Silicon Collar – a book review

SUMMARY:

Vinnie Mirchandani has produced a thought provoking book on the impact of machines in the modern world. He poses important questions but doesn’t always leave us with answers. Even so, this is an important addition to the discourse on 21st century technology impacts.

silicon collarWhen Vinnie Mirchandani writes a book, you can be sure of two things: first it will be controversial in one sense or another, and second, it will be stuffed full of stories that support his primary thesis. Mirchandani’s latest work, Silicon Collar – an optimistic perspective on humans, machines and jobs, (pre-order) falls squarely within the tradition he has set, but with something of a twist.

Optimism in a world of gloom

As the title implies, Mirchandani takes the view that the manner in which technology innovation is and/or will impact all our lives is or will be a net good and, contrary to the view of many observers, will bring with it a new age of employment that might be hard to imagine today, but will be exciting and full of promise.

Despite this optimism, Mirchandani is careful to balance his enthusiasm by outlining the theories of some of the leading pessimistic voices. While I remain somewhat skeptical about the overall ‘good’ impact, I am far less agin’ where technology is taking us than I was when Mirchandani first started talking to me about this as a book topic in the early part of this year. I’ll explain why later.

Silicon Collar neatly divides itself into three sections: Machines as Colleagues, Machines as Overlords? and Guiltless Automation and across 11 chapters. The book starts with a prologue – The Allure of Machines and ends with an epilogue – The Allure of the Human Touch. As a structure, this works well and those who prefer to dip in and out rather than follow the linear path of reading can readily take nuggets from anywhere that takes their fancy. That’s what I did on a first pass before working my way through the 250 plus pages on offer.

The stories around the use of sensors and increased use of both advanced and predictive analytics in fields as different as medicine, sports and agriculture are of a kind you’d expect see in a book of this nature and very well documented. In doing so, Mirchandani is careful to point towards the historical heritage from which some of the newer technologies spring. He says of Pixar, the film production company:

These are modern day descendants of the Disney artists who, in 1937, created the first fully animated feature film, Snow White and the Seven Dwarfs. The Xerox copying process had just been invented. The xerography machine in a dedicated room with conveyor belts had been the critical technology for many other animation classics that followed Snow White.

Those perspectives are important because anyone who reads modern media would be forgiven for thinking that many of the new technologies just fell out of the sky, when in reality, as Mirchandani often points out, they have taken decades to come to the point they are today.

Ripe for disruption?

In and amongst, Mirchandani is not afraid to point towards moribund industries and professions. Quoting our own Brian Sommer talking about the accounting profession for instance, he says:

Yet, institutional barriers still try to slow down ‘progress’ in this industry. For example, let’s look at continuous auditing. To an external auditor, continuous auditing could be a nightmare scenario. If such smart technology could check almost every transaction in near-real-time, why would you need an external auditor? If an external auditor had a technology that could audit every transaction, would the auditor be legally culpable for any missed fraud? Auditors have maintained for eons that fraud detection is not the purpose of an audit. That defense worked when all they did was sample a few transactions but that ‘out’ may be going away.

But that risk is nothing compared to the damage automated, continuous auditing could do the auditor’s business model. Many of these firms are designed around hiring piles of recent college graduates who will learn their clients’ businesses and accounting issues via the conduct of audit work. If systems do this work, would accountancies need all of these new graduates? No. Worse, without the billable hours that a bunch of cheap staff auditors generate, auditing firms would also need to rethink their pyramidal staffing/income models, training programs, and partner development tracks.

In that context, Sommer is ringing the doom bell that I have been quietly tinkling away at for over 10 years. And it only gets worse in Sommer’s view. But rather than spoil the punchline I’ll leave readers to go find that out for themselves. But I will say, change takes time and on that, I am in violent agreement with the book.

Closer to home, we can already see the impact of automation on the business models of the Indian heritage outsourcers. Buyers are demanding (and getting) more for less but while many mundane tasks can be automated, Mirchandani is circumspect about the longer term outcomes.

