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WEI Qiang (卫强)

PhD and Professor of Information Management


School of Economics and Management
Tsinghua University
weiq@sem.tsinghua.edu.cn

Business Changing in
the Big Data Era
Content
 Dynamic Characteristics of Big Data
 Data-Driven
 Proactive Pushing
 Agile Sensing
 Cross-Domain Fusion
 Value Orientation

 The Focuses of Business Changing


 Longtail Market
 Crowdsourcing Platform
 AI Augmentation

 Motive Power - Technology Innovation


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Dynamic Characteristics
of Big Data

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Pre Information Age (Before 1960)
“Non-data” Environment

Little

Intuitions

Decision Support

Business data
Handwork
Decision problem: How many should we
produce in the next quarter?
Decision-making model: decisions are made mainly
according to managers' experiences and what his
sense on market.
Business Activities

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The Beginning of IT Era (Before 2000)
Small Data Environment
Transactional Processing

Much

Basic Decision Support


Analysis
Computerized By Human

Business Data
Decision problem: How many should we produce in the next quarter?
Decision process: managers ask analysts to sort out data over the last two
years and make a graph. Then they will make decisions based on the statistic
model and the possible market demand in the next quarter.
Business Activities
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Network Era (After 2000)
Massive Data Environment
Massive
Intelligent
Analysis
Transactional
Processing

Decision Support

IT-Enable Analysis
Decision problem: How much should we
Automation produce in the next quarter?
& Decision process: the automatic module
Networking embedded in the system will extract related
information, like inventory, production line,
staff on a regular basis, then automatically
conduct an optimization, and can prompt the
results proactively.
Business Activities Business Data

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Business Intelligence

Business Value


Massive Data
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A Case of NBA Sports
 How can an NBA team win a game?
 Traditional thinking: all-court press, cross and smear, quickly
pounce and the related techniques.
 The new weapon of NBA coach: data mining tools
 About 20 teams adopted IBM Advanced Scout System to
optimize their tactics combination.
 The Magic used Scout and analyzed lineups, and finally won
in the competition with Miami.

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Data-Mined Victory of Orlando Magic
 According to the analysis of the system, two guards Anfernee Hardaway
and Brian Shaw in the Magic starting lineup got -17 in the previous two
games, which means they lost 17 points more than what they got .
However, when Hardaway and backup guard Darrell Armstrong
combined, the Magic got +14 points.

 In the next match, the Magic extended the playing time of Armstrong,
showing an effective output: Armstrong got 21 points, Hardaway got 42
points. The Magic won by 88:79. In the fourth match, Armstrong started
lineup first and beaten the Miami again.
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Dwyane Wade’s Scores of 2015

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Intelligent Analysis of Massive Sports Data

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Hypothesis-driven vs. Data-driven
 Hypothesis-driven:  Data-driven:

Experts/Users
Big Data Analysis

Small Data Validation Experts/Users

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Data-Driven

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Data Size In The Big Data Era
Data Size Meaning Illustrations
1 Bit 1 Bit
1 Byte 8 Bit An English character
1 Kilo Byte (KB) 1,024 Byte A small email
1 Mega Byte (MB) 1, 048,576 Byte A plain text of novel, a photo
1 Giga Byte (GB) 1,073,741,824 Byte 30-minute DVD film
1 Tera Byte (TB) 1,099,511,627,776 Byte 1~3 computer drives
1 Peta Byte (PB) 1,024 TB
1 Exa Byte (EB) 1,024 PB
1 Zeta Byte (ZB) 1,024 EB
1 YB 1,024 YB
1 DB 1,024 YB
1 NB 1,024 DB 1152921504606846976 ITB hard disks,
about 70 trillion kilograms
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Growing into Big Data…

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Web 1.0  Web 2.0  Web 3.0

Pull Push
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Characteristics of Big Data:4V
1. Volume 2. Variety

Big volume Semi-structured data, structured data


and unstructured data
The world entered to the ZB era formally in Today the type of data is not single text form, order,
2010, IDC was expected in 2020. Then the world log, audio and ability, all raise high demands.
will have a volume of 35ZB all together.

