Why Every Company Needs a New Type of Operating System Enhanced with Artificial Intelligence


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Kyield founder Mark Montgomery on top of NM Oct., 2016, taken by Betsy Montgomery with their dog Austin

 

The Amazon acquisition of Whole Foods represents yet another confirmation of our rapidly changing business environment driven by opportunities at the confluence of technology and network dynamics. Although only the latest in a powerful trend initially impacting in this case the grocery industry, the business and technology issues driving the strategy are relevant to most and serves as a reminder that digital convergence is not confined to traditional thinking or industry lines.

A sharp devaluation of public grocery companies followed, so apparently many investors share concerns highlighted in the current HBR article “Managing Our Hub Economy”, which warns that “most companies will not become hubs, and they will need to respond astutely to the growing concentration of hub power”. The devil in the details for management is how to respond astutely. The answer is largely an AI OS.

A recent article at MIT SMR describes the complex operating environment: “The Five Steps All Leaders Must Take in the Age of Uncertainty”:

These ecosystems are nested complex adaptive systems: multilevel, interconnected, dynamic systems hosting local interactions that can give rise to unpredictable global effects and vice versa. Acknowledging the unpredictability, nonlinearity, and circularity of cause-and-effect relationships within these systems is a notable departure from the simpler, linear models that underpin traditional mechanistic management thinking.

One of the reasons for the attention in this latest combination is the integration of virtual networks with physical locations, which has been a priority for many companies, including Kroger, which shares many of the same zip codes as Whole Foods. A few days following the announcement Kroger Chairman and CEO Rodney McMullen revealed that he wasn’t surprised: “you could tell that Amazon wanted to do something from a physical asset standpoint and I think Whole Foods is a great fit for them.” Kroger is a well-managed company known for wise use of analytics, which is reflected in McMullen’s advice to investors: “you should assume that we look at any potential opportunities”.

We needed a new operating system” – Doug McMillion, CEO of Wal-Mart Stores, Inc.

The question is will traditional methods be sufficient moving forward? The answer may be found in part by looking at the world’s largest retailer. Wal-Mart was viewed as one of the most stable companies before Amazon entered their core lines of business, eventually leading to the recent conclusion by Wal-Mart CEO Doug McMillon: “We needed a new operating system”. The company recently paid $3 billion for an e-commerce component of a new OS in Jet.com, which may seem excessive to those of us unaccustomed to managing a half-trillion USD in annual revenue, though represents a relatively minor investment if it works well.

Unfortunately for 99.99% of businesses, investing $3 billion in a native e-commerce platform is not an option, particularly one experiencing significant losses. Very few of the remaining .01% could consider doing so for a partial OS. Even Walmart’s bold actions appear insufficient when we consider that the acquisition of Whole Foods was powered less by the core business of Amazon or Whole Foods than the bold manifestation of what was previously learned, resulting in an entirely new and much better business model in AWS (see article on spinning off AWS). Amazon’s strength is its ability to learn rapidly, recognize potential, and then convert and realize interconnected opportunity to new offerings in a fiercely competitive manner.

Competing in such a hypercompetitive and rapidly changing environment can be especially difficult for companies thinking and behaving in a linear manner. The retraining for me personally that began in our lab in the 1990s was a profound voyage initiating from a relatively high level. The technical training and transition involved a sharp learning curve that has only become steeper and more intense with time.

Native platforms are quite different than corporate networks that have evolved incrementally over decades. Understanding related opportunities and risk many years in advance is a critical challenge. One must peer through an asymmetrical prism constructed from tens of thousands of hours of total immersion and make bold bets that are well timed, particularly with AI systems.

Among many lessons learned is that the network economy is not only interconnected, it is also multidimensional and pre-programmed. When managed optimally and competitively the entire experience of the customer is an obsession with little deference for traditional lines.

Important considerations for an AI OS

1 – A competitive AI OS will be necessary for most to survive

Essentially all the evidence we see with mid-size companies to market leaders across most industries is that a strong AI OS is rapidly becoming the new competitive bar. If a company doesn’t have a competitive AI OS platform and the competition does, it will likely negatively impact the entire organization and each individual within it, as well as customers and partners. Google and Amazon are examples of companies that appear to be employing some functions similar to those found in our Kyield OS. While leadership and corporate strengths are critical, employing advanced AI systems is among the most important improvements any organization can make. The question really is how and when.