Some outsourcers are indeed preparing for this future. Wipro is using machine learning algorithms to help with its internal help desk support. The firm has now created an AI platform called HOLMES that uses computer algorithms to reduce human effort in many of its customers’ industries. Tata Consultancy Services is working on an AI platform called ignio to help build applications quickly and get more out of its infrastructure management capability. Infosys has announced a major investment in automation capabilities as well.

However, given how labor-intensive these firms are, such automation efforts will only have a tiny impact. A few good operations research experts could easily reduce the insane amount of travel endured by their staff.

The place of policy

For me, one of the most interesting yet troubling parts of the book centered on policy and the place of government in a world where the nature of work is undergoing important changes.

The book attempts to tackle important societal issues. As you’d expect, the changing nature of work is given heavy prominence coupled with the need for new types of skill such as data analysis and creative types across many industries.

Mirchandani discusses the topical and controversial question of a Universal Basic Income, something that was rejected in Switzerland but which has found favor at Y Combinator, the startup firm which encourages and funds very early stage innovation. He concludes with:

So, here is another set of policy questions to ponder: UBI or credits? Or should we use any funds set aside for either model to invest instead in rapid retraining programs that allow workers to transition to new skills to adjust to the previously discussed 24-second shot clock? How about investment in energy, health, and road infrastructure which will generate a new generation of jobs?

A glaring problem

The problem with the arguments that Mirchandani puts forward are that they are rooted in variations of the economic status quo, regardless of whether you are ‘left’ or ‘right’ leaning in your assessment of economic theory.

In that sense, Mirchandani doesn’t consider alternatives to those theories, recusing himself on the grounds that he doesn’t have a good answer to that or, the emerging question of ethics in technology.

Notice that I am posing questions for these societal and governmental matters. I am not arrogant enough to suggest I have many answers. I raise them because they merit vigorous discussion. I am a bit more specific when it comes to enterprise and personal perspectives. Let’s look next at enterprise considerations when it comes to automation decisions.

I get that and can respect that point of view. We are all rooted in our own reality and sometimes it is not easy to consider alternatives, however wild they may seem. Also, it is fair to say that some theories, like those posed at Evonomics or by Umair Haque are tough to parse and, for some, will appear downright alien. But that doesn’t prevent them from being legitimate discourse in a world where the current narrative often appears sterile and I wish that Silicon Collar had opened up that debate beyond the well known thoughts of people like Warren Buffet.

Interestingly, and much earlier in the book, Mirchandani points to research by Denis Pombriant, a well known CRM analyst, who says that when you look at how economic downturns have occurred, it is almost always the result of a major problem with the financial markets and very little, if anything, to do with technology advances.

The glaring hole in these explanations points directly to the failure of governments of many stripes to provide the framework around which markets can operate efficiently but without the inherent dangers of stifling regulation.

Bizarrely in my mind, it’s not a topic of widespread discussion in a year where we have already seen the UK vote to leave the EU and where there is the real possibility of the US experiencing its own version of Brexit in the form of electing Donald Trump as the next President.

Looking back and at current events, it is hard to position Brexit, or the possibility of a Trump presidency as anything other than massive protest votes against the status quo.

At the risk of jumping feet first into a bucket of political crap, I think that Silicon Collar could have delivered a knock out punch to his thesis by looking more closely at the role of government rather than extolling the reader to get off his or her proverbial backside and look at the world of opportunity.

The sad truth for many is that Mirchandani’s vaunted world of opportunity is far from real in 2016. That was painfully obvious during my recent trip to Europe where the mood among the working population I met was far from rosy and gloomier still among those who do not have work. It is all good and well for Silicon Collar to reference the ‘gig economy’ of Uber, AirBnB et al, but it ain’t going to happen any time soon across large parts of the world outside the huge cities.

Those in the UK who genuinely felt disadvantaged did the one thing they could do that was within their power and let elected officials know the ‘sum of their fears.’ The US electorate might follow suit. The fact this is giving rise to all sorts of economic gyrations matters little to those who have ‘missed out’ or who are on the brink of exhaustion from holding down multiple jobs. Those people want to be given hope and while the book points firmly in that direction, the impact outside the cognoscenti is barely perceptible, let along imaginable.