3. Veracity 4. Velocity

The veracity of data Velocity of information


The Quality Of Data Is Volatile And It Mainly Depends This is the most distinguished characteristic between
On The Data Source, Acquisition Method, that Would big data and traditional data. Nowadays is an ear of
Influence Late Analysis And Results. ZB. The efficiency to analyze data is essential to an
enterprise with such massive data.

Different from previous eras, the Big Data Era records all
activities in the form of data.
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Generating Big Data
– A Case of Coronation of the Pope

Dead Data

Alive Data
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Proactive Pushing

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The Evolution of Business Decision Paradigm

Passive Pull Hypothesis-Driven


Business
Business Data Business Decision
Activities

Pre Big Data Era

Big Data Era


360 Degree
Big Data Business Decision
Business Activities
Proactive Push Data-Driven

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UGC (User Generated Content)
 UGC
 search(Google Trends, baidu index)
 online comment(LeBook, taobao)
 social BBS(microblog, blogger,
wechat)
 professional network forum(baidu
stock forum)
 online social network(QQ, wechat)
 instagram(Tumblr)
 video sharing and play(YouTube,
Youku)
 transaction data(stock, futures)
 expression of feeling(Emoji)
 crowdsourcing(wikipedia, baidu
knows)
 crowdfunding(PDAI, crowfunding)
 ……
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IoT (Internet of Things)
wearable healthy/medical devices

Cow GPS Tracking and Analysis

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UGC: Google Flu Trends - Predicting or Sensing?
Flu prediction with Google Trends

black line -predictions of flu spreading


red line - the real flu spreading

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Search “iPhone”
- Sales Forecasting = Intent Sensing?

1~2 quarters of lead time


Sales
volume

Search
volume

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Uncertainty of UGC
 One of the founders of quantum physics
Werner Heisenberg, who pointed out in a
paper in 1927, that particles measuring
position in the quantum world will
inevitably affect the velocity of the
particles. Measuring the position of the
particle will undoubtedly affect its speed.
This is called "uncertainty principle." Now,
the "uncertainty principle" can also be
applied on big data.
 Over-prediction of Google Flu Trends
 Public opinions are spreading over on Weibo
and Twitter

Subjectivity of UGC ?
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IoT: Healthcare Big Data Analytics
 Guttag J. and Stultz C. collected the
ECG data of heart-disease patients.
They did some data mining and
found that the risks of three types
of abnormal ECG patients dying
from heart attack increased 1 to 2
times. It can identify the high-risk
patients who haven't been found
by the current branching screening
technology.

 Action trajectory detection project


at the University of Arizona elderly
community, the United States.

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IoT: Hu Huanyong Line
• In 1935, Hu Yong Hwan noted that Heihe
- Tengchong Line is the Chinese
population density boundary. 96% of the
population live in the southeast of line in
On the Distribution of the Chinese
Population.

http://im.qq.com/online/index.shtml
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IoT: Mobile Phone Users and Population Migration

Baidu is automatically tracking:


 370m active users
 337 cities
 5m kms roads
 95% highways
 50 cities’ real-time traffic
 70,000 bus routes
 1.8m terminals
 0.5m partners
 10 billions requests
http://qianxi.baidu.com

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Agile Sensing

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Alibaba’s November 11 Festival

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A joke about Big Data
 A pizzeria phone rang, the customer service staff picked up the phone.
 Customer Service: XXX pizzeria. Hello, Mr. Chen, is there anything I can help you?
 Customer: Hello, I want a ......, wow, how do you know who I am?
 Customer Service: Mr. Chen, the CRM can prompt your profile on your incoming calls.
 Customer: Oh, okay. I Want a seafood pizza .....
 Customer Service: Mr. Chen, seafood pizza is not for you.
 Customer: Why?
 Customer Service: According to your medical records, your blood pressure and cholesterol
are high.
 Customer: So ah. What's that you can recommend?
 Customer Service: You can try our healthy low-fat pizza.
 Customer: How do you know I would like to eat this kind of?
 Customer Service: You borrowed a low fat healthy diet on last Monday in the Central
Library.
 Customer: Good. Then I would like a family pizza king, how much?

