Nelson Chang, CEO of the L'Hotel de Chine Group
Success in the Age of AI
While the replacement of humans is already underway, the key to success, according to Nelson Chang, is finding the canary in the coalmine.
Success in the Age of AIBy Elaine Huang, Monique Hou
From CommonWealth Magazine (vol. 596 )
As a low-level civil servant in the New York City government 40 years ago, Nelson Chang wrote a program to calculate the estimated daily revenues and expenditures based on probability. This contribution helped the NYC government, often at its wits' end over finances, get a more precise handle on fiscal management.
No books related to his profession are visible in Chang's office; rather, the shelves are filled with titles on culture and history, plants and wildlife, along with calligraphy brushes and ink stones, poetry, and fans inscribed with his own calligraphy. Despite his white shirt and khaki pants, it is not difficult to imagine him in another time, dressed in traditional Chinese linen attire clutching a fan.
Having worked as a civil servant, started a software company, run a cable TV service, spent time in the financial and cement industries, and now operating a hotel business, Chang has often changed course, yet wherever he has gone he has always found success. Waving his hand vigorously in dismissal, he claims he has merely benefited from not "being tied down" by "professionalism"; rather, with a broad outlook, and logical thinking, he "always finds the canary in the coal mine."
The following is CommonWealth's exclusive interview with Nelson Chang, touching on such areas as the rapid advancement of artificial intelligence and its impact on corporate operation and management.
CommonWealth (CW): How does the AlphaGo way of thinking augment corporate operations and decision-making?
Nelson Chang (Chang): Whether winning or losing in business, you always need to find your canary. If you cannot get a handle on the canary, you die. Back in the days of coal mining, a canary was used to detect deadly gases in the mines due to their acute sensitivity. If something was wrong with the bird, you knew you had to get out of there. The same goes for business, where you need a bellwether like the proverbial canary in a coalmine.
CW: How does AlphaGo's "Deep learning, random move-making, and self-strengthening" model differ from
typical corporate management philosophy?
Chang: My decisions are always grounded in macroeconomics. Taiwanese businesspeople don't get this at all; they don't look at the macroeconomic picture, just their own industry, and so they fail. If you don't set out from a macroeconomic approach, you cannot gauge market trends and which direction the wind is blowing. Failure is the inevitable result.
Knowledge is the prerequisite for innovation. How can an ignorant jungle boy innovate? I'm still learning, reading a book and a pile of magazines each week.
CW: Programing takes strong logic. This seems to have a big impact on your thinking and decision-making. Is that true?
Chang: Logic is involved in everything. It is about self-training, not education. When I approach a subject, I look at it from the macro-economic perspective. I write things down, like how economic shifts affect exchange rates and interest rates.
I write down three reasons, and go back to re-examine my analysis a few months later. If you don't write things down, you'll never improve.
CW: AlphaGo pits itself against itself, constantly simulating human Go matches. How do you apply this to operational management?
Chang: I'm already conducting simulations and calculating probability whenever I make a business decision; things that have a low probability of occurring are excluded from the calculations. When you run simulations, you shouldn't think about catching the highest or lowest points, just the middle. When I make business decisions, I don't pick the absolutely correct or absolutely wrong parameters; as long as I find the right direction, I go ahead and do it.
CW: These days there are no guarantees, even for white collar jobs. Do you think the middle class will disappear?
Chang: It will happen, but it won't be so dramatic; the real dramatic repercussions will be seen in changes to business models. For instance, FinTech (financial technology) is a changed business model, not just technological. Shifting business models and industry paradigms, like Uber, are the real key.
Uber's strength is its platform. Uber is already developing food and beverage delivery services overseas. In New York, Uber is cooperating with different restaurants, and changing menus on a weekly basis, constantly improving services. But this is not simply limited to Internet-based platforms or the impact of artificial intelligence, but how the business model is changing industry.
In the United States, you still have a personnel deficit of several hundred thousand software engineers, yet there remains a large number of unemployed people. This is happening all over the world.
CW: Have people in your business been replaced by automation?
Chang: Yes, too many. First of all, logistical support has been replaced by automation. Our sales
volume keeps expanding, but we have never conducted personnel increases. What you have here is the replacement of human labor.
If you don't take the time to learn things, you'll get left behind. Most people are too passive and don't think for themselves; if someone feeds them they eat, and they do not make any effort to examine what it is they are missing in their experiences and make up for their deficiencies. Most people spend their lives reacting to situations, so naturally they end up getting eliminated. You need to have a plan in life, and companies are the same way. If all you care about is every little jittery response to the market, it will end up killing you.
It is necessary to make plans in order to stay ahead of the market rather than getting pulled along by the market. Industries experience fluctuations, and while no individual person or company is immortal, certain attitudes are.
Translated from the Chinese by David Toman