MIT Sloan Fellows Blog

The MIT Sloan Fellows Program has educated some of the world's most influential leaders. With this blog we look to share the collective wisdom of our global community of alumni and faculty. Stay tuned to find out what's happening on the international frontier of business and industry.

A robot can drive you to work, but can it advise you on your finances?

The founding father of artificial intelligence Marvin Minsky once said that his ultimate goal was not so much to build a computer he could be proud of as to build one that would be proud of him. MIT Sloan Professor Andrew Lo mentioned this anecdote in a recent piece about financial advisers in The Wall Street Journal. In essence, he poses the question: Can a robot do the job?

Andrew LoLo says that while tech-savvy millennials would be just as happy interacting with an app as with a human adviser, robo advisers can’t take into account the emotion of investors. “When the stock market roils, investors freak out,” Lo explains. “They need comfort and encouragement.” During the recent stock-market rout, he notes that Vanguard Group was so besieged with calls from jittery investors it had to pull staff from across the company to handle the call volume. “Investing is an emotional process,” Lo says, and “robo advisers don’t do emotion.” At least not right now.

Integrating human feeling into the digital advising process is probably the greatest challenge of financial technology. Lo likens the present state of digital financial advising to a rotary phone in an iPhone world. He points out that investing is much more complex and nuanced than tasks like driving, “which is why driverless cars are already more successful than even the best robo advisers.”

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Augmented Reality Summit at MIT Media Lab brings the world’s AR pioneers together on the AR frontier

ARAugmented reality (AR)—a cousin to virtual technology—is quickly making itself indispensable in fields like medicine, architecture, industrial design, and entertainment, especially gaming. For those interested in leveraging the possibilities of AR, MIT’s annual Augmented Reality Summit is the center of the known universe.

AR in Action takes place at the MIT Media Lab January 17 and 18, 2017. The summit convenes the top minds in the augmented reality ecosystem, a diverse group of renowned thought leaders, visionaries, Fortune 100 executives, futurists, technologists, and AR practitioners, including Ethernet inventor Bob Metcalf and personal computer pioneer Alan Kay. Together, they will explore the challenges and opportunities that face inventors, integrators, investors, and other innovators working to bring the benefits of AR to the world.

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MIT Sloan’s Jay Forrester, change-maker and inventor of system dynamics, dies at 98

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Jay Forrester “standing on top of the fruits of his many careers. He’s standing on a device that integrates servomechanisms, digital controllers, and a sophisticated feedback control system.” MIT Sloan Professor John Sterman

“From the air traffic control system to 3-D printers, from the software that companies use to manage their supply chains to the simulations nations use to understand climate change, the world in which we live today was made possible by Jay’s work.” MIT Sloan Professor John Sterman is talking about legendary system dynamics pioneer Jay Forrester, who died November 16 at the age of 98. [Read the full tribute in MIT News.]

A mid-century invention, system dynamics (SD) is the analysis and redesign of any interdependent social, managerial, economic, or ecological system. SD has gained legions of adherents over the decades, and Forrester worked to develop new iterations almost up to the time of his death.

The dynamic Midwesterner arrived at MIT in 1939 with a degree in electrical engineering from the University of Nebraska and quickly grew to become a key actor in the development of digital computing and the national air defense system. He also led Project Whirlwind, a pivotal digital computing project, which led him to invent magnetic core memory, an early form of RAM. Forrester joined MIT Sloan in 1956 with the goal of applying his background in science and engineering to the essential issues that determine the success or failure of organizations.

“To me, Jay was MIT,” MIT Sloan Professor Nelson Repenning observed in a recent MIT Sloan tribute to Forrester. “He showed up to work on gunsights and radar mounts for the U.S. military, ended up playing a pioneering role in digital computing, and suddenly became a social scientist. I can’t imagine that happening anywhere else. It was the perfect match of a unique person [and institution].”

Forrester’s initial SD investigations were calculated by hand. He assembled a team of graduate students to interview employees in a company about how they made decisions at their individual operating points. “By tapping the wealth of information people possessed in their heads,” Forrester said, “we were able to build a model that revealed overall organization behaviors that resulted from the interconnected actions of many local decision-making individuals.”

In the late 50s and early 60s, Forrester and his students began building their simulation models with computers. By translating the policies, information flows, and interconnections of a company into computer instructions, they were able to create a model that could act out individual roles at each decision point. The computer would then feed the results of those actions into other connected decision points, allowing the model to generate the basis for its next round of simulated decision-making. The technology enabled the team to create a laboratory replica of a company that could be used to observe the behavioral consequences of company policies. “What we showed,” explained Forrester, “was that the policies believed to be the solution to the company’s problems were, instead, the cause of those problems.”

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Thomas Kochan offers a new way of working in Shaping the Future of Work

ThomasKochanThe working models that made sense for post-World War II employees do not necessarily work for the employees of today, and MIT Sloan Professor Thomas A. Kochan believes it’s about time those models were updated to fit a dramatically altered world. In his latest book, Shaping the Future of Work, Kochan outlines the steps that business, government, and academic leaders must take so that workers can perform their best work and prosper. These steps, he contends, are necessary for companies to realize positive outcomes and national economies to thrive.

Kochan’s goal is to inspire the creation of more productive businesses that provide good jobs and successful careers, resulting in a more inclusive economy and more broadly shared prosperity. But to revamp the system, he says, workers must acquire new sources of bargaining power and business, labor, government, and educational leaders must work together to meet the challenges and opportunities facing the next generation workforce.