And finally…

Despite my wish for a stronger ending, Silicon Collar is definitely a book to enjoy with plenty to exercise the mind. The raft of anecdotes are skillfully crafted and easily digested, a trick that’s hard to pull off in a business book. In particular, I liked the way Mirchandani pulled together the threads of man and machine from a creative standpoint, ending up with:

Societies evolve differently, and some are blessed with younger workforces than seen in Japan. Others, like the U.S., rely on immigration to keep their workforces vibrant. Every society, however, continues to blend traditional arts and crafts with modern production
and automation. Rug weavers in Turkey, Gaelic teachers in Ireland, glass blowers in Murano, Italy, Shakespearean theater around the world, artisan wares on sites like Etsy and Novice— humans cherish the past, even as we are surrounded by a growing number of machines.

Artisans in the midst of automation—mankind has a long history of cherishing both. We will never get tired of the human touch, no matter how imperfect it may seem compared to the work of machines. More importantly, when man and machine collaborate for excellence, people line up for blocks to pay tribute.

Yup, I can go with that but sincerely hope that as progress is made, and machines move into those numerous mundane and mind numbing tasks, that we end up with a society where the skewing of inequality is narrowed significantly.

Image credit - Story image from the book cover, featured story image via stock photos

Disclosure - Mirchandani quotes or references myself, Jon Reed, Phil Wainewright and diginomica in various parts of the book. Infosys is a premier partner at the time of writing.

    Comments are closed.

    1. Dennis, thanks for a very fair review. Just want to touch on a couple of points you raised

      a) I did not go much into public policy partly because my reading audience tends to be business and tech executives. If anything, I have a request to do a “practitioner” follow up on automation and business process rethink. I covered Universal Basic Income because I was taken aback so many countries are seriously looking at it when my research showed automation gets gradually absorbed by societies. UBI to me represents a fatalistic view that jobless societies are just around the corner. It also made me think about personal responsibility and accountability, which brings me to my next point

      b) I was sympathetic to the Brexit and the frustrated labor in US sentiment before I started research for the book. But as I dug deeper into our jobs economy, I saw so many opportunities (as worker, as contractor, as small biz, as franchisee, as entrepreneur in platforms (iStore, Uber, airbnb etc) and I saw so many 2nd, 3rd, later acts in careers – look at every one at Diginomica, many I know etc, that I am now in the personal accountability camp. You can whine and wait for society to do something or you can go find opportunities for yourself and your family. In the US, the IRS says we reported $ 9 trillion in AGI – mostly comp and small business income. We are not at death’s door, same with most developed economies in world. I want Trump and others to do the real pivot – rather than pander to the angry voter, point out things are actually pretty healthy. We have to keep improving it.

      Having said that, I hope the policy and political discussions don’t take away from the technology message of the book. Machines are making all kinds of work safer, smarter and speedier, and we need to keep embracing them, not be afraid of them. Thanks again!

    2. says:

      I hear you Vinnie and as I said, I respect your enthusiasm, but then I saw for myself over a 6 week period just how tough it is in the UK and Spain away from our relatively privileged world.

      I genuinely believe that a new economics is needed that is far removed from the Keynesian or market-driven narrative of the past 60/70 years. If anything, those experiments have been shown to be wildly inaccurate in their ability to create the kind of equilibrium needed for everyone to have a fair chance and in which the economists believed.

      As you know, the US middle class has been hollowed out the last 20 years and there are no signs it will get any better any time soon, despite the encouraging employment figures.

      The same is true in other economies. I see the dead hand of bureaucracy and the nanny state imposing ridiculous amounts of overhead upon business and the individual in the UK in ways that appall me as someone planning on a return to my home country. I’d hate to be a small business person trying to make things work today.

      Having said that, the books stands on its own merits and I did enjoy most of what you had to say, to the point where I am more hopeful of the benefits you discuss than I was 6 months ago. I’m just not sure over what time horizon those benefits will emerge or the extent to which benefit will flow to those most in need.

    3. Dennis, I spent weekend with a cousin who is married to a former banker before he got tired of that business and ended up with a Kona Ice franchise. He was catering at a political rally and we went along to help him. I saw nothing but excited, smiling customers so different from the constant complaints he heard as a bank manager. It’s physically demanding in FL heat. Talk about a radically new second act. The Bureau of Labor Stats shows 850 occupations and does not even to begin the new jobs the I store, airbnb etc have created. Now may be that is not as true in rural Spain or UK but if you expect life time employment and a single occupation all career long you are a bit delusional. That’s my point about personal responsibility. Keep looking for the next act not just be angry.

      1. says:

        Vinnie – the choices of which you speak may exist in the US for some but they absolutely do not exist in large parts of the world. Following Brexit, there were some very interesting follow up documentaries I’ve seen. One talked about the impact of Thatcher’s war on the mining unions in the 70s. Some of those communities have never recovered. Another talked about how Sunderland voted Brexit when the logical economic arguments would suggest that it should not have done so, given its dependency upon Nissan and that company’s threat to leave the UK. It came down to a general sense of people believing that the UKs governing elite have ignored pretty much everything 25 miles north of London and the resulting protest vote. That surely says something fundamental about the economics we have been following for the last 50 years. As for Spain – well you should know that Podemos (Protest Party) polled very well on the last 2 elections – out of nowhere. The town we used to live is has seen almost all its young people leave the country going to places like Germany where the skills they have trained for are in demand. The country’s housing market is still in the doldrums. You can have all the automation and innovation you want but Spain relies on construction and tourism as key planks of its economy. Yet when coastal tourism is held up by antiquated, paper based bureaucratic practices that go back to the Fascist era, then it is hard to see how innovation helps that much.

    4. Bob Warfield says:

      This devolves to the age-old Nature vs Nurture question: can someone learn to be an entrepreneur, or must they be born to it? Vinnie, it is an unprecedented time for entrepreneurs to start businesses that have global reach with relatively little capital thanks to the Internet. But, having tried to help many to become entrepreneurs, I’ve come to suspect it is something you must be born to–it is not easily taught.

      At best, it may require years of cultural change to acclimate people to it. Meanwhile, it isn’t enough to simply say, “Oh, but you have to keep looking for the next gig! Opportunity abounds!” If nothing else, it is disingenuous in a world where the few have colluded with government to destroy the Middle Class.

      If nothing else, being an entrepreneur takes confidence, and it’s hard to come by the confidence if the system breeds fundamental mistrust about whether it’s fair. This lack of confidence in the system is one of the big factors underpinning the malaise of the Millenials. They simply don’t believe that the system rewards hard work fairly any more.

      Dennis, as for your perspective, there is nothing wrong with Keynesian economics. The fact is, what we practice today is not capitalism–it is monopolism and croneyism. We have allowed over-regulation in some areas to be conflated with the idea that true Capitalism requires no-regulation.

      Nothing could be further from the truth. True Capitalism requires but one thing: efficient markets where competition is the norm and everyone has as equal as possible a chance at competing. The more competition we have, the better.

      But in eliminating regulations too over-zealously for the Big Entities that have bought our governments, we have eliminated competition. Even the competition that is the vote of the people to sway the government. In addition, we have over-regulated the small businesses that are the true engines of growth to make their burden impossibly hard.

      A middle ground is needed–a middle ground for entrepreneurship versus following an established career path and a middle ground for regulation and monopoly breakup. The natural forces that control government have shifted to a point where it takes extreme acts such as Brexit even to get any attention. That doesn’t bode well for a smooth transition out of our current mess.

      1. says:

        Well – the UK tried Keynesian economics following WW2 and what we ended up with was a series of booms and busts. You can argue that what the UK got wasn’t true Keynes but there was a genuine effort that was seen by many to have failed. That’s how we ended up with Thatcher and her bastard child Blair who absolutely sold out the working man and woman while all the time corrupting politics and financial institutions to a shameful extent.

        The net result is that there is no discernible government led framework around which business can prosper in a manner that lifts all boats. Instead we have near, unfettered quasi-capitalism with all the horrors that go with it.

    5. Bob, I would agree when it comes to courage to launch a tech startup, put up pressures of funding etc. the skills and attitude are eluusive. But I am talking about many “jobs” our parents never had access to – ios apps developers, Uber drivers, airbnb hosts, work at home eBay businesses, small businesses who take advantage of Amazon fulfillment, all kinds of food, fitness and many other franchises, 1099 work. I like to say we traded our parent’s lifetime employment, 25 year service plates and pensions for a job economy where we have unprecedented occupational mobility and 2nd and 3rd acts. Too many people long for the bygone past and blame greedy corporations when they should just pick up and take advantage of our new world.

      1. says:

        I don’t for one minute believe that we can return to any so-called golden past.

        But what I do believe is that it is incredibly destabilizing to think that careers are marked out in short hops of 3-5 years. You only need to look at the shallow thinking of today’s millennials to realize that what ‘may’ be gained through the illusion of choice (does anyone REALLY want to hold down 2-3 jobs or believe that the gig economy is anything more than sweated labor or the use of surplus assets?) is lost through lack of experience.

        The very fact that a common refrain among us media types is that it is nigh on impossible to find the people skilled in knowing WTF is going on. That makes it hard for us to grow as fast as we’d like and is testament to the dearth of experience. Vinnie – you of all people should know that given what we see and read in our microcosm.

        Is it any wonder there is a thriving cottage industry around ‘be an instant entrepreneur?’ I was gobsmacked earlier this year at the lack of basic business skills at SaaStr among almost every attendee. These are people often with arm loads of cash from some VC outfit or another who demonstrated atrocious, nay non-existent, financial skills.

    6. Den, the 3-5 year job tenure is a growing reality if your look at labor stats. It is a reaction to corporations moving away from lifetime employment, their outsourcing, frequent layoffs etc. They did it because corporate lives used to be 50-60 years now they average 20. So, lives are shrinking – corporate, product, employment. It’s the new normal. In some ways corporate world will become like sports world – 4-5 year player contracts, farm systems, trades etc.

      1. says:

        The new normal as you describe it sounds an awful lot like the kind of short termism that drives extreme ‘winner take all’ strategies that ultimately reduce the spread of wealth. It’s not sustainable in a civilized society.

    7. Den, the short termism helps us a customers. if we can commit to 10 year contracts, corporations may live longer and may hire workers longer. It’s the circle of life – getting shorter.

    8. Unsaid here is increasing network effects.

      Previously canals, steam, electricity, roads, airports, computing devices increased productivity and provided many new jobs where taxes could be levied on the transportation of logistics into higher level goods to provide services like education. Then the internet came along and processes are increasingly digitized when combined with nearly perfect network effects producing unintended results.

      Nearly perfect network effects concentrate profits to those with the biggest servers and transfer all risks to the edges and folks doing real world work. Lehman Brothers was a case in point. The music industry is another one. Apple and others are stripping mining all profits and leaving very little for the intermediaries to employee folks or even pay musicians and other content creators.

      http://video.ft.com/2252642544001/The-man-who-would-monetise-the-web/Companies

      We need to update for network effects especially where the conversions happen so quickly taxes cannot be levied, folks paid for work done, and wealth accumulated perfectly with paying taxes.

    9. Clive, let me offer a slightly different pov on what you call network, and what i call new platform based employment. Apple in music, Amazon in publishing, Uber in transport and others are disintermediating incumbent businesses and business models and in each case lowering prices and broadening markets. They are also opening up many new opportunities for workers. I can tell you in publishing, Amazon rewards me with substantially better royalties than publishing houses, especially if I price my Kindle books under $ 9.99. And many more authors can publish freed of the old distribution channel of traditional publishers. Same thing with Uber and Lyft – lots more individuals with cars can drive and supplement income than those who could with medallions in big cities. Now you could argue Apple underpriced iTunes at 99c a pop but it brought tons more consumers into the market which would not have bought complete albums. Amazon, Uber can also be accused of underpricing products, but they are grrowing in a new class of consumers and workers

      1. Vinnie, agree with network effects ability to disintermediate incumbent businesses and business models and provide new opportunities. Nearly perfect network effects get out of hand the 0.1 per cent on Wall Street and other businesses that concentrate profits, invert to pay no taxes, and transfer all risks to the network edges. Innovate, but keep a level playing field not supersized monopoly’s.