Disruptive innovation, education and open data: Tim O’Reilly, CEO O’Reilly Media

In this CXO Talk interview, Tim O’Reilly, founder and CEO of O’Reilly Media, discusses disruptive innovation, education, open data and changing the world by spreading the knowledge of innovators.

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(31:48) I think one of my principles was data is the new Intel inside, and that has really turned out in the last 10 years to be very true. But this doesn’t mean that it’s at the heart of every business.

(31:59) Look for example at Apple, clearly a great business, but not a data driven business in the way that Google is for example. Google’s entire business was around a creative new way of using data to make better results. Apple is a design genius and in some ways saying forget the data. I’m going to create something that people are going to want.

(32:30) But that being said, the context of my thoughts about data were really to give you long historical context that they were formed by looking at historical analogies.

(32:45) I came into the industry a little before the IBM PC was introduced, and what really struck me was that there had been this dominant player – IBM with all the hardware and they thought the software didn’t matter. So they signed this deal with Microsoft. Microsoft realized that there was effectively a paradigm shift, in which software was going to become more important than hardware. Hardware that was going to become commoditized, and it did in fact become commoditized. There were a lot of people who spent time in still thinking that making a computer company was making hardware and competing with IBM. And you know eventually people did beat IBM there, but Microsoft just went on and created a whole new game.

(33:34) And they then dominated the industry for decades with this paradigm that software mattered. And what I saw was that with the open protocols of the Internet, and with open source software, software was being commoditized in the same way where hardware had been commoditized before. And then I asked myself a question, well what will become valuable now?

(33:54) I came to the conclusion that it was data that was going to become valuable and that was really a kind of early reflection on the kind of competitive advantage that you saw in a company like Google.

(34:09) So moving onto the Internet of Things question, you know in some ways I don’t know if it comes after data, because data is still super important like software is super important and hardware is super important. But as computing starts to penetrate the real world, you know what is super important, the vision to understand how to re-engineer that real world processes.

(34:49) There was a Tweet once from Aaron Levy of Boxx who said, Uber was worth $3.5 billion and is now worth $40 or $50 billion and in designing the way the world ought to be than simply the way it is. Saying we are going to computerize taxicabs meant that we will put a little terminal in the back, where you could swipe your credit card or we can show you ads. And if we can call a car at any time anywhere and have it show up because now we know where you are and where the driver is.

(35:23) If you think about that, actually at first people didn’t get it and I would say this is the para-dramatic Internet of Things company they want to know where is the Internet of Things device? Well it’s a smart phone, full of sensors and the fact both the driver and the passenger have this sensor package if they are augmenting themselves in the paradigms. If one of those decides that it was a self-driving car, and we are thinking Internet of Things. Or if it was a little car calling device, they would say it’s the Internet of Things. But no, it just happens to be a general-purpose device.

(35:56) But that pattern of recreating real world processes, based on the capabilities you have now are so different. We don’t actually do it the way we used to, and you know, when you look at other things like Monsanto buying, (fiber core?) plus precision planning and now we are doing this data gathering --everything from the satellite and weather data and we are actually saying, oh yeah, in this part of the field we are going to put this much fertilizer on we are going to put the seed this deep and grow something differently. It’s the same kind of thing, like we have capabilities now that we didn’t have before, and in some ways that kind of puts design at the center in an odd way and not the design that’s about, you know making things pretty.

(36:46) But the kind of design that’s about – what are we really trying to do here? Everyone slaps there forehead and goes oh wait! We didn’t have to do it like that. We can do it different.

Michael:         (37:00) You’ve hit on I think two of the most interesting aspects of digital transformation, which is No. 1, how does that affect real world processes – how do we do things different, as opposed to digital transformation which means, well we’re going to sell something on the Internet and we can track the marketing numbers through analytics. So that’s No. 1, the real world changes, and then No. 2, is the fact that user experience becomes a central component in all of this.

Tim:                 (37:37) Yeah and I think user experience is central in some ways and obviously you can think of that narrow way as in UX testing and so on. But in the broad way – actually let me back up a little bit. There is an e-book by Michael Schrage out of MIT called, who do you want your customers to become, and in makes the case that great entrepreneurs actually create their customers. They make the world a place where a different kind of person exists who wants their product.

(38:15) So if you think about it, Henry Ford – a great example, he invented the weekend. He invented I guess the Sabbath, but he there was so many things that he basically invented, the idea that people would take these excursions in their cars. You know the kind of leisure to travel industry, which formerly belonged to only rich people. And suddenly it was something that everybody could do in their car, and he invented a different kind of world.

(38:49) Then you look at what Google did and invented a world where we think that we should have access to all of the world information at our fingertips. And the smart phone has taken that even further, so we’ve all been changed in a profound way by these technologies.

(39:06) I think we see that right now with companies like Uber with the expectations that I can have on demand transportation. You know, it’s a profound shift and it’s going to ripple all the way through our society. And I think the Internet of Things – so when I talk about design, I mean that kind of design. You know, thinking about the fact that the world could be different and then making it so.

Michael:          (39:29) Yeah on the design on the broadest sense, beginning from the point of view of what are we trying to actually accomplish here? What is the benefit we are going to bring forth?

Tim:                 (39:42) At O’Reilly, we are covering a lot of this in our Internet of Things conference coming up in June. Creating online conferences designed for the Internet of Things, it’s really how do we think about all these issues? We have these immense new capabilities.

(40:02) Another good example would be the way that education is changing. You know, Khan Academy is a redesign of education. It’s not just supplemental material, you all hear about the flip classroom but the whole notion of, hey wait, let’s instead of delivering a lecture in class, and then sending kids home with homework, we’ll deliver the lecture at home and have them come in, where someone can actually work with them on their homework. You know, so much better and if you’ve got kids, you’ll realize what a terrible curse homework is, and it’s not really well designed where you can get your kids to actually watch the lecture at home – that’s easy.

(40:50) And so that’s like a redesign, it’s process redesign.

Vala:               (40:54) I’m incredibly impressed, I have a 12-year-old daughter who attends a public school that is in the Google classroom, in the cloud and when her instructors grade her essays, we can actually click on these word bubbles and the instructor is talking to us about why they have taken points off here, and this whole adapted learning model in the collaboration that includes the parents is incredible. You’re not going to be surprised in terms of doing the exam in whether you feel that you learned and you fully understand the topic. It’s just magical.

Tim:                 (41:40) I think it goes even further, we all probably saw the Matrix, where Trinity knows how to fly the helicopter and downloads the instructions. You know, you look at where we are going with augmented reality, that’s a big piece of that, it’s like you’re not downloading it directly into your brain yet, but you are sitting there and you know a company like Zachary out of LA, like here is a mechanic working on a jet fighter and they have got a way of showing him things and what they’re supposed to look like. That really brings me to this whole goal of this event that I’m working at, if we can use this technology to disempower people or we can use it to empower them.

(42:30) I have been telling the story about how there are two different ways to use data with employees. One is to create micro-shiftwork and oh, we used to think we needed you for eight hours. Now we are realizing that we need you for this three hours and this two hours, and by the way you are now part-time so now we don’t have to pay you benefits and yeah, we can save money. And of course, the employee is screwed.

(42:53) And the other is what Uber and Lyft is doing, like they are actually exposing the data to their workers, and you talk to these Uber and Lyft drivers, and what they say is they love that they are in charge. They get to decide when I’m going to work, how long I’m going to work. And so he is this old industrial model taking to its acme with this sort of micro-data driven shiftwork.

(43:20) And with all kinds of tracking of how productive you are. And the other is we are going to make a market and we are actually going to have the network rate the workers. You know, there are all kinds of new business principles at play there. And all of that leads back to the design thing and you are multiply judged by, did you create a better experience with a customer rating system.

(43:47) It’s pretty awesome and fundamental transformation in the nature of work, which doesn’t mean that there are no problems with it you know, because as a society we have tried all kinds of safety net kinds of things to traditional employment. So if someone says, oh this is a lousy job because it doesn’t have this factor or the other safety net thing. And you can go well, who created those things where we are only tied to do non-traditional jobs. You know that’s a choice we made in this society and we can say, well this is actually a better way to organize work, let’s actually add on some of those other things.

Michael:         (44:0 20) Well, this has been a phenomenal conversation and unfortunately we’re out of time.

Vala:               (44:29) That was the fastest 45 minutes of my week, and we could have gone for another two hours. Tim, unbelievable insight, thank you so much.

Tim:                 (44:39) Well I am glad to do it and I enjoyed talking with you guys.

Michael:         (44:44) And I hope you’ll come back another time, maybe when you are doing your future of work conference, you can come on CXO-talk sometime around that period, and we can talk about the future of work.

Vala:               (44:56) And if you’re ever in Boston -- courtside seats, you know where.

Michael:         (45:03) You have been watching episode number 111 of CXO-Talk I’m Michael Krigsman and my fabulous co-host, Vala Afshar. We have been joined by Tim O’Reilly, who is the founder of O’Reilly Media. Next week we have Mark Schwarz, who is the CIO of the US citizen and immigration service. So everybody have a great week. Tim, thank you for taking the time today and we’ll see you next time everybody, bye, bye.

O’Reilly Media                                                           www.oreilly.com

AOL:                                                                            www.aol.com

Planet Labs                                                                  www.planet.com

NASA                                                                           www.nasa.com

Lyft                                                                              www.lyft.com

Uber                                                                            www.uber.com

AirBnB                                                                         www.airbnb.com

Google                                                                         www.google.com

Amazon                                                                       www.amazon.com

GE                                                                                www.ge.com  

Hyatt                                                                           www.hyatt.com

Civic Insights                                                               www.civicinsight.com

Boxx                                                                            www.boxx.com

Intel                                                                             www.intel.com

Apple                                                                           www.apple.com

Microsoft                                                                    www.microsoft.com

Twitter                                                                        www.twitter.com

This story, "Disruptive innovation, education and open data: Tim O’Reilly, CEO O’Reilly Media" was originally published by CIO.

Copyright © 2015 IDG Communications, Inc.

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