Saturday, May 03, 2008

The Cognitive Age

quoth Ed;
I noticed you have not discussed the artificial intelligence angle. Who needs to employ a real business analyst when you have computers making up optimized probable scenarios and determining the best path and a fall back plan?

This type of AI is emerging and this will eliminate the need for many White collar workers. What is going to happen is a mass of micro-firms while a lot of middle class people will be left behind.
I agree with this to a very great extent Ed, though I'm less inclined to believe that AI will be the driver as much as the obsolescence of large hierarchical organizations. As you well know, no large hierarchical command and control system can express anything even remotely approaching the cognitive efficiency of small, flexible, and highly incented teams. Not only that, but in a large enterprise, one or two bad apples can exert spoiling effects that extend across the entire enterprise. Given the effects of incumbency and non-merit based promotion decisions, it's an inevitability that the large organization will suffer from scrub parasitization. What is true of the large enterprise is still more true of nations.

David Brooks column y'day in the NYTimes kinda, sorta, faintly - and in a waters testing way - went there (though he clearly played himself with the gratuitous partisan hackery);
The chief force reshaping manufacturing is technological change (hastened by competition with other companies in Canada, Germany or down the street). Thanks to innovation, manufacturing productivity has doubled over two decades. Employers now require fewer but more highly skilled workers. Technological change affects China just as it does the America. William Overholt of the RAND Corporation has noted that between 1994 and 2004 the Chinese shed 25 million manufacturing jobs, 10 times more than the U.S.

The central process driving this is not globalization. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalized sectors, and it would be happening even if you tore up every free trade deal ever inked.
I'll take it a step further Ed. Not only have we entered the cognitive age (arguably, humans have always competed on a cognitive threshing floor) but the way in which small, flexible teams are organized and operate determines whether or not they can realize and benefit from the emergent ne telepathic levels of coordination and complementarity that are possible for optimized teams.

Finally, this emergent phenomenon of micro-firms will pose nearly as significant a governance challenge as the material, biological, and computational technologies with which such firms will be engaged. It's almost like we've entered the era of Goldilocks optimization, not too big, not too small, but just right. There's a lot of opportunity for folks who've prepared themselves to get on with it.