In 2020, Wuhan is expected to account for 6% of worldwide mobile OLED capacity, 3% of mobile LCD capacity and 2% of LCD TV capacity. In 2021, these figures should rise to 9% of mobile OLED capacity and 4% of LCD TV capacity…Since the display industry is still in a period of over-supply, this supply disruption could help further stabilize and increase prices.
Lately I’ve been thinking a lot about where AI fits into corporate strategy and structure. Marc Andreessen recently suggested
…there’s two obvious business models… one is to be a horizontal platform provider [or] infrastructure provider, analogous to the operating system or the database for the cloud. The other opportunity is in the verticals, the applications of AI.
…AI is a platform and an architecture, in the same sense that the mainframe was architecture, the mini computer was an architecture, the PC, the internet, the cloud, have been architectures. We think there are very good odds that AI is the next one of those. When there’s an architecture shift in our business…everything above the architecture gets rebuilt from scratch. Because the fundamental assumptions about what you’re building change. You’re no longer building a website, you’re no longer building a mobile app, you’re no longer building any of those things, you’re building instead an AI engine that is, in the ideal case, giving you the answer to whatever the question is. And if that’s the case, then basically all applications will change. Along with that all infrastructure will change. Basically, the entire industry will turn over again, the same way that it did with the internet, and the same way it did with mobile and cloud. And so if that’s the case, then it’s just it’s going to be like an absolute explosive period of growth for this entire industry.
What does this mean for business? It means incumbents are displaced because their products are no longer relevant. And the products become irrelevant because the service that was being performed is now being delivered in a new way, perhaps by an AI engine running across the organization. Or perhaps the service is no longer being delivered at all because it has become redundant in a world wherein AI engines deliver superior services to what was previously being delivered.
If AI is a feature sitting on top of an already existing underlying service, then AI will eventually be added to most products and services. But it will sit on top of the service and the underlying service won’t actually change much.
I see AI as much more transformational. I see AI reframing the underlying service. In this way, AI creates new services. Entirely different services and experiences than what was previously being offered.
The Bureau of Industry and Security (BIS) issued an interim final rule that imposes a license requirement for the export and reexport of software specially designed to automate the analysis of geospatial imagery. The rule applies to exports and reexports to all countries beyond Canada.
The rule is scheduled to be published on Monday January 6, 2020. But you can read the unpublished rule here.
- In 2020 we will see more disinformation. Deceptively edited videos and photos (“dumbfakes”). Synthetic media (“deepfakes”) will follow in the years to come. A deceptively edited video of Joe Biden signals what’s coming.
- Mind control for the masses – no implant needed
- Statement by T.S. Eliot on the opening of the Emily Hale letters at Princeton
- How we survive the surveillance apocalypse by the ever talented Geoffrey Fowler
- Mass adoption of AR is years away – Facebook’s Chief Scientist Michael Abrash
- Everything you need to know about the CCPA
- Median wage growth at the bottom has been faster in states that recently raised their minimum wage
Earlier this week the Census Bureau released national and state population estimates. Some key take-aways:
- U.S. population continues to slow. U.S. Population increased 0.48% between July 1, 2018 and July 1, 2019. This is the slowest growth rates since 1918.
- Nature increase (births minus deaths) continue to slow. S. births fell 0.9 percent in 2019, the fourth consecutive year of decline. Deaths increased 0.4 percent in 2019. The natural increase fell below 1 million in 2019 for the first time in decades.
- Net international immigration is also declining. Net immigration declined to 595,348 in 2019, the lowest level in a decade. Net international immigration has been declining annually since 2016. China replaced Mexico to become the largest sending country of foreign-born immigrants to the United States as of 2018.
Other interesting details:
- 42 states and the District of Columbia had fewer births in 2019 than 2018. Eight states saw increases in births – Washington (612), Utah (293), Nevada (232), Arizona (175), Idaho (166), Montana (66), Vermont (44), and Colorado (30).
- Four states had more deaths than births (natural decrease): West Virginia (-4,679), Maine (-2,262), New Hampshire (-121) and Vermont (-53).
