Human predictions about AI winning games are wrong

When Kasparov challenged the IBM chess-playing computer called Deep Blue, he was absolutely certain that he would win.  An article in USA Today on 2 May 1997 quoted him as saying “I’m going to beat it absolutely.  We will beat machines for some time to come.

He was beaten conclusively.

In early 2016 another landmark was reached in game-playing computing, when AlphaGo (DeepMind) challenged Lee Se-dol to a game of Go.  The Asian game is a magnitude more complex than chess, and resulted in Lee making the observation that “AlphaGo’s level doesn’t match mine.”

Other expert players backed Lee Se-dol, saying that he would win 5-0.  In the end he only won a single game.

Now the same team that developed AlphaGo is setting it’s sights on a computer game called StarCraft 2. This is a whole new domain for artificial intelligence because, as The Guardian points out:

StarCraft II is a game full of hidden information. Each player begins on opposite sides of a map, where they are tasked with building a base, training soldiers, and taking out their opponent. But they can only see the area directly around units, since the rest of the map is hidden in a “fog of war”.

“Players must send units to scout unseen areas in order to gain information about their opponent, and then remember that information over a long period of time,” DeepMind says in a blogpost. “This makes for an even more complex challenge as the environment becomes partially observable – an interesting contrast to perfect information games such as Chess or Go. And this is a real-time strategy game – both players are playing simultaneously, so every decision needs to be computed quickly and efficiently.

Once again, humans believe that the computer cannot beat humans.  In the Guardian article, the executive producer for StarCraft is quoted as saying “I stand by our pros. They’re amazing to watch.”

Sound familiar?

If AI can win at a game like StarCraft, it’s both exciting and troubling at the same time.

It will mean that an AI will have to reference ‘memory,’ take measured risks and develop strategy in a manner that beats a human. These three things – pattern recognition (from memory), risk taking, and strategy, are skills that command a premium wage in economies that value ‘knowledge workers.’

In 2015 a research team at Oxford University published a study predicting 35% of current jobs are at “high risk of computerisation over the following 20 years.”  The StarCraft challenge might cause them to revise this prediction upwards.

Making Sense of Current VUCA Levels: Carlota Perez

Among colleagues around the world at the moment, there’s a definite recognition that VUCA is increasing.  One of more interesting theories about why this is happening comes from the work of academic Carlota Perez who has studied long-wave change theories for three decades.  In a nutshell, she believes that we’re currently transitioning from what she calls the “installation period” (where technology is developed) to the “deployment period” (where economic booms occur).  Perez believes that the levels of VUCA we are seeing now are reflective of the transition.

So how do you know when you’re in the gap between the two?  Here’s one metric that she uses to support her view:

During Installation, there is always strong asset inflation (both in equity and in real estate) while incomes and consumption products do not keep pace. This creates a growing imbalance in which the asset-rich get richer and the asset-poor get poorer. When salaries can buy houses again, we will be closer to the golden age.

In many countries around the world there is a profound disconnect between average income and the ability to buy a house. For example in Canada the average home price was $480,743 for July 2016 while the average Canadian employee makes just over $49,000 a year. 

In parts of the UK such as Trafford (and it’s important to note that this isn’t London) house prices are now 8.9 times higher than average wages and 7 times higher in Stockport. In Manchester, the number has risen to 5.1 times in 2015.

In New Zealand the average house price is now six times the annual household income.

One of the other key changes Perez points to as an indicator, is the birth of new economic instruments:

…there need to be innumerable investments and business innovations to complete the fabric of the new economy. Here’s one small example: Millions of self-employed entrepreneurs work from home with uneven sources of income. Where are the financial instruments to smooth out their money flow so they can work and live without anxiety?

This sounds remarkably like the innovations surrounding the deployment of blockchain, where one of the best quotes that I’ve heard about this technology is that:

If the Internet is a disruptive platform designed to facilitate the dissemination of information, then Blockchain technology is a disruptive platform designed to facilitate the exchange of value.

Perez quotes two other indicators that can be used to spot the transition: the first is more financial regulation at a global level.  However the complexity at play here is that in a world that is heading away from globalisation, it’s very difficult to bring nations together to agree on these types of initiatives.  It may take another severe financial crisis to induce a global agreement.

The final indicator is increasingly stable industry structures, and I’d argue that currently this is harder to discern.  However one signal may be in the form of  digital consolidation of internet traffic by Google, Apple, Microsoft, Facebook and Amazon.  Most of the world’s internet flows through one of these organisations and they also act as enablers – for example the creation of a store front with Amazon with promotion via Facebook/Google.