2  – An organization OS is not a computer OS

Many different types of operating systems exist. A few minutes of reading my book (condensed version) Ascension to a Higher Level of Performance will highlight the difference between the Kyield OS and a computer OS. The standard system is focused on universal issues common to all organizations, individuals, and networks. We have good reason to believe Kyield is among the world’s competency leaders in knowledge systems, which is a sub-specialty of artificial intelligence.

Our focus is a thin yet broad and very deep specialty with little overlap to most others, including AWS, Azure, and Google (Kyield OS integrates well with most others). Although executed with software, the Kyield OS is a ‘low code’ system compared to a computer OS and more dependent upon data and algorithmics. The system operates in the background with a simple natural language interface for corporate, group, and individual administration. The Kyield OS is transparent, non-intrusive, and interoperable so that any function can be added as needed in a highly efficient manner.

A recent note from a Fortune 50 CXO exemplifies the need from a slightly different perspective in response to our recently released HumCat offering—a new model for prevention for human-caused catastrophes, including cyber prevention.

I like your idea of an Operating System. I’m so convinced that the world is too complex and getting more complex every second that human beings cannot manage it in the right way anyway… Now, it is time (for the Kyield OS), otherwise we are on the hook of dark side of cybernetics—cybercrime or cyberwar and nobody can defend us.

3  –  Reinventing AI system wheels is not wise

As I shared with a Fortune 20 team recently, while it may be extraordinarily easy to underestimate the amount of tradecraft and secrets for such an endeavor, it is nonetheless foolhardy to do so (hence the AI talent wars). Fortunately for our customers, we’ve done the bulk of the heavy lifting. It was two decades ago this year that Kyield was originally conceived in the lab as an authentic invention (Optimizing knowledge yield in the digital workplace).

Many research and consulting reports on AI systems are available, and they have improved significantly over the past two years (See reports by MIT SMR & BCG and Nordea as recent examples), but caution is warranted. Some consulting firms are still advising to start small and experiment in areas that no longer need experimentation. Although generally appropriate five years ago, it is increasingly dangerous today as the competitive gap due to AI systems is expanding rapidly.

A good example of an ongoing experiment was highlighted in the WSJ CIO Journal: “Swiss Re Bets AI Can Help Workers Cope with Complexity of Reinsurance”. The goal is admirable, achievable and sounds impressive until reading the subtitle: “The company’s 100 data scientists and AI experts are building software that can read documents on their own.” This is not a new technology. If the article is accurate it appears that Swiss Re is spending between 10-100 times more for a small fraction of the functionality found in our Kyield OS. Other options also exist for the specific function described that would likely be much more wise than a custom effort.

Our friends at Swiss Re are far from alone. Munich Re publishes an IT radar report (with a nice diagram) based on research that “systematically analyzes opportunities, trends and technologies, and provides an ongoing insight into which technologies could be relevant for Munich Re and our customers from a very early phase”. In the current 2017 report Munich Re places predictive analytics in adoption phase while advanced machine learning and robotics process automation in the trial phase. These and other recommendations may raise some eyebrows. Predictive analytics has been deployed for many years as has advanced machine learning for specific purposes. If one is competing with a technical leader—and increasingly most are, waiting too long can be a fatal error. The first mover position, however, is not always an advantage, so such decisions need to be situation-specific.

4  – Method and sequence of adoption

To date the super majority of investment in AI systems have been strategic resulting in a few notable successes. We have also witnessed large and costly errors, including in M&A, VC, internal development, and in system designs and business models by vendors.

Horizontal systems like our Kyield OS serve as an efficient platform to unify the organization and ecosystem. Ideally a native AI OS should be adopted first. Quite apart from significant IP liability risk, since our standard system is focused on universal issues for every type of organization, with improved productivity, security, and prevention, it is difficult at best to justify internal custom efforts that replicate any of this functionality. Strategic functions are best built on top and/or integrated with our networked platform OS so that the organization and ecosystem operate in an optimal manner.

All is not lost, however, for those who have experimented in overlapping areas. The modules within the Kyield OS creates the data structure needed for compliance and then populates across the network in a manner designed to execute the functionality within the system as efficiently as possible, including for accuracy, integration and financial efficiency.