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A joke about Big Data (ctd.)
 Customer Service: 99 yuan, enough for your family of six persons. But your mother should
eat less, she made a heart bypass surgery last month, she is still in recovery.
 Customer: ... Thanks for the reminder. Can I pay by credit card ?
 Customer Service: Mr. Chen, I'm sorry. Please pay in cash, because your credit card has
been maxed out, still owes the bank 4807 yuan, and not including mortgage interest.
 Customer: I will go to the nearby ATM withdrawals.
 Customer Service: Mr. Chen, according to your records, you have exceeded withdrawal
limits today.
 Customer: Well, sent pizza to my house directly. I have cash at home. How long will it take?
 Customer: About 30 minutes. If you do not want to wait, you can ride here yourself, just for
15 minutes. And I can give you a 5 yuan discount if you do so!
 Customer: Why?
 Customer Service: Based on our GPS vehicle tracking system records. You have registered a
motorcycle with license plate number SB-748, you are currently riding the motorcycle near
NO.23rd of Jiefang East Road.
 Customer:……

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Cross-Domain Fusion

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The Fifth V of Big Data - Value

Source: https://www.nissatech.com/the-key-ingredient-you-need-to-extract-big-value-out-of-big-data/

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Value Orientation

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The Big Data Business Modeling Paradigm

Data Driven Proactive Pushing

Big Data Value Orientation

Cross-Domain Fusion Agile Sensing

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Why Big Data now?

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Big Data can be collected!

User-Generated Content Internet of Things

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Big Data can be Processed!
 Malaysia Interior Minister Zahid Hamidi told
parliament on Wednesday, the heavy burden
on International Criminal Police Organization
loosened immigration check. Zahid said that
40.2 million of lost passports database is so
big that it makes Malaysia database
management system paralyzed. The
International Criminal Police Organization
whose Headquartered is in Lyon, France, said
its database requires only 0.2 seconds to
show whether a passport has been listed as
stolen one.

 The cloud computing cooperation between


12306.com and Aliyun clouding platform.

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The Focuses of
Business Changing

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3 Principles to Create Business Value
Increasing Revenue

Acceleration

Cutting Cost
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Profit 
=
Revenue  – Cost 

Longtail Market AI Augmentation Crowdsourcing Platform

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Longtail Market

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Pareto Principle --80 / 20 Principle
 Vilfredo Pareto

 The earliest observation:


 It is found that 80% of the peas grow from 20% of the bean pod when
planting pea in the garden.
 For bees, worker bees can be divided into several categories clearly:
20% work hard, 60% of normal labor, 20% of bees almost do not work
at all.
 When we put 20% of the hard working bees together, there will also
be 20% of hard workers and 80% of not-hard-working bees And if
we again put the 20% of the hard-working bees together ......

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Pareto Principle
 80% of sales are created by 20 percent of the superior customers, a
direct corollary - the marketing focus is to explore, be kind to and keep
these excellent customers.
 Why abandoning the other 80% customers. Because the sales made by
these customers is too small and can not meet the transaction costs for
marketing (bringing supply and demand together) .
For example, due to the limits of space and fund, a
supermarket can not put all its products of all brands on the
shelf. It can only sell their best-selling products. likewise, a
new vehicle design also pays more attention to mainstream
customers.
80% of the transaction cost is too high
to meet customer demand and can not
be offset by the low value benefits.
Therefore it can only be ignored -
ignoring the market!

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The Key of Matching Supply and Demand
- Transaction Cost

Matching

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Era of Zero Transaction Cost
 The emergence and popularization of the network,
has made the transaction cost between the
Internet customers and the dealers approaching to
zero.
 Its means there’s no need to give up any customer. You
can communicate with any customer effectively with very
low cost .
 For example, 0 cost matching methods includes: fast
payment by Alipay, understanding user needs through
online reviews, analyzing the market situation through
search log, targeted marketing through mobile
advertising, locating consumer places via GPS, ...

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An Extreme Case of Long Tail
 In Apple store there’s a new APP
published in May 2008, called the "I
Am Rich”, at $ 999. It was soon
removed off shelves for not following
Apple’s regulations. But within a short
period of being on shelves......

 After being put on the shelves, there


were 8 people who bought it, among
whom one person said it was mis-
operation, one person regretted. After
negotiations, Apple refunded the two,
but the other six deals were done. The
APP had no negative comment ...