Whichever way you look at the current macro global situation, it’s clear we’re not in what Perez calls the “Golden Age.”  Perez herself notes that the Golden Age might not even eventuate, and that patterns from the past might not foretell the future:

Historical regularities are not a blueprint; they only indicate likelihood. We are at the crossroads right now.

McKinsey on foresight in Boards

Although it dates from 2014, this McKinsey article is full of gems for organisations seeking to connect foresight, strategy and innovation at the highest level. It’s a solid five minute read but I’ve culled the absolute highlights below:

Governance suffers most when boards spend too much time looking in the rear-view mirror and not enough scanning the road ahead. Directors still spend the bulk of their time on quarterly reports, audit reviews, budgets, and compliance—70 percent is not atypical—instead of on matters crucial to the future prosperity and direction of the business.
The alternative is to develop a dynamic board agenda that explicitly highlights these forward-looking activities and ensures that they get sufficient time over a 12-month period.

“Boards need to look further out than anyone else in the company,” commented the chairman of a leading energy company. “There are times when CEOs are the last ones to see changes coming.”

Media reporting and chaos

This is a long but very worthwhile read from The Guardian that feeds into some of the reasons why VUCA is increasing.  The key paragraphs are below:

Twenty-five years after the first website went online, it is clear that we are living through a period of dizzying transition. For 500 years after Gutenberg, the dominant form of information was the printed page: knowledge was primarily delivered in a fixed format, one that encouraged readers to believe in stable and settled truths.

Now, we are caught in a series of confusing battles between opposing forces: between truth and falsehood, fact and rumour, kindness and cruelty; between the few and the many, the connected and the alienated; between the open platform of the web as its architects envisioned it and the gated enclosures of Facebook and other social networks; between an informed public and a misguided mob.What is common to these struggles – and what makes their resolution an urgent matter – is that they all involve the diminishing status of truth. This does not mean that there are no truths. It simply means, as this year has made very clear, that we cannot agree on what those truths are, and when there is no consensus about the truth and no way to achieve it, chaos soon follows.

Source: How technology disrupted the truth | Katharine Viner | Media | The Guardian

VUCA gets an ‘S’ and a ‘T’

Eric McNulty is the director of research for Harvard’s National Preparedness Leadership Initiative.  On O’Reilly he’s published a very accessible piece about VUCA (volatility, uncertainty, complexity and ambiguity) where he’s added S and T.

The two additions are system-scale change and ubiquitous transparency, and Eric explains them further:

If VUCA were not daunting enough, I will add two new elements that take us from VUCA to VUCAST. They are system-scale change and ubiquitous transparency.

System-scale change can be seen in four mega-trends that I have been following since 2008. These are what I call “Pillar Trends” because they are global, will affect virtually everyone, have a discernable long-term trend curve (even if final outcomes are not clear), and no single individual or organization can alter their basic trajectory (the pillars are climate change, aging, urbanisation and technology).

Ubiquitous transparency is a direct outgrowth of the last component of system-scale change. You have to assume that almost anyone can know almost anything in almost real time. While this will cause some organizations to try to lock things down more tightly than ever, expectations of transparency will also grow.

I’ve also noticed these two components on the rise – my term for transparency is “the perfectly informed consumer” (however this cannot be added to VUCA to make a better acronym).

Leading in a time of tumultuous change: Our VUCAST world – O’Reilly Media

Complexity and technology

This is an insightful piece from the NY Times about the rise of American tech giants, but it also touches on an issue which increases the VUCA score of the world (my emphasis in bold below):

“What’s happening right now is the nation-state is losing its grip,” said Jane K. Winn, also a professor at the University of Washington School of Law, who studies international business transactions. “One of the hallmarks of modernity is that you have a nation-state that claims they are the exclusive source of a universal legal system that addresses all legal issues. But now people in one jurisdiction are subject to rules that come from outside the government — and often it’s companies that run these huge networks that are pushing their own rules.”

Ms. Winn pointed to Amazon as an example. The e-commerce giant sells both its own goods and those from other merchants through its marketplace. In this way, it imposes a universal set of rules on many merchants in countries in which it operates. The larger Amazon gets, the more its rules — rather than any particular nation’s — can come to be regarded as the most important regulations governing commerce.

Source: Why the World Is Drawing Battle Lines Against American Tech Giants

Working on strategy? Use paper…

If you are working in a strategy team, or trying to grasp abstract and complex relationships, it’s hard to beat the use of paper as a communication method.  While I have three screens on my desk, I still prefer large sheets of paper for the really hard thinking.