Conclusion

As important as external competition can be in this environment, the degree to which displacement will occur is dependent on a number of factors. All things being equal otherwise, the outcome primarily depends on the incumbent’s actions, its people, systems, and processes. Even though some companies may seem well positioned, the fundamental economic and business environment is rapidly changing. To the best of my awareness, survival from this point forward will essentially require a strong AI OS for the super majority of organizations.

Mark Montgomery is the founder and CEO of Kyield, originator of the theorem ‘yield management of knowledge’, and inventor of the patented AI system that serves as the foundation for Kyield: ‘Modular System for Optimizing Knowledge Yield in the Digital Workplace’. He can be reached at markm@kyield.com.

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An open letter to Fortune 500 CEOs on AI systems from Kyield’s founder


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Since we offer an organizational and network operating system—technically defined as a modular artificial intelligence system, we usually deal with the most important strategic and operational issues facing organizations. This is most obvious in our new HumCat offering, which provides advanced technology for the prevention of human-caused catastrophes. Short of preventing an asteroid or comet collision with earth, this is among the most important work that is executable today. Please keep that in mind while reading.

In our efforts to assist organizations we perform an informal review on our process with the goal of improving upon the experience for all concerned. In cases where we invest a considerable amount of time, energy, and money, the review is more formal and extensive, including SWOT analysis, security checks and reviews, and deep scenario plans that can become extremely detailed down to the molecular level.

We are still a small company and I am the founder who performed the bulk of R&D, so by necessity I’m still involved in each case. Our current process has been refined over the last decade in many dozens of engagements with senior teams on strategic issues. In so doing we see patterns develop over time that we learn from and I share with senior executives when behavior causes them problems. This is still relatively new territory while we carefully craft the AI-assisted economy.

I just sent another such lessons learned to a CEO in a public company this morning. Usually this is done in a confidential manner to very few and never revealed otherwise, but I wanted to share a general pattern that is negatively impacting organizations in part due to the compounding effect it has on the broader economy. Essentially this can be reduced to misapplying the company’s playbook in dealing with advanced technology.

The playbook in this instance for lack of a better word can be described as ‘industry tech’, as in fintech or insurtech. While new to some in banking and insurance, this basic model has been applied for decades with limited, mixed results over time. The current version has switched the name incubators for accelerators, innovation shops now take the place of R&D and/or product development, and corporate VC is still good old corporate VC. Generally speaking this playbook can be a good thing for companies in industries like banking and insurance where the bulk of R&D came from a small group of companies that delivered very little innovation over decades, or worse as we saw in the financial crisis, which delivered toxic innovation. Eventually the lack of innovation can cause macro economic problems and place an entire industry at risk.

A highly refined AI system like ours is considered by many today to be among most important and valuable of any type, hence the fear however unjustified in our case. Anyone expecting to receive our ideas through open innovation on these issues is irresponsible and dangerous to themselves and others, including your company. That is the same as bank employees handing out money for free or insurance claims adjusters knowingly paying fraudulent claims at scale. Don’t treat the issue of intellectual capital and property lightly, including trade secrets, or it will damage your organization badly.

The most common mistake I see in practice is relying solely on ‘the innovation playbook’. CEOs especially should always be open to opportunity and on the lookout for threats, particularly any that have the capacity to make or save the company. Most of the critical issues companies face will not come from or fit within the innovation playbook. Accelerators, internal innovation shops and corporate VC arms are good tools when used appropriately, but if you rely solely on them you will almost certainly fail. None of the most successful CEOs that come to mind rely only on fixed playbooks.

These are a few of the more common specific suggestions I’ve made to CEOs of leading companies in dealing with AI systems, in part based on working with several of the most successful tech companies at similar stage, and in part in engaging with hundreds of other organizations from our perspective. As you can see I’ve learned to be a bit more blunt.

  1. Don’t attempt to force a system like Kyield into your innovation playbook. Attempting to do so will only increase risk for your company and do nothing at all for mine but waste time and money. Google succeeded in doing so with DeepMind, but it came at a high price and they needed to be flexible. Very few will be able to engage similarly, which is one reason why the Kyield OS is still available to customer organizations.

  2. With very few exceptions, primarily industry-specific R&D, we are far more experienced in AI systems than your team or consultants. With regard to the specific issues, functionality, and use cases within Kyield that we offer, no one has more experience and intel I am aware of. We simply haven’t shared it. Many are expert in specific algorithmics, but not distributed AI systems, which is what is needed.