- The Northeast region saw its population decrease for the first time in decades
- The South, the largest of the four regions, saw the largest numeric growth (1,011,015) and percentage growth (0.8%) between 2018 and 2019
- Ten states lost population between 2018 and 2019: New York (-76,790; -0.4%), Illinois (-51,250; -0.4%), West Virginia (-12,144; -0.7%), Louisiana (-10,896; -0.2%), Connecticut (-6,233; -0.2%), Mississippi (-4,871; -0.2%), Hawaii (-4,721; -0.3%), New Jersey (-3,835; 0.0%), Alaska (-3,594; -0.5%), and Vermont (-369 ; -0.1%).
- Over the last decade, five of the fastest growing states have been in the Mountain states. Utah was the fastest growing state in the country, followed by Colorado (3rd), Nevada (4th), Idaho (6th), and Arizona (7th).
While technological shifts will help shape the future of work, demographic shifts will also define not only what work is, but where to find it. Population growth is slowing at the same time that domestic migration or internal migration (movement between states) is slowing to record low levels. These are some of the demographic trends playing out as the digital economy rolls forward. These trends will interact in interesting ways in the coming years.
Breast cancer is the most common cancer in women worldwide. Early detection and treatment can lower mortality rates. But clinicians still fail to identify breast cancer about 20 percent of the time (false-negative results). Clinicians also identify cancer, when there is no breast cancer present (false-positive results). Studies suggest 7-12 percent of women will receive false positive results after one mammogram and after 10 years of annual screening, more than half of women will receive at least one false-positive recall.
False-negative results provide a false sense of security and could ultimately hinder treatment effectiveness. False-positive results can cause anxiety and lead to unnecessary tests and procedures. Another hurdle in identifying breast cancer is a shortage of radiologists needed to read mammograms.
Researchers have developed an AI system that surpasses human experts in breast cancer identification. Their study results were recently published in the journal Nature.
We show an absolute reduction of 5.7% and 1.2% (USA and UK) in false positives and 9.4% and 2.7% in false negatives. We provide evidence of the ability of the system to generalize from the UK to the USA. In an independent study of six radiologists, the AI system outperformed all of the human readers…We ran a simulation in which the AI system participated in the double-reading process that is used in the UK, and found that the AI system maintained non-inferior performance and reduced the workload of the second reader by 88%.
The study results are promising. The AI system outperformed six radiologists and also lowered missed cancer diagnoses on the U.S. sample by 9 percent and mistaken readings of breast cancer by 6 percent. It also produced results across populations, something many AI systems have yet to produce. The researchers didn’t go as far as to suggest their AI system would replace humans.
The optimal use of the AI system within clinical workflows remains to be determined. The specificity advantage exhibited by the system suggests that it could help to reduce recall rates and unnecessary biopsies. The improvement in sensitivity exhibited in the US data shows that the AI system may be capable of detecting cancers earlier than the standard of care. An analysis of the localization performance of the AI system suggests it holds early promise for flagging suspicious regions for review by experts.
Beyond improving reader performance, the technology described here may have a number of other clinical applications. Through simulation, we suggest how the system could obviate the need for double reading in 88% of UK screening cases, while maintaining a similar level of accuracy to the standard protocol. We also explore how high-confidence operating points can be used to triage high-risk cases and dismiss low-risk cases. These analyses highlight the potential of this technology to deliver screening results in a sustainable manner despite workforce shortages in countries such as the UK.
At the same time, it becomes more difficult to make the case for approaches that are exclusively human. It is hard to imagine patients, insurance companies, and others won’t demand AI systems augment what humans are doing. This is especially true in healthcare. But will also likely become increasingly true in other domains. What tasks would you want humans to do alone if you know that you can get better results (greater accuracy, faster, etc) when human capability is augmented with AI systems.
Humans will need to learn how to incorporate these type of AI systems into their workflow. The next big step for AI seems to be “operationalizing AI.” This is likely a decade in the works, but slowly you will see individuals figuring how to best work within environments that are being redefined by AI systems.
The internet is bifurcating. And it is becoming clear there will be massive ramifications for how global citizens see the world and how companies operate within it.
