if the programming is smart enough.

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Smart phones are outwitting poverty

Alexander Graham Bell would be astonished at the power of today’s smart phones. Yes, the app that makes it possible to find a Starbucks along an unfamiliar highway can feel like a miracle, but the true revolutionary power of the telephone is felt most in developing countries. In Kenya, for example, the mobile phone has, to some extent, stabilized the economy for many citizens and transformed quality of life.

Nearly all Kenyan households own at least one mobile phone—not state-of-the-art smart phones, but phones “smart” enough to accommodate at least one M-Pesa account. Available to any customer of Safaricom, Kenya’s mobile network leader, M-Pesa is a money transfer service that allows a daughter at one corner of the country to send money safely and securely to her mother in a village seven hours away. Previously, she would have entrusted an envelope of cash to a bus driver heading to her mother’s village (at considerable risk) or relied on a money transfer that took days—and a daunting amount of red tape—to process.

Of course, to withdraw funds through an M-Pesa account you must have access to an agent who can disperse the cash. Happily, in response to the popularity of M-Pesa, the network across Kenya has mushroomed to 150,000 agents. Working with Innovations for Poverty Action, Associate Professor of Applied Economics Tavneet Suri, a native Kenyan, and her colleague William Jack have been tracking incomes in regions where new agents have opened for business. They compared the financial health of those regions with that of regions where agents are not as accessible.

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Matchmakers: Finding marketplace compatibility for multisided platforms

We live in a world of matchmakers. Airbnb matches people needing a room to people with an extra to rent. Lyft matches people needing a ride to people with a vehicle and an empty seat. eHarmony matches people looking for love with other people looking for love. The bottom line is, quite simply, supply and demand…with a twist. Multisided platforms are about matching one set of customers with another set of customers. And truth be told, bringing two customer groups together does not always result in a match made in heaven.

In their book Matchmakers: The New Economics of Multisided Platforms, MIT Sloan Dean Emeritus Richard Schmalensee and coauthor David S. Evans, explain how successful matchmakers excel and how entrepreneurs in this realm can improve their chances of survival. Schmalensee and Evans were among the first economists to analyze this marketplace and have consulted for some of the most storied platform businesses in the world.

Rich with stories from phenomenal winners and ignominious losers, their much-talked-about book guides the reader through this complex area of enterprise.

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In “The Conversational Firm,” MIT Sloan’s Catherine Turco Looks at Motivating a Millennial Workforce

Is it possible for a company to shed some of the key trappings of traditional bureaucracy and still be competitive in the marketplace? Catherine J. Turco, an associate professor of work and organization studies at MIT Sloan, went undercover for ten months at a fast-growing social media marketing company to find the answer.

In her illuminating new book The Conversational Firm: Rethinking Bureaucracy in the Age of Social Media, Turco takes an in-depth look at a young enterprise called TechCo, a pseudonym she uses to protect the identity of company and employees. She finds that TechCo has developed a deeply engaged workforce by promoting open company-wide dialogue. That sense of freedom, she notes, has contributed to a culture that is invested, innovative, and adaptable to change. She calls this new style of company “the conversational firm.”

One of the principal tools of the conversational firm, Turco reports, is social media. TechCo provides its employees—who are primarily millennials—with social media vehicles so that they can offer input into major business issues. Because millennials relate to the world through social media, she says, it only makes sense that they would feel comfortable relying on apps to register ideas and opinions in the workplace.

In The Conversational Firm, Turco leverages her interviews with 76 employees, her attendance at hundreds of company meetings, and insights from cultural and economic sociology, organizational theory, economics, technology studies, and anthropology, to portray a company that has found a way to be open without relinquishing control.

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What bumps in the road lie ahead for autonomous vehicles?

Rubber bumpers, airbags, shatterproof windshields—such were the hallmarks of vehicular safety before the advent of the driverless vehicle. For the passenger in a driverless car, however, it’s the software, first and foremost, that must be crash-proof. In a recent editorial in Xconomy, Lou Shipley, a lecturer at the Martin Trust Center for Entrepreneurship at MIT Sloan, cautions that in the production of autonomous vehicles, the management of software supply chains must be as reliable as the rigorously tested supply chains for mechanical parts.

Lou Shipley“Beyond being efficient, software providers for driverless cars will surely face requirements to certify that the code they deliver is free of security vulnerabilities that, if exploited, could enable a hacker to seize control of the vehicle,” Shipley says. “A faulty spark plug is one thing. Suddenly having your steering, acceleration, and braking hijacked is quite another.” He points out that many software fixes will take place remotely, the way that an Apple technician in Cupertino can now patch an iPhone in Sri Lanka—via cyberspace.

Bottom line, Shipley says, the success of autonomous vehicles will depend on whether drivers feel comfortable giving up the wheel. “Motorists’ willingness to hand over that control to software will depend largely on carmakers’ ability to gain their trust.” He notes that consumers have already shown some comfort with automated transportation. “Airline passengers today don’t seem to worry about automatic pilots guiding airplanes through the sky and even landing them when visibility is poor.”

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Annual EmTech Conference—a window on the digital frontier

Every fall, technology, business, and culture converge at MIT for the EmTech Conference, organized by MIT Technology Review. The 16th annual EmTech, which takes place October 18-20, 2016, at the MIT Media Lab, will offer participants a look at what’s just over the horizon in the digital world. Those present will also get the opportunity to meet and network with the entrepreneurs who are poised to bring those innovations to the world stage, including MIT Technology Review’s35 Innovators Under 35”—the guiding lights of the digital frontier.