In a recent interview with MIT Sloan News, Kochan raised the example of the Market Basket grocery store chain, where workers staged a successful walkout two years ago after the pro-worker CEO was fired. “It’s going to require a massive effort on the part of the public to do what we saw at Market Basket—to say, ‘This is the kind of company we expect to have competing here in the United States.’”

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The Engine: When you realize you can change the world—but that it may take awhile

Venture capitalists and entrepreneurs lean toward immediate gratification. So does the pharmaceutical industry and, for that matter, society as a whole. Unfortunately, inventions that require a long lead time to develop are often overlooked in favor of projects that promise a quicker pay-off—a phenomenon that may well be holding back disease cures and energy solutions. MIT is stepping up to address this issue with a pioneering new enterprise called The Engine, which will provide funding, expertise, and physical space to innovators studying breakthroughs that may take a bit longer to commercialize.

Picture1MIT President L. Rafael Reif announced the initiative in late October 2016 at The Engine’s headquarters in Central Square, Cambridge. He noted that many innovations never leave the lab because companies have difficulty finding financing. The Engine, he said, will power a grid of innovation networks, supporting startup companies working on scientific and technological breakthroughs that have the potential for transformative societal impact.

“If we hope for serious solutions to the world’s great challenges,” Reif said, “we need to make sure the innovators working on those problems see a realistic pathway to the marketplace. The Engine can provide that pathway by prioritizing breakthrough ideas over early profit, helping to shorten the time it takes these startups to become ‘VC-ready,’ providing comprehensive support in the meantime, and creating an enthusiastic community of inventors and supporters who share a focus on making a better world. We believe this approach can offer exponential growth to regions that pursue it successfully — and we want Greater Boston to lead the way.”

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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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Entrepreneurial Wisdom from UBER CEO Travis Kalanick

For every startup that rises to stardom, many thousands of enterprises go bust. What are the X-factors that determine whether a great idea succeeds the commercialization gauntlet or bottoms out? The Leadership Blog will be investigating that “million-dollar question,” over the next few months. Watch this space for late-breaking wisdom from faculty and MIT Sloan Fellows entrepreneurs around the world.

Uber CEO Travis Kalanick,We’ll kick off this series of posts by looking at the insights of Uber CEO Travis Kalanick, who visited MIT recently. He talked about the traits of indomitable entrepreneurs (of course, he himself can be counted among them).

One of Kalanick’s first nuggets of advice was about reinvention. He pointed out that Uber delivers magic to consumers, affording customers relaxed, dependable, and magical rides. Unfortunately, he said, “We get used to magic. There was a time when running water was magic.” Indeed, he noted, customers’ expectations are perpetually rising, and any enduring company or entrepreneur must continually rise to the occasion and meet those expectations.

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How much is a living wage? MIT Sloan faculty experts weigh in

Arguably, a living wage is the goal of all civilized societies—that is, the amount of money a person needs to maintain a basic standard of living. But what exactly is a sufficient wage? And will increasing the minimum wage create a knee-jerk effect among employers to hit the brakes on hiring?

At present, the hourly minimum wage in the United States is $7.25, and the Democratic Party platform is advocating more than doubling that rate to $15. MIT Sloan asked three of the School’s top economic and labor experts to weigh in on the idea of raising the minimum wage. Here’s what they had to say:

ErikErik Brynjolfsson
MIT Sloan Professor of Information Technology
Director, MIT Initiative on the Digital Economy

Having more people working and earning good wages is good not just for the people we help, but for all of us: People who work are more engaged in community, creating a virtuous cycle. If we do these three things, we’ll be on track to becoming a richer, more engaged, and more dynamic nation.

#1 Expand the Earned Income Tax Credit
Suppose that someone is earning $12 per hour, and we’d like them to earn $15. With an Earned Income Tax Credit (EITC) they’d get an additional $3 per hour worked from the government. The money to pay for this would come from general tax revenue including income taxes, or ideally increased taxes on carbon dioxide emissions, congestion, and other things we’d like to discourage.

#2 Reinvent Education
The wage gap between the most and least educated workers has grown enormously since the 1980s, and better-educated workers also have much lower unemployment rates and higher rates of workforce participation. But it’s not enough to simply do more of the same. We need to reinvent education for an age where machines are increasingly doing cognitive tasks—the second machine age. That means a greater emphasis on skills like teamwork, project management, persuasion, leadership, coaching, and creativity.

#3 Reduce unnecessary occupational licensing
Over 25 percent of workers now require a license to do their jobs, a five-fold increase since the 1950s. While some licenses are important for safety or other reasons, research has shown that excessive licensing requirements reduce employment and mobility.

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Robert McKersie merges management theory and activism

What does advanced management theory have to do with social and economic justice? Everything, according to MIT Sloan Professor of Management Emeritus Robert B. McKersie. In his latest book, A Decisive Decade: An Insider’s View of the Chicago Civil Rights Movement During the 1960s, McKersie reveals how his convictions and his scholarship merged on the front lines of historic events in the civil rights movement—strategy sessions, marches, boycotts, and negotiations.

Robert McKersieMcKersie is best known for his pioneering work in industrial relations. His groundbreaking publications include A Behavioral Theory of Labor Negotiations (with coauthor Richard E. Walton) and The Transformation of American Industrial Relations, honored with the George R. Terry Award by the Academy of Management as the most outstanding contribution to the advancement of management knowledge in 1986. McKersie’s Strategic Negotiations: A Theory of Change in Labor-Management Relations (with Walton and Joel E. Cutcher-Gershenfeld) has been used effectively in the Northern Ireland peace process as well as in Israeli-Palestinian negotiations.

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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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