The last decade was about bringing billions of individuals online. By the end of 2005 there were just over one billion internet users. By 2010, the number had surpassed the 2-billion mark. As we close 2019, the number of global internet users has surpassed four billion, just under 54 percent of the global population. In the early years of this transformation, the focus was on creating an internet that could be accessed in developing countries on developing networks. From Pranav Dixit reporting in Buzzfeed:
“The only times India came up during product discussions was customizing those products on slow and patchy internet networks in developing countries,” said a longtime Google executive who didn’t wish to be named. “What we think of as the ‘internet,’ even 10 years ago, was the American internet, and that is what everybody experienced.”
In recent years, there has been a move to create an internet increasingly customized to its users. As Caesar Sengupta wrote in a Google blog post in 2015:
“Our goal is to bring all Indians online — regardless of income, region, age, gender, or language — and as they come online, we want to make the Internet more relevant and useful for their needs.”
Again from Dixit:
“Over the last few years, Google has made its products available in more than a dozen Indian languages, reworked Android keyboards to work better with Indic language scripts, and even trained its voice assistant to understand Hinglish, a mixture of Hindi and English that millions of Indians use colloquially, which trips up Alexa and Siri regularly.”
The customization and personalization that was so attractive early on has revealed some downside risks as Eli Pariser wrote about in his 2011 book The Filter Bubble: What the Internet Is Hiding from You. As Bill Gates noted in 2017, technologies such as social media, “lets you go off with like-minded people, so you’re not mixing and sharing and understanding other points of view…It’s turned out to be more of a problem than I, or many others, would have expected.” In some ways, algorithms coupled with individuals’ own self-selection have created siloed pools of internet users and driven a type of bifurcation.
Local rules and laws create bifurcation. Europe’s right to be forgotten creates separate internets. China has long maintained state control over the internet there, while Saudi Arabia, Iran and other countries in the Middle East exert similar influence. Turkey’s two-year block of Wikipedia was just ruled unconstitutional by the Turkish Supreme Court. The court voted 10-6 in favor of Wikipedia so the mistake of the ban wasn’t as obvious as we might hope. And Russia has begun testing a national internet system that could enable the country to operate its own alternative sovereign internet.
Governments have obviously realized the power of a connected populous. Many watched the Arab Spring redefine nations in early 2010s. Today, nations like India and Hong Kong frequently turn off the internet in times of public uprising. And as governments turn off the internet to quell protests, users are turning to offline messaging solutions like Bridgefy and FirecChat which use the Bluetooth connectivity of mobile devices to create peer-to-peer mesh networks so that individuals can continue to communicate and coordinate even when communication networks are down. A bifurcating internet that is increasingly state-controlled will lead to greater offline communication and information dissemination, even if it is digital.
Companies also see the inevitability of a splintering internet. Google was widely criticized when it was revealed it was secretly working on a censored search engine project dubbed “Project Dragonfly.” Apple recently took heat for complying with Russia’s demand to show the annexed Crimean peninsula as Russian territory inside of Apple Maps and its Weather app, when viewed inside of Russia.
A bifurcating internet could mean smaller addressable markets for digital products and services. It likely means that local alternatives have longer runways. Most countries want to develop a domestic innovation agenda. A more state-controlled internet likely translates into support for domestic companies. This has long been true in China. Just this week, The Wall Street Journal reported that China’s Huawei received as much as $75 billion in tax breaks, financing, and create resources. A bifurcating internet will likely result in similar dynamics, though perhaps somewhat less pronounced, in more countries. It is a net negative for U.S. tech companies.
Last week I spent time with several teams at Paylocity – a cloud-based provider of payroll and human capital management (HCM) – at their HQ just outside of Chicago. But Paylocity isn’t just a producer, they are also a consumer. Paylocity uses their software platform for their own HCM.
In fact, Paylocity is also their own largest client. While an average Paylocity client has just over 100 employees, Paylocity has over 3,000 employees, making them the largest user on their platform. This creates an interesting environment for experimentation and exploration. It also presents an interesting approach for product development and highlights how cross-department collaboration can be operationally important.
While Facebook’s early motto “move fast and break things,” might now conjure negative sentiment, it also invokes an important Schumpeterian spirit – in order for companies to remain relevant, organizations must reinvent themselves from the inside out. Throughout my time at Paylocity I frequently heard references to, “drink our own wine” or #DOOW – the idea that Paylocity sticks by the quality of their products and services by using them as well. The subtle difference between, “moving fast and breaking things” and #DOOW is accountability. It isn’t enough to break things if that new knowledge isn’t poured back into the product.