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The MIT Media Lab, venue for the 2016 EmTech Conference

 

EmTech 2016 will examine the year’s most significant news on emerging technologies in sessions such as:

The Robots Among Us

Breakthroughs in robotics are giving machines the skills they need to work side by side with humans. Find out how humans and machines can learn from one another.

The Future of Energy

Climate change, driven in part by the demand for energy, is one of the greatest challenges of our time. Find out how emerging technologies can help create and store sustainable power.

AI’s Next Leap Forward

Artificial intelligence has had an impact on every industry. Find out how collaboration— with one another and with intelligent systems—can advance work, life, and commerce.

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Platform companies: Does the chicken really come before the egg?

Platforms make the digital world go round. Apple, Microsoft, Google—they’re all platform companies. So are billion-dollar startups like Uber and Airbnb.

cusumanoBut what exactly is a platform? MIT Sloan Professor Michael Cusumano, who teaches internet entrepreneurship, among other IT-related management subjects, explains. “Platforms are foundation technologies or services that bring multiple people together for a common purpose. Platforms are where we find each other or where we transact business that would be difficult without that intermediary component. Computers, the internet, and other digital technologies have enabled companies and governments to create truly global platforms. They can perform an almost unlimited number of activities and grow at a pace never before seen in human history.”

The classic chicken and egg dilemma

Cusumano notes that, at the outset, every platform company faces the classic chicken and egg problem. “Airbnb guests won’t rent rooms unless a lot of people make their rooms available to rent. But people won’t offer rooms on a website unless it has a good reputation and a deep pool of desirable consumers. How is a brand new company supposed to establish the reputation it needs to draw both chickens and eggs?”

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“Speed-dating” for job hunters reinvents the search

Fremont-Smith It’s called Happie, and even before reaching its one-year anniversary, the pioneering job search startup has earned a right to the name. Happie leverages digital matchmaking innovations to connect job hunters with employers more speedily and productively than conventional online systems. Founder and CEO Jennifer Fremont-Smith, SF ’10, calls it “speed-dating for job hunters,” and her inventive model has caught on quickly. Already, more than 300 employers are working with the site, and the number of Happie job seekers has climbed into the thousands.

Fremont-Smith’s premise was this: prospective employers and employees today feel very much at home in the digital environment. “It’s where they bank, communicate with friends and family, and access their entertainment,” Fremont-Smith notes. “They’re also used to posting selfies and videos, so creating an arena where job hunters and providers can meet and chat via video falls well within the contemporary comfort zone. And in the potentially stressful job search realm, those familiar tools make for a welcoming experience.”

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Finding new ways to connect with consumers

Burnout. That was the only word for it. In the early years of the 21st century, marketing professionals were beginning to find that customers had grown immune to traditional promotions. Direct mailings, television advertisements, cold calls—they were all reaching unresponsive audiences suffering from marketing burnout.

BRUCEHALLIGANFor MIT Sloan Fellows classmates and HubSpot cofounders Brian Halligan, SF ’05, and Dharmesh Shah, SF ’06, the marketing crisis inspired an aha moment. Their vision for inbound marketing was born. Instead of begging, pestering, and cajoling customers to listen to your pitch, the duo thought, what if the content you offered was so compelling that people were clambering to get at it? If this sounds obvious today, it’s owing in part to HubSpot’s success. Since the company’s launch in 2006, it has developed a customer base of more than 19,000 in 90+ countries worldwide.

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What’s in that apple? Elif Buluç can tell you.

Don’t think that digital tools can bring you closer to nature? Elif Buluç SF ’08, might be able to convince you otherwise. Buluç is CFO of Anadolu Etap, Turkey’s largest fruit producer and distributor. The company processed 162,000 tons of fruit last year purchased from 150,000 farmers in 3,000 villages across the country. It’s also the first Turkish agribusiness executing its operations within the framework of sustainable agriculture principles.

elifBuluç says that software innovations are making it possible for Anadolu Etap to disclose the specific origins of every piece of produce it brings to market. “The only way to better know the provenance of a piece of fruit is to pick it yourself,” she says. The company worked with a digital development firm to create a revolutionary new enterprise resource planning (ERP) software system that gives the company the ability to monitor every aspect of the growing and processing of fruit.That traceability means that the company—and its consumers—are able to learn where and how the fruit or fruit product was produced.

“Knowing the origins of what they’re eating is important to today’s consumers,” Buluç says. “They worry about safety—especially the safety of the fruit, juice, and baby food they feed their children. Every step of our growing process is digitally recorded, so we can vouch for the full life cycle of every single piece of fruit. That makes full disclosure possible and gives our customers a sense of comfort.”

Monitoring the life cycle of a piece of fruit

The ERP system integrates information from three business units: operating plantations for the growth of fruit (more than 100 varieties), producing processed fruit for the makers of fruit juice and baby food, and selling fresh fruit for consumption. The analysis it generates informs management about the production of every piece of fruit at every plot at every Anadolu Etap plantation as well as the costs and outcomes of production, how much labor was used to produce each crop, climate conditions, and other essential metrics. “We can compare and contrast the success of various methods of planting and processing and quickly course-correct when necessary,” Buluç says. “We learn something every day that allows us to maximize our harvests, boost our productivity, and design new plantations with those lessons in mind.”

Buluç says that she has new reasons to be excited every day about the advances Anadolu Etap is able to achieve because of the continual flow of digital knowledge. “When people think digital, they think it’s a substitute for the human factor. But our digital tools have everything to do with the human factor. They connect the entire Anadolu Etap family, from climate scientists and agronomists to workers in the fields and processing plants. Everyone is part of this network—including the consumer. It’s now possible for us to draw a direct line from the farmer to the consumer. When someone eats a pomegranate that we grow, they know exactly which little rural farm brought it to life.”

Read more about Anadolu Etap’s digital quality control system.