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Long tail of Amazon.com
 Development History
 The online bookstore was established in 1995 ( book is a standard
product )
 In November of 1998, sales of book categories> 3 million kinds(Far
more than the traditional bookstores)
 Through effective search, discounts, book reviews have gained
market recognition
 Currently, Amazon's inventory turns up to 150 times (traditional
bookstores can just do 3 to 4 times)
 In 2004, among books sold by Amazon, 57% of the varieties can’t be
found in physical bookstores like Barnes & Noble.
 “In the long-tailed market of the Internet, 90% of the products can’t
be found in the traditional market. They contribute to 25% of sales and
25% of profits. At the same time, products that do not bring any profit
in the traditional market, occupying 8% in the total amount, account
for 25% of sales and 25% of profits in the long-tailed market. ”

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Today’s Amazon.com
• Amazon has thousands of patents of the logistics, with the
latest patent being “Anticipatory Shipping”.

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Characteristics of Building a Longtail Market
High speed search
Supply Intelligent Recommendation
Demand
 Flexible / Customized
Social sharing
 Customized needs
Manufacturing
 Immersive Consumption


Virtual Shop
Optimized logistics
Marching  Interactive customization
 ……
 ……
Precise Tracking
Real-time sensing
Mobile Payment

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Precisely "Match" the Longtail Market
 The basis of precise matching - business intelligence
driven by big data.
Outbound Marketing Inbound Marketing

TV advertising, telemarketing, Users generated content (Weibo ---


radio ads, direct mail, e-mail Chinese microblog, comments, ...)
bombing, printing ads... Internet things of data (APP, GPS,
sensors…)
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Online Reviews - Reflection of Users’ Intents
Consumer reviews will affect the
purchase intention of new
consumers directly!

The features of online reviews


about Soymilk machine say that
"low noise", "easy to clean“, but
not “cheap”, “high quality”.

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Using UGC to Analyze Credit and Behaviors
 In the afternoon of January 6th, 2015, the central bank
released the Notice about Preparation of Personal Credit
Investigation on its website. According to the notification,
companies including Ali Sesame Credit Management Ltd.,
Tencent Credit Investigation Co., Ltd., Ping An Shenzhen
Qianhai eight institutions credit Information Center Corp.,
Shenzhen PING AN Credit Investigation Co., Ltd., CCIS Co.,
Ltd. Intelligent Credit Co., Ltd., Kara Credit Management Co.,
Ltd. BEIJING SINOWAY CREDIT BUREAU need do
preparations about personal credit investigation services.
The preparation time is six months. This means that the
eight bodies may become China's first commercial credit
bureaus.
 Credit data records Source: Alipay, TenPay, QQ chat records,
etc.
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Customers Deeply Involved in Customization
- Implicit Participation with IoT
EMC2 cooperated with German Audi,
designed optimized and customized
solutions based on the sensor data
(rather than self-reported data from
users) .
From the end of November in 2013, the iQIYI added a "Green Mirror"
video editing features. It is based on the operation of your video, such as
fast forwarding, rewinding , repeated playing, etc., to determine your
preferences automatically, then to generate Essentials. More than an
hour long“Dad,where we go " or "Happy Camp” ,that interspersed with a
lot of advertising, can be finished in watching on iQIYI for 30 minutes
without missing the highlights.

Green Mirror also showed the video content about Jimmy Lin taking care
of Cindy (Tian Liang’ s daughter), has become the highest rate of skipping
contents after opening and trailer in that program, among which the
fragment about Jimmy being indifferent when he saw Cindy was crying,
was skipped at the rate of 29.64%.

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Big Data Driven Total Lifecycle Marketing

- Targeting the needs of customer more precisely


Traditional marketing
- Locking-in customer earlier
- Full automation

Customer
design develop produce logistics store sales
service

Targeted marketing driven by big data

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The Change of Marketing Ideas
 From "selling product" to "selling customer“
 The customized marketing department of Baidu, based on the database on 1 billions
customers’ online profile, sells the suitable target customers to advertisers.
 Australian Airlines in 2014 had a loss of $ 2.8 billions AUD, but revenue of frequent flyers
department maintained growth for five consecutive years by sharing frequent flyers
information with major retailers.