Some observations related to #DOOW:
Product Development Can Take Place from the Inside Out
Historically organizations might build a product roadmap by eliciting input from clients. But when an organization “drinks their own wine” they create a feedback environment within the halls of the organization. End-users and developers are nested within the same organization. Developers can get real-time feedback from end-users while also more quickly adjusting to evolving requirements.
Celebrate Breaking Things
The teams I interacted with at Paylocity celebrate breaking new features being rolled out to customers. By catching bugs early in what amount to real-world tests, Paylocity is able to shorten innovation cycles and innovate iteratively.
Massive Cross Department Collaboration
Many organizations talk about cross department collaboration, but true coordination is often scarce. Most executives are experts within their own domains and cross department alliances don’t often transcend the products and services being rendered. But when organizations are building product features from the inside out and “drinking their own wine,” employees must rely more heavily on each other. Cross department collaboration in these instances will help the HCM team get the features they want and ensures developers are building the features their end-user will use.
The #DOOW philosophy has become a core aspect of Paylocity’s value proposition. Paylocity stands by their HCM offerings by relying on the tools they build for others. And as the largest company on the platform, it creates some wonderful dynamics for innovation for themselves and others. It is an organizational approach that is highly conducive to digital products and something we will see more frequently as a result.
It reminds of the origin of AWS. As Ron Miller writes, Amazon “was growing quickly and hiring new software engineers, yet they were still finding, in spite of the additional people, they weren’t building applications any faster. When [Andy] Jassy, who was Amazon CEO Jeff Bezos’ chief of staff at the time, dug into the problem, he found a running complaint. The executive team expected a project to take three months, but it was taking three months just to build the database, compute or storage component. Everyone was building their own resources for an individual project, with no thought to scale or reuse. (I think you can guess where this is going.) The internal teams at Amazon required a set of common infrastructure services everyone could access without reinventing the wheel every time, and that’s precisely what Amazon set out to build — and that’s when they began to realize they might have something bigger.”
By solving internal problems, companies like Amazon and Paylocity are creating solutions that are attractive to other organizations.
How does your organization, or other organizations you’ve seen, “drink their own wine?”
Yesterday Best Buy reported 4Q FY18 results well above Street estimates. Comparable store sales in the quarter were up 9% (domestic) and 9.9% (international), compared with a 3% Street estimate. US comps were especially strong for entertainment (16.8%) and appliances (20.7%). Entertainment was up 26% year-over-year (likely driven by gaming). Appliance sales were up nearly 30% year-over-year and broke a billion dollars in the quarter for the first time. Overall sales were up 13.4% year-over-year with consumer electronics growing 10.3% and the computer and mobile phone category growing 13.4%.
Domestic online sales were up 21.9% year-over-year and were 20% of total domestic revenue in the quarter. We’ve long talked about online sales but at 20% of total domestic sales, it really starts to restructure the business. With 70% of Americans living within 15 minutes of a Best Buy store, in-store pick-up and same-day delivery are key components of growth moving forward. Best Buy has been expanding their same-day delivery services. They’re also expanding their in-home consultation services to help unlock what they see as latent demand.
Best Buy is also planning to close all of its 250 mobile-focused stores by the end of May 2018. These stores were built to leverage growing mobile phone adoption. Today, nearly every U.S. adult (95%) now owns a cellphone, and 77% own a smartphone. At the same time, these stores were also built to create customer convenience but the new convenience is online.
In a letter to employees, Best Buy chief Hubert Joly noted that “the cost of operations in our Mobile stand-alone stores is higher than in our Big Box stores.” Some 55% of Best Buy’s phone stores are within three miles of one of its big-box stores. The larger stores are better positioned to handle the warehousing of online orders that will either be picked-up in store or delivered same-day.
So where’s Best Buy’s Achilles heel? It’s in services. Service revenue was down 9.3% on a year-over-year basis. As online sales increase as a share of total sales, Best Buy will need to grow higher-margin services in order to sufficiently differentiate themselves.