Some recent research has supported why this is the case:

In all three tasks, the paper users were significantly more “abstract” in thinking. Digital participants reported preferring concrete rather than abstract descriptions of a behavior–for example, “making a list” would be associated with “writing things down,” rather than the “getting organized” description preferred by those taking the survey on paper.

Digital participants scored higher than the paper participants, on average, in recalling details of both the story and the car data table. But they scored lower on questions of inferred relationships and meaning…

Next time your colleagues suggest writing a strategy using PowerPoint, pull out a pencil…

Source: Screen Reading Worse for Grasping Big Picture, Researchers Find

Strategy, disruption and scanning

This is a long but worthwhile post from a VC taking aim at the overuse of the word ‘disruption’ when it’s linked to strategy.  About half way down the piece is a quote which is worth repeating. It’s from an HBR article written by the former president of PepsiCo:

…most of PepsiCo’s major strategic successes are ideas we borrowed from the marketplace–often from small regional or local competitors.

For large companies that find it hard to innovate internally, it’s worth keeping an eye on smaller ones that are more nimble.

Constantly scanning innovation both in your sector, and in adjacent sectors, is a valuable capability but one that very few organisations invest in. I recall that Texas Instruments used to employ a guy called Gene Frantz who described his role as looking for lunatics within TI with ideas that could spark new directions for the company.

Back to the article that sparked this post – it goes on to close with another great original quote:

Without a strategy you might predict the market and the technology exactly and still lose to someone who does have a strategy.

Source: Disruption is not a strategy | Reaction Wheel

Breaking paradigms – a science story

This article from The Guardian is a long, but excellent read about the health impacts of sugar.  However the story also examines something fascinating – how paradigms change in science:

In a 2015 paper titled Does Science Advance One Funeral at a Time?, a team of scholars at the National Bureau of Economic Research sought an empirical basis for a remark made by the physicist Max Planck: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

 The researchers identified more than 12,000 “elite” scientists from different fields. The criteria for elite status included funding, number of publications, and whether they were members of the National Academies of Science or the Institute of Medicine. Searching obituaries, the team found 452 who had died before retirement. They then looked to see what happened to the fields from which these celebrated scientists had unexpectedly departed, by analysing publishing patterns.

What they found confirmed the truth of Planck’s maxim. Junior researchers who had worked closely with the elite scientists, authoring papers with them, published less. At the same time, there was a marked increase in papers by newcomers to the field, who were less likely to cite the work of the deceased eminence. The articles by these newcomers were substantive and influential, attracting a high number of citations. They moved the whole field along.

In organisations – large or small, formal or informal – it’s easy to get caught in paradigms.  New thinkers, young people and contrarians are essential in challenging accepted assumptions, and for the development of robust thinking that doesn’t fall into the trap of delivering the same outcomes.

Even when confronted with clear evidence that the paradigm is wrong, experts have trouble accepting this, and refute their own work, as evidenced by this other gem from the same article:

The National Heart, Lung and Blood Institute decided to go all in, commissioning the largest controlled trial of diets ever undertaken. As well as addressing the other half of the population, the Women’s Health Initiative was expected to obliterate any lingering doubts about the ill-effects of fat.

It did nothing of the sort. At the end of the trial, it was found that women on the low-fat diet were no less likely than the control group to contract cancer or heart disease. This caused much consternation. The study’s principal researcher, unwilling to accept the implications of his own findings, remarked: “We are scratching our heads over some of these results.” A consensus quickly formed that the study – meticulously planned, lavishly funded, overseen by impressively credentialed researchers – must have been so flawed as to be meaningless.

Just to emphasise this again: The study’s principal researcher was unwilling to accept the implications of his own findings.

This case study should make it into the leadership manual of every CEO when working with their strategy teams.

Source: The sugar conspiracy | Ian Leslie

Strategy from machines and people

The HBR online has published an intriguing piece about the formation of strategy from a combination of information synthesised by people and machines.  In essence, it’s saying that some parts of strategy formulation should be informed by rules (i.e. data) and others by intuition (i.e. people).  the concept is nicely encapsulated in the graphic below.

An integrated strategy machine is the collection of resources, both technological and human, that act in concert to develop and execute business strategies. It comprises a range of conceptual and analytical operations, including problem definition, signal processing, pattern recognition, abstraction and conceptualization, analysis, and prediction. One of its critical functions is reframing, which is repeatedly redefining the problem to enable deeper insights. Within this machine, people and technology must each play their particular roles in an integrated fashion.

 

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Source: Designing the Machines That Will Design Strategy