New Thinking: Selling Customers

Traditional Thinking: Selling products

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Crowdsourcing
Platform

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4 Enterprise System Development Strategies
high Business system low
Meal
development
buy mature commercial Eat at restaurant or
Purchasing system ; the suppliers provide
technological support have a takeout
c

Difficuilty
o the third party which is out of
the organization is responsible Employ a cook or a
Outsourcing
s for the construction and
maintanence of the system
part-time maid
t Support team inside the
Internal organization is responsible for
the development and Parents cook
Development maintenance of information
system

End User the knowledge worker


develops and maintains their Make by self
low Development own desired systems. high
low

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Crowdsourcing
 Crowdsourcing is a new form of production organization
brought by the Internet. It is a new business model that
companies use the Internet to assign work, find creative
points or solve technical problems. These organizations can
take advantage of the creativity and ability of voluntary
employees via controlling the Internet --- these voluntary
workers have the skills to complete the task, willing to use
their spare time to work and wanting a small remuneration
for their services, or no immediate reward, only to satisfy
the prospects getting more payment in the future,
especially for the software industry and the service sector,
this provides a new way of organizing labor.

 Compared with meal


Large numbers of people at the
same time (free or sharing costs)
cook for You

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Searching Crowdsourcing - Human Flesh Search
(South China Tiger Incident)
 On 3rd October , 2007, Shanxi farmer Zhou Zhenglong said that he took South China tiger
photos in Bashan; on the 12th of same month, the Provincial Forestry Department of Shanxi
held a press conference to show the South China tiger photos. After several hours, questions
about the real of "Tiger photos" appeared in the Seying Wuji BBS, then netizens constantly
questioned the picture from the light, camera angles, realistic paintings and other search
angles.
 On 15th of November 2007, netizen named "Panzhihua xydz" said the tiger photos were very
similar to the pictures hanging in his house; the following days, netizens across the country
continued to report about finding " New Year tiger paintings", leading online discussions about
tiger photos. Voice thinking it’s fake gradually prevailed.
 A netizen named "West undefeated" who played an important role in "abusing cat incident",
distinguished the trademark in lower left corner of "South China Tiger” carefully in Baidu South
China Ttiger BBS . He found a traditional Chinese character of "Dragon". West undefeated
then used the " New Year Dragon Painting", "Dragon mural", "Dragon wall painting" and other
keywords to search on the Internet.
 As a result, he found the same trademark in the"Xinlong
wall painting" color printed and packaged by Lancaster
Company in Yiwu, Zhejiang...
 You can‘t wrap fire in paper. On 29th of June, 2008, the
so-called "south China tiger photo" has been identified as
false picture finally, Zhou Zhenglong was arrested on
suspicion of fraud.

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Traffic Optimization Crowdsourcing ——
The “Real-Time Congestion Avoidance" between FM103.9 and
AMAP
 FM103.9, Beijing Traffic Radio provided messaging platform
 The drivers are notified through broadcast;
 If you want to report a road traffic information, you can send a SMS to
the broadcast platform.
 The radio host picks and reads relevant SMS.
 The functions of AMAP "real-time congestion
avoidance"
 On the one hand, through loading GPS and wireless
communications on the taxis in major cities ,
logistics cars and other vehicles on the industrial
operations, it can send and transmit the vehicle
travel time, speed, direction, coordinates and other
parameters information to a floating car dashboard
in center, and then comes to the traffic information
of road.
 On the other hand, nearly ten million AMAP online
navigation users every day also gives a big data
about users’ traffic service.
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Crowdfunding – NoPhone project of KickStarter
 September of 2015, the Kickstarter
website launched a NoPhone
project crowdfunding. NoPhone is
to response to the relief of phone
addicts, and their product is a
mobile phone-sized plastic plate.

 Up to 30th of October, it has


raised $ 18,316 successfully(far
exceeding the initial target of $
5,000).

 Till the thanksgiving, more than


2,000 orders were received ($ 12
for each). It was to be distributed
before Christmas.

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Information Crowdsourcing Platform
 Farmeron provides farmers data tracking and analysis services like
Google Analytics. Farmers can use this software to record and track
their conditions of rearing livestock (fodder stocks, consumption and
spending, livestocks’ birth, death, milk and other information, as well
as information of farm income and expenditure ). Farmeron puts the
fragmented agricultural production documenting together. with
advanced analytical tools and reports, it can monitor the farm and its
production, helpful for farms to make independent and scientