[Applause]
one spring day during my sophomore year
in high school I sat down with my
parents to decide whether I was taking
the liberal arts or the math science
track the conventional wisdom in rural
Korea three decades ago was that girls
didn’t go to college but instead got
married and took care of the household
my parents gave me a blank stare and
said why are you trying to go to college
if you send you to college you won’t
even spend money on a bus ride for us
because you get married and become a
stranger to us but we’ll get an airplane
ride out of your brothers that day I
decided I’d go to college with or
without their help
I came to Brigham Young University with
only 70 dollars in my pocket and began
working a job where I gotta pay for in
the morning to scrub toilets on campus
with God’s grace and scholarships I
graduated with honors and no student
loans thank you
when I got my first job after college I
bought an airplane ticket and flew my
mom out she did get an airplane ride out
of me when she saw how I was living she
said you are a dragon born in a stream I
thought you’re a salamander dragons
belong in the ocean not in the humble
stream where you were born how do you go
from a salamander to a dragon that
radically changes the conventional
wisdom and causes everyone to play by
the rules that you define what are the
principles of radical innovation let’s
turn to the ancient Chinese board game
of go for answers I grew up watching my
dad play go where players take turns to
play black and white stones on the board
to gain more territory go is a twenty
five hundred year old board game played
by 40 million people daily often it
takes hours to finish run around I still
remember the day when my mom threw out
my desk go stones totally exasperated in
March of last year more than 200 million
people around the world watched a
historic goal match between some unusual
participants one was the second-highest
ranking world champion of go Lisa doll
from South Korea and the other was
artificial intelligence or AI developed
by google deepmind called alphago at the
end of five days Lisa doh lost one to
four which was a total surprise goal has
long been considered the most
challenging of classic games because
it’s very complex and requires intuition
to win the average number of possible
moves for a given turning goal is 250 in
comparison it’s 35 in chest
the number of possible board
configurations in go is more than the
number of atoms in the universe as I
watch the match unfold
I became intensely curious about how
alphago beat
Lucido my investigations uncovered
several principles behind alphago’s
victory and I was fascinated to see that
these were the same principles some
companies use to spawn radical
innovation and fundamentally change the
rules of the game whom I call quantum
companies these principles have not just
helped these companies
tweak things here and there and make
incremental improvements but have
catapulted the organization’s
far away the competition radically
changing how the game is played in their
industry I’ll share three of these
principles today first stealth
organization both alphago and quantum
companies use self-organizing agents in
AI agents are the notes where
computation happens similar to
individual neurons in our brain they
take input from sensors and direct their
activities towards certain goals in
alphago the agents learn everything
themselves from scratch to decide the
next move instead of relying on
pre-programmed instructions from goal
grandmasters similarly Reed Hastings CEO
of Netflix has talked about how Netflix
lets its employees self-organized
Netflix manage massage there is no
clothing policy at Netflix but nobody
comes to work naked because the
employees know the right thing to do
salaried employees don’t track their
overtime when they work weekends and
nights so why should the company track
their vacation days
their vacation policy is not to have a
vacation policy same goes with expense
policy
there is no expense policy at Netflix
nor a department to ensure compliance to
an expense policy the employees decide
how many days they take and what
expenses they get reimbursed this is
just a small example of how Netflix
promotes self organization as a result
of implementing this and other
principles of radical innovation Netflix
was the number one top performing stock
in two out of the last four years
among the S&P 500 companies my global
leadership research the first round
result of which was published on Harvard
Business rapidash sure found the
allowing self organization is the second
most important out of the 74 attributes
tested when evaluating bosses it’s a
universal human need to be self-directed
and determine our own fate
second simple rules to provide some
cohesive boundaries and direction among
the many self-organizing agents pursuing
different things both alphago and
quantum companies use simple rules
alphago has two sets of simple rules one
set of rules called policy networks
evaluates the board position and reduces
the breast of the search another set of
rules called value networks evaluates
the probability of winning in a given
position and reduces the depth of the
search it has to simplify the search
space because a brute force evaluation
of every possible move is just not
practical you might have to wait until
the next Big Bang to see the and the
game the cows might never come home the
horizontally challenged lady might never
sing you get the point
Google also uses simple rules as loose
guidelines for his tens of thousands of
stop organizing employees without these
simple rules all these employees during
different things would result in chaos
with no consistency interruption Google
simple rules to decide priorities
focused on the user and all else will
follow
how about ethics don’t be evil how to
allocate corporate funds spend seventy
percent on the core product twenty
percent on emerging products and 10% on
moonshot projects these simple rules not
only provide cohesive parameters by
which employees can self-organize but
they also speed up decision-making in
today’s complex business environment
where things are changing constantly
