What eCommerce Can Learn from “The Second Machine Age”

April 21, 2016

Category: Best Practices

The dystopian movies such as “The Terminator,” and even this year’s “Ex Machina” highlight the potential downside of Artificial Intelligence (AI) and how machines and people might get along (or not get along) in the future. One thing is for sure, though, is that advanced machine learning and automation is here and now, and businesses need to begin to leverage the possibilities for good.

In the 2014 book “The Second Machine Age,” authors Erik Brynljolfsson and Andrew McAfee tell the story of how quickly computers and machine learning are evolving. They tell in detail the story of IBM’s Watson computer and its trials over several years trying to beat a human challenger at Jeopardy. The human competitors, Brad Rutter and Ken Jennings, were certainly formidable ones. In fact, Jennings had won a record seventy-four times in a row in 2004. What is highlighted in this story is just how far AI has come in just a few years. In fact, as the book reports, “In December 2006, shortly after the project started, when Watson was tuned to try to answer 70 percent of the time…it was only able to come up with the right response approximately 15 percent of the time. Jennings, in sharp contrast, answered about 90 percent of questions correctly in games when he buzzed in first.”

But Watson kept learning and kept improving with the efforts of the IBM team, though by 2010 it still had only improved to answering 85% correctly, not quite enough to beat Jennings. Yet, Watson still kept playing and learning and by the time of the match against Rutter and Jennings in 2011, it trounced them both!  The book summarizes the outcome: “Jennings, who came in second, added a personal note on his answer to the tournament’s final question: ‘I for one welcome our new computer overlords. Just as factory jobs were eliminated in the twentieth century by new assembly-line robots, Brad and I were the first knowledge-industry workers put out of work by the new generation of ‘thinking’ machines. ‘Quiz show contestant’ may be the first job made redundant by Watson, but I’m sure it won’t be the last.’”

The business world must learn from “The Second Machine Age” that we need to move faster than ever to stay relevant to our customers and ahead of our competitors.

Most of us know intuitively that we should be doing more to take advantage of technology to automate, optimize and reduce costs, yet we often don’t take advantage of the immense new tools available, or move too slowly to apply them.

In our recent “Manufacturing Commerce & Technology 2020” survey, we learned that 56% of US Manufacturers believe more than half of their orders will be done via eCommerce by 2020, yet offline methods such as Phone, Fax and Sales Reps still top the go-to-market tactics for many organizations. There is a real chance to fall behind here, though, and fall behind quickly. The early adopters of eCommerce are already doing a lion’s share of their orders online, and the number of manufacturers planning to do more than 90% of their orders online will triple by 2020.

How to prepare your Organization:

  1. Seek out new technologies that automate your work, improve your access to data, reduce your costs, and improve your customer experience. Often these can be found in the same place. Think of any processes you have today that involve both offline and online processes — or a mix of manual and machine. Chances are it can be automated, saving both time and money, while also reducing errors and making your customers happier.
  2. Modernize. Move your software to the Cloud. The days of hosting all of your own software and systems are over. Your organization will improve security and reduce costs by moving to the cloud. A recent study by NTT Communications showed that the Cloud has 50% more scalability, 47% lower capital expenses and 45% lower operating expenses than running these technologies in house.
  3. Seek a “Best-of-Breed” approach. Modern API’s enable you to avoid having to pick just a single software suite to solve your business challenges. You can connect all of the best systems via an API, whether they’re eCommerce, PIM, CMS, CRM, ERP or analytics systems – you can connect them with a modern eCommerce system like Four51’s OrderCloud and solve your exact and unique needs. In fact, this is rapidly becoming a best practice. Gartner reports that by 2018, more than 50% of commerce sites will integrate technologies from more than 15 vendors to deliver a digital customer experience.

How does your business stay ahead of the Terminator?  Start adopting modern technologies now, and master them before they master you.