  3. A few companies have now wasted billions of USD attempting to replicate the wheel that we will provide at a small fraction of that cost. A small number of CEOs have lost their jobs due to events that cost tens of billions I have good reason to believe our HumCat could have prevented. It therefore makes no sense at all not to adopt.

  4. The process must be treated with the respect and priority it deserves. Take it seriously. Lead it personally. Any such effort requires a team but can’t be entirely delegated.

  5. Our HumCat program requires training and certification in senior officers for good reasons. If it wasn’t necessary it wouldn’t be required.

  6. Don’t fear us, but don’t attempt to steal our work. Some of the best in the world have tried and failed. It’s not a good idea to try with us or any of our peers.

  7. Resist the temptation to customize universal issues that have already been refined. We call this the open checkbook to AI system hell. It has ended several CEO careers already and it’s early.

  8. Since these are the most important issues facing any organization, it’s really wise to let us help. Despite the broad characterization, not all of us are trying to kill your organization or put your people out of work. Quite the contrary in our case or we would have gone down a different path long ago.

  9. We are among the best allies to have in this war.

  10. It is war.

Mark Montgomery is the founder and CEO of Kyield, originator of the theorem ‘yield management of knowledge’, and inventor of the patented AI system that serves as the foundation for Kyield: ‘Modular System for Optimizing Knowledge Yield in the Digital Workplace’. He can be reached at markm@kyield.com.

A Million in Prevention can be Worth Billions of Cure with Distributed AI Systems


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DeepWater Horizon Rig, April 2010 (NOAA News)

Every year, natural catastrophes (nat cat) are highly visible events that cause major damage across the world. In 2016 the cost of nat cats were estimated to be $175 billion, $50 billion of which were covered by insurance, reflecting severe financial losses for impacted areas.[i]  The total cost of natural catastrophes since 2000 was approximately $2.3 trillion.[ii]

Much less understood is that human-caused catastrophes (hum cat) have resulted in much greater economic damage during the same period and have become increasingly preventable. Since 2000 the world has experienced two preventable hum cat events of $10 trillion or more: the 9/11 terrorist attacks and the global financial crisis. In addition, although the Tōhoku earthquake in Japan was unavoidable, the Fukushima Daiichi nuclear disaster was also preventable, now estimated at $188 billion excluding widespread human suffering and environmental damage.[iii]

One commonality in these and other disasters is that experts issued advanced and accurate evidence-based warnings only to be ignored. The most famous and costly such example was the Phoenix memo issued on July 10, 2001 by Special Agent Kenneth J. Williams.[iv]  The FBI memo was described as “chilling” by the first journalist who reviewed it due to specificity in describing terrorist-linked individuals who were training to fly commercial aircraft.

Williams was a seasoned terrorism expert who followed the prescribed use of the FBI’s rules-based system, yet during the two-month period prior to the 9/11 attacks no relevant action was taken. If the lead had been pursued the terrorist attacks and ensuing events would very likely have been avoided, including two wars with massive casualties and continuing hostilities.

Government agencies have invested heavily in prevention since that fateful day of September 11, 2001 so hopefully similar events will be prevented.

In corporate catastrophes, however, prevention scenarios are usually more complex than the Phoenix memo case. They are also occurring with increasing frequency and expanding in scale and cost.

The remainder of this article can be viewed at Cognitive World.

View brief video by Mark related to this article and Kyield’s new HumCat product.

Mark Montgomery is the founder and CEO of Kyield, originator of the theorem ‘yield management of knowledge’, and inventor of the patented AI system that serves as the foundation for Kyield: ‘Modular System for Optimizing Knowledge Yield in the Digital Workplace’. He can be reached at markm@kyield.com.

Why the U.S. Must Lead the World with Intelligent Infrastructure


Americans have been through a great deal in the last two decades. In addition to the network effect that consolidated wealth in a few zip codes, we endured rapid globalization that benefited other nations at the expense of our own, the 9/11 terrorist attacks, multiple wars, and the global financial crisis, all within the first few years of this millennium.

To put this series of interconnected events in perspective, the collective shock is roughly comparable to the impact of a small super volcano, a minor asteroid, or a limited nuclear war. Catastrophes of this scale are thought to be of sufficient size to change the course of modern civilization, depending of course upon our response.