speed of execution is a lot more
important than perfect execution partly
due to its culture of using simple rules
and other principles of radical
innovation google has been ranked among
the top three most innovative companies
ten years in a row as compiled by a
Boston Consulting Group third trainer in
the process of practicing
self-organization and at the same time
deciding which simple rules work best
both ethical and the employees in
quantum companies learn from repeated
experiments of trainer alphago played
against itself 30 million times and
160,000 times against decent amateurs
whose games were found on the internet
using reinforced learning these trial
and error results were used either to
amplify or attenuate the input which
slowly improve the algorithm over time
alphago had to lose many times to
improve its win rate
in a similar fashion by setting up an
a/b test on a microsite and comparing
the original version against many other
variations of color location and and a
display of the promotional offer a video
game company Electronic Arts sold more
than 1 million copies of SimCity 5 in
the first two weeks of its launch for
example they were surprised to find that
the variation with no promotional offer
whatsoever drove 43 percent more
purchases because their loyal customers
just wanted to buy the game and no extra
incentive was necessary success comes
from learning and learning requires
failures which means success requires
failures for both AI and organizations
tolerating failures and learning from
each iteration of trial and error is
essential to radical innovation
organizations will be a much better
served by measuring learning and
tracking pattern recognition skills and
false positive and false negative rates
in the decisions they make
instead of quarterly earnings if they
want to win in the long term these
principles can turn any company into a
powerhouse of radical innovation because
radical innovation is a serendipitous
result of many self-organizing employees
learning from trend or following simple
rules these principles work because they
are based on laws of nature governing
all living organisms including people
and organizations part of what my global
leadership research found was that when
these leaders practiced principles of
radical innovation there are also good
bosses to work for when our bosses don’t
micromanage us but instead let us self
organize when our bosses don’t give us
precise instructions on how to do our
jobs
instead give us broad boundaries of
simple rules when our bosses don’t throw
us under the bus at the sly sign of
failure but instead make you safe for us
to learn from our mistakes in Shriner
they can be bosses whom we enjoy working
for and at the same time who catalyzed
radical innovation we can start the
change by being the change everyone can
use these principles of radical
innovation and transform their
organization or become a more effective
leader you can radically change the
rules of the game and unleash the dragon
in each of you you all belong in the
ocean thank you
[Applause]
one spring day during my sophomore year
in high school I sat down with my
parents to decide whether I was taking
the liberal arts or the math science
track the conventional wisdom in rural
Korea three decades ago was that girls
didn’t go to college but instead got
married and took care of the household
my parents gave me a blank stare and
said why are you trying to go to college
if you send you to college you won’t
even spend money on a bus ride for us
because you get married and become a
stranger to us but we’ll get an airplane
ride out of your brothers that day I
decided I’d go to college with or
without their help
I came to Brigham Young University with
only 70 dollars in my pocket and began
working a job where I gotta pay for in
the morning to scrub toilets on campus
with God’s grace and scholarships I
graduated with honors and no student
loans thank you
when I got my first job after college I
bought an airplane ticket and flew my
mom out she did get an airplane ride out
of me when she saw how I was living she
said you are a dragon born in a stream I
thought you’re a salamander dragons
belong in the ocean not in the humble
stream where you were born how do you go
from a salamander to a dragon that
radically changes the conventional
wisdom and causes everyone to play by
the rules that you define what are the
principles of radical innovation let’s
turn to the ancient Chinese board game
of go for answers I grew up watching my
dad play go where players take turns to
play black and white stones on the board
to gain more territory go is a twenty
five hundred year old board game played
by 40 million people daily often it
takes hours to finish run around I still
remember the day when my mom threw out
my desk go stones totally exasperated in
March of last year more than 200 million
people around the world watched a
historic goal match between some unusual
participants one was the second-highest
ranking world champion of go Lisa doll
from South Korea and the other was
artificial intelligence or AI developed
by google deepmind called alphago at the
end of five days Lisa doh lost one to
four which was a total surprise goal has
long been considered the most
challenging of classic games because
it’s very complex and requires intuition
to win the average number of possible
moves for a given turning goal is 250 in
comparison it’s 35 in chest
the number of possible board
configurations in go is more than the
number of atoms in the universe as I
watch the match unfold
I became intensely curious about how
alphago beat
Lucido my investigations uncovered
several principles behind alphago’s
victory and I was fascinated to see that
these were the same principles some
companies use to spawn radical
innovation and fundamentally change the
rules of the game whom I call quantum
companies these principles have not just
helped these companies
tweak things here and there and make
incremental improvements but have
catapulted the organization’s
far away the competition radically
changing how the game is played in their
industry I’ll share three of these
principles today first stealth