The most recent CBO report forecasts the U.S. federal debt at 150 percent of gross domestic product in 2047, which would place the U.S. as the third most indebted nation in 2017 between Greece and Lebanon. This is obviously not where the U.S. wants to be in 30 years. Fortunately, such a decline is unnecessary and well within our power to avoid, though the path is narrow and hazards are many.

Catching up on deferred maintenance is a necessary but insufficient plan for the challenges facing Americans. A modern strategic infrastructure plan should be focused on unleashing the current national economy similar to previous eras with the intercontinental railroad, interstate highway system, or electric grid.

The focus should be maximize benefits from our inventions, engineered systems and technologies to recreate a sustainable competitive advantage. One benefit of lagging behind other countries in infrastructure is that much progress has been made in recent years. Future projects can be embedded with hardware that enable intelligent networks, which can then be managed with distributed operating systems enhanced with artificial intelligence (AI) to meet the diverse needs of our society.

AI systems can substantially resolve many of the destructive forces and high-risk areas facing the modern economy, including the ability to provide far more effective governance in a highly complex data-driven world, prevention of most types of human-caused catastrophes, improved workplace productivity, more effective security, and reversal of the dangerous trajectory in healthcare costs.

In order to realize the full potential of a national intelligent infrastructure strategy, it must be planned in a highly specific manner. Intelligent infrastructure is driven by physics and engineering, which can be easily damaged by misguided or corrupted politics. The value of AI systems is substantially dependent upon the availability and integrity of data. Important priorities include but are not limited to interoperability, security, privacy, business modeling, cost of ongoing maintenance, and adaptability for future innovations.

The combination of technical viability in AI systems with the current macro economic scenario has created a perfect storm for public-private partnerships. Funds with trillions USD under management are in search of improved yields in mid to long-term bonds that offer lower risk profiles and diversification, which allows risk transfer to investors for specific projects rather than tacked on to an unsustainable national debt trajectory. Moreover, the combination of intelligent infrastructure with AI systems can improve productivity, provide attractive return on investment, and create new high paying jobs that will be competitive far into the future.

The federal government should act as the policy and standards body to avoid hard lessons learned in previous national infrastructure programs. A plug-and-play architecture is needed that encourages economic diversification in all states, fosters new business formation and new wealth creation that has the capacity for reversing the increasingly historic wealth gap.

In today’s fast moving hyper competitive world, the U.S. cannot afford to wait a century to unravel the type of monopolies that were cobbled together during the formation of the electric grid. The network economy increasingly represents the entire economy so must be as diversified and dynamic as society if to remain healthy and sustainable.

If the Trump administration and U.S. Congress seize this historic opportunity for a strategic intelligent infrastructure plan, they should find bipartisan support as it can positively impact every zip code in America, which could serve to reunify the nation around common good. Executed well, a strategic intelligent infrastructure plan can serve as a solid foundational platform to solve many of the current and future challenges facing America and the world.

Mark Montgomery is the founder and CEO of Kyield, originator of the theorem ‘yield management of knowledge’, and inventor of the patented AI system that serves as the foundation for Kyield: ‘Modular System for Optimizing Knowledge Yield in the Digital Workplace’. He can be reached at markm@kyield.com.

E-book on AI systems by Kyield


My ebook “Ascension to a Higher Level of Performance” is now available to the public.

Learn about the background of Kyield and the multi-disciplinary science involved with AI systems, with a particular focus on AI augmentation for knowledge work and how to achieve a continuously adaptive learning organization (CALO).

 

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TABLE OF CONTENTS

INTRODUCTION ……………………………………………………………………………………..

REVOLUTION IN IT-ENABLED COMPETITIVENESS …………………………………………..

POWER OF TRANSDISCIPLINARY CONVERGENCE …………………………………………..

MANAGEMENT CONSULTING ……………………………………………………………………

COMPUTER SCIENCE AND PHYSICS…………………………………………………………….

ECONOMICS AND PSYCHOLOGY ………………………………………………………………..

LIFE SCIENCES AND HEALTHCARE……………………………………………………………

PRODUCTS AND INDUSTRY PLATFORMS…………………………………………………….

KYIELD OS …………………………………………………………………………………………..

THE KYIELD PERSONALIZED HEALTHCARE PLATFORM ………………………………….

ACCELERATED R&D: THE LIVING ONTOLOGY ………………………………………………

SPECIFIC LIFE SCIENCE AND HEALTHCARE USE CASES …………………………………

BANKING AND FINANCIAL SERVICES ………………………………………………………..

THE PILOT PROCESS ……………………………………………………………………………..

EXAMPLE: BANKING, PHASE 1…………………………………………………………………

PHASE 2…………………………………………………………………………………………….

PHASE 3…………………………………………………………………………………………….

PHASE 4…………………………………………………………………………………………….

CONCLUSION: IN THIS CASE THE END JUSTIFIES THE MEANS …………………………21

 

Visit our learning center to download this ebook and view other publications from Kyield at the confluence of AI systems, crisis prevention, risk management, security, productivity and organizational management.

Priority Considerations When Investing in Artificial Intelligence


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After several decades of severe volatility in climatology across the fields involved with artificial intelligence (AI), we’ve finally breached the tipping point towards sustainability, which may also represent the true beginnings for a sustainable planet and humanity.

Recent investment in AI is primarily due to the formation of viable components in applied R&D that came together through a combination of purposeful engineering and serendipity, resulting in a wide variety of revolutionary functionality.  However, since investment spikes also typically reflect reactionary herding, asset allocation mandates, monetary policy, and opaque strategic interests among other factors, caution is warranted.

The following considerations are offered as observations from my perch as an architect and founder who has been dealing with many dozens of management teams over the last few years.  The order of priority will not be the same for each organization, though in practice are usually similar within industries.

Risk Management and Crisis Prevention

The nature of AI when combined with computer networking and interconnected emerging technology such as cryptography, 3D printing, biotech and nanotech represents perhaps the most significant risk and opportunity in history.

While the global warnings on AI are premature, often inaccurate, and appear to be a battle for control, catastrophic risk for individual companies is considerable.  For most organizations the risk should be manageable, though not with traditional strategies and tactics.  That is to say that AI within the overall environment requires aggressive behavioral change outside comfort zones.

Recent examples of multi-billion dollar investments in AI include Google, IBM, and Toyota, though multi-million USD investments now number in the thousands if we include internal investments and venturing.  To be sure much of this investment is reactionary and wasteful, but the nature of the technology only requires a small fraction of the functionality to prove successful, which can be decisive in some markets.

For appreciation of the sea change, common functions employed today were deemed futuristic and decades in the future just three or four years ago.  So it’s not surprising that a majority of senior management teams we’ve engaged in the last two years confirm that AI is among their highest priorities, though I must say some are still moving too slow. We’ve observed a wide range of actions from window dressing for Wall Street to confusing to brilliant.

The highest return on investment possible is prevention of catastrophic events, whether an industrial accident, lone wolf bad actors, systemic fraud, or disruption leading to displacement or irrelevance.  Preventable losses in the tens of billions in single organizations have become common.  Smaller events that require a similar core design to prevent or mitigate are the norm rather than the exception, but are often nonetheless career ending in hindsight, and can be fatal to all but the most capitalized companies.  We’ve experienced several multi-billion dollar events in former management teams that likely could have been prevented if they had moved more quickly, including unfortunately loss of lives, which is what gets me up at 3am.

Talent War

An exponential surge in training is underway in machine learning (ML) along with substantial funding in tools, so we can expect the cost of more common technical skills will begin to subside, while other challenges will escalate.

“In their struggle against the powers of the world around them their first weapon was magic, the earliest fore-runner of the technology of to-day.  Their reliance on magic was, as we suppose, derived from their overvaluation of their own intellectual operations, from their belief in the ‘omnipotence of thoughts’, which, incidentally, we come upon again in our obsessional neurotic patients.’’ — Sigmund Freud, 1932.

The challenge is that the magic of the previous century has evolved and matured by necessity from the efforts of many well meaning scientists, but some of the magicians on stage still suffer from neurosis.  Technology is evolving much faster than humans or organizations.

Examples of talent issues commonly found in our communications:

  • Due to long AI winters followed by the recent tipping point in viability, the number of individuals with extensive experience is very small, and most are at a few tech companies attempting to displace other industries.

  • Industry-specific expertise beyond search and robotics is rare and very specialized with little understanding of enterprise-wide potential.
    An exceptional level of caution is warranted on conflicts in AI counsel due to competency and pre-existing alliances.

  • Despite efforts to exploit emerging opportunity, ability to think strategically in AI systems appears to be almost non-existent.

  • CTOs may win some key battles in tactical applications, but CEOs must win the wars with organizational AI systems.

The talent war for the top tier in AI is so severe with such serious implications that hundreds of millions USD have been invested for key individuals.  Of course very few organizations can compete in talent auctions, which is one reason why the Kyield OS is so important.  We automate many AI functions that will be common in organizations and their networks for the foreseeable future while also making deep dive custom algorithmics simpler and more relevant.

Historic Opportunity

Not only is AI a classic case of ‘offense is the best defense’, when designed and executed well to enhance knowledge workers and customers, the embedded intelligence with prescriptive analytics can accelerate discovery, uncover previously unknown opportunities, providing historically rare potential for new businesses, spin outs, joint ventures and other types of partnering.  Managed well, this is precisely what many companies and national economies need.

Architectural Design

Impacting every part of distributed organizations, the importance of architecture cannot be overstated as it will influence and in many instances determine outcomes in the distributed network environment.  AI is a continuous process, not a one-off project, so it requires pivotal thinking from two decades of fast fail lean innovation that our lab helped pioneer.  Key considerations in architecture we incorporated in the Kyield OS include but are not limited to the following:

  • Optimizing the Internet of Entities

  • Governance, compliance, and data quality

  • Accelerated discovery and innovation

  • Continuous improvement

  • Real-time adaptability

  • Interoperability

  • Business modeling

  • Relationship management

  • Smart contracts

  • Security and privacy

  • Transactions

  • Digital currency

  • Ownership and control of data

  • Audits and reporting

  • Productivity Improvement

A priority outcome for most organizations in competitive environments, productivity improvement is increasingly derived from optimizing embedded intelligence, which is also desperately needed to improve the macro global economic situation.  A large gap remains in most AI strategies with respect to enterprise-wide productivity, which represents the foundation of recurring value to organizations and society, regardless of the specific task of each knowledge worker and organization.

While cultural challenges and defensive efforts are common obstacles to any productivity improvement, strong leadership has proven the ability to triumph.  Internal and external consultants and advisors can help, particularly given the steep learning curve in AI;  just be cautious on unhealthy relationships that may have interests directly opposed to the client organization, as conflicts are pervasive and tactics are sophisticated.

Trust

Just when we thought trust couldn’t become more important, it seems to dominate life on earth.  We’ve come across quite a few trust related issues in our AI voyage. A few examples that come to mind:

Intellectual property:  Trust is a two-way street, particularly when it comes to intellectual assets, so upfront mutual protection is a necessary evil and serves as the first formal step in establishing a trustworthy relationship, without which the other party must presume the worst of intentions.  Once the Kyield OS is installed with partners this problem is effectively eliminated with smart contracts and digital currency based on internal dynamics and verified intelligence (aka evidence).

Fear of displacement:  Since AI is new for most, suffice to say that fear is omnipresent and must be dealt with in a transparent and intelligent manner. At the knowledge worker level we overcome the problem with transparency, which makes it obvious that the Kyield OS is likely their strongest ally.

Modeling:  While motivation to change is often needed from external sources such as regulatory or competition, it’s probably not a good idea to trust a company that has the capability, desire, culture and incentive to displace customers.  Another problem to avoid at the confluence of networked computing and AI is lock-in from technology or talent, including service models.  Beware the overfunded offering that attempts to buy adoption and/or over-reliance on marketing hype.

Authenticity:  Apart from the serious structural economic problems caused by copying or theft of intellectual work, consider the trustworthiness of those who would do so and how much know-how is withheld because of this problem.  Authenticity is especially important in this field due to the length of time required to understand the breadth and depth of implications across the organization and network economy.

Conclusion

Given the strategic implications to organizations, AI should be a top priority led by senior management.  However, since supply chains face similar challenges with AI, traditional methods and channels to technology adoption may not necessarily serve organizations well, and in some cases may be high risk.  Whether for strategic intent, financial return, operational necessity or any combination thereof, investing well in AI is not a trivial undertaking. Integrity, experience, knowledge and freedom from conflicts are therefore critical in choosing partners and investments.

About the author

Mark Montgomery is the founder and CEO of Kyield, which is based on two decades of self-funded R&D.  The Kyield OS is designed around his patented AI system, which tailors data to each entity in the digital network environment.

We must empower a more diversified economy in 2016


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Those of us growing up in the 1960s and 1970s experienced tumultuous times that had some similarities to the last decade. Among many other contributions from our generation—which include both positive and negative influences—were some great artists, one of whom Bob Dylan is featured in a massive IBM ad campaign. Dylan’s poetry is timeless and quite relevant today:

The post WW2 era we grew up in provided the best economic conditions the world has ever known. The baby boom population explosion, of which I am at the tail end of, combined with vast sequential gains in productivity to create the ‘miracles’ of economies in the U.S., Japan, Germany, and China among others, or so it seemed.

Although a few credible experts have warned all along that the world’s trajectory wasn’t sustainable, and perhaps most of us intuitively realized same, the financial crisis contained a potential silver lining in revealing the stark naked truth: much of that ‘success’ in the post war era came at the direct expense of the future, and the bills are coming due.

Although woefully deficient in ethics with poor visibility of systemic risk—even in cases where desire for prevention existed, master politicians and financial engineers in both the public and private sector have masked structural problems in the economy for decades—from the public and each other, by employing ever-more complex short-term remedies in a misguided game of musical chairs.

Unfortunately, the resolution of the financial crisis has consisted primarily of the very same type of financial engineering—it’s the only hammers central banks have in their toolbox. While central bankers are justified in pointing fingers at political and fiscal malfeasance, it’s up to humble citizens like me to hold up a mirror and suggest that they take a look to see that such malfeasance would not be possible if not empowered by monetary policy.

One certainty is that the super majority of consolidated malfeasance in much of the world has been transferred to the balance sheets of central banks and national debt at direct cost to billions of people, many of whom followed the rules, not least those who saved all their lives just as their public institutions recommended.  Those savings have been taxed for nearly a decade now by monetary policy rather than a democratic process; by devaluation of currency, record low (or negative) interest rates, inflation from asset bubbles such as commodities and housing, and the need for hundreds of millions to tap their principal for survival. Also certain is that regardless of whether or which stimulus measures were necessary, one outcome has been a dangerous expansion of the wealth gap now at record level in the modern era.

It’s very important to better understand that the previous wealth gap peak in the 1920s was partially causal to the Great Depression and WW2, among other earlier great revolutions and loss of life. Today’s billionaires seem to understand the moral hazard and potential for backlash, which is presumably one of the reasons for the philanthropic pledges. A nice gesture that will hopefully do much good, philanthropy is not an alternative for economic diversification, though can help if targeted for that purpose.

The financial crisis represents precisely how corrosive moral hazard is realized at dangerous levels that can reach critical mass, which could be triggered by unforeseen events.  Moral hazard is a psychological phenomenon, which occurs from regulatory, governance and policy failures that then combine with the ensuing economic weakness to cause the next crisis.  In this case the trigger was regulatory failure followed by heavy-handed resolution that caused massive collateral damage, further harming innocent citizens worldwide. In such cases where the non-virtuous (aka vicious) cycle is not interrupted by a moral realignment, typically through accountability by the justice system, strong credible governance, and adoption of new systems that punishes crimes and rewards beneficial behavior, then civilizations can and do rapidly decline.

In hindsight from a high level view, from a hopefully wiser former business consultant who has studied related phenomenon for decades now, it appears that we enjoyed a long period of one-off exploitations of planet and people combined with ever-increasing public debt and corruption supporting promises by politicians and institutions that were far beyond their means to deliver.

The bad news is that the combination of public debt and future liabilities tragically promised by politicians—and now expected—some portion of which is necessary to survive in the high cost modern economy caused by these policies, can’t possibly be paid by the current economy.

The good news is that not all of that massive spend on R&D over decades has gone to waste, and we now have much more accountable systems that can indeed prevent the super majority of future crises, if only we can muster the courage to adopt them. We are also seeing dramatic improvements in systems that have the capacity for exponential productivity growth over time, which is the only method in our current economic system to cover national debt, unfunded liabilities, and the needs of a quickly aging global population, given the immense future needs in healthcare, environment and economics.

So my plan for 2016 is to tap the exponentially decreased cost and performance improvement in computing hardware and algorithmics to extend our networked artificial intelligence system to the mid-market, NGOs, and governments to provide them with a world class system unavailable to anyone at any cost until very recently. My hope is that our Kyield OS will help even the playing field and lead to a more dynamic and robust economy of the type that is only possible with healthy balance of diversification. Soon thereafter we plan to do the same directly for small business and individuals.

“If your time to you is worth savin’
you better start swimmin’, or you’ll sink like a stone
For the times they are a-changin’”
– Bob Dylan