organization both alphago and quantum
companies use self-organizing agents in
AI agents are the notes where
computation happens similar to
individual neurons in our brain they
take input from sensors and direct their
activities towards certain goals in
alphago the agents learn everything
themselves from scratch to decide the
next move instead of relying on
pre-programmed instructions from goal
grandmasters similarly Reed Hastings CEO
of Netflix has talked about how Netflix
lets its employees self-organized
Netflix manage massage there is no
clothing policy at Netflix but nobody
comes to work naked because the
employees know the right thing to do
salaried employees don’t track their
overtime when they work weekends and
nights so why should the company track
their vacation days
their vacation policy is not to have a
vacation policy same goes with expense
policy
there is no expense policy at Netflix
nor a department to ensure compliance to
an expense policy the employees decide
how many days they take and what
expenses they get reimbursed this is
just a small example of how Netflix
promotes self organization as a result
of implementing this and other
principles of radical innovation Netflix
was the number one top performing stock
in two out of the last four years
among the S&P 500 companies my global
leadership research the first round
result of which was published on Harvard
Business rapidash sure found the
allowing self organization is the second
most important out of the 74 attributes
tested when evaluating bosses it’s a
universal human need to be self-directed
and determine our own fate
second simple rules to provide some
cohesive boundaries and direction among
the many self-organizing agents pursuing
different things both alphago and
quantum companies use simple rules
alphago has two sets of simple rules one
set of rules called policy networks
evaluates the board position and reduces
the breast of the search another set of
rules called value networks evaluates
the probability of winning in a given
position and reduces the depth of the
search it has to simplify the search
space because a brute force evaluation
of every possible move is just not
practical you might have to wait until
the next Big Bang to see the and the
game the cows might never come home the
horizontally challenged lady might never
sing you get the point
Google also uses simple rules as loose
guidelines for his tens of thousands of
stop organizing employees without these
simple rules all these employees during
different things would result in chaos
with no consistency interruption Google
simple rules to decide priorities
focused on the user and all else will
follow
how about ethics don’t be evil how to
allocate corporate funds spend seventy
percent on the core product twenty
percent on emerging products and 10% on
moonshot projects these simple rules not
only provide cohesive parameters by
which employees can self-organize but
they also speed up decision-making in
today’s complex business environment
where things are changing constantly
speed of execution is a lot more
important than perfect execution partly
due to its culture of using simple rules
and other principles of radical
innovation google has been ranked among
the top three most innovative companies
ten years in a row as compiled by a
Boston Consulting Group third trainer in
the process of practicing
self-organization and at the same time
deciding which simple rules work best
both ethical and the employees in
quantum companies learn from repeated
experiments of trainer alphago played
against itself 30 million times and
160,000 times against decent amateurs
whose games were found on the internet
using reinforced learning these trial
and error results were used either to
amplify or attenuate the input which
slowly improve the algorithm over time
alphago had to lose many times to
improve its win rate
in a similar fashion by setting up an
a/b test on a microsite and comparing
the original version against many other
variations of color location and and a
display of the promotional offer a video
game company Electronic Arts sold more
than 1 million copies of SimCity 5 in
the first two weeks of its launch for
example they were surprised to find that
the variation with no promotional offer
whatsoever drove 43 percent more
purchases because their loyal customers
just wanted to buy the game and no extra
incentive was necessary success comes
from learning and learning requires
failures which means success requires
failures for both AI and organizations
tolerating failures and learning from
each iteration of trial and error is
essential to radical innovation
organizations will be a much better
served by measuring learning and
tracking pattern recognition skills and
false positive and false negative rates
in the decisions they make
instead of quarterly earnings if they
want to win in the long term these
principles can turn any company into a
powerhouse of radical innovation because
radical innovation is a serendipitous
result of many self-organizing employees
learning from trend or following simple
rules these principles work because they
are based on laws of nature governing
all living organisms including people
and organizations part of what my global
leadership research found was that when
these leaders practiced principles of
radical innovation there are also good
bosses to work for when our bosses don’t
micromanage us but instead let us self
organize when our bosses don’t give us
precise instructions on how to do our
jobs
instead give us broad boundaries of
simple rules when our bosses don’t throw
us under the bus at the sly sign of
failure but instead make you safe for us
to learn from our mistakes in Shriner
they can be bosses whom we enjoy working
for and at the same time who catalyzed
radical innovation we can start the
change by being the change everyone can
use these principles of radical
innovation and transform their
organization or become a more effective
leader you can radically change the
rules of the game and unleash the dragon
in each of you you all belong in the
ocean thank you
[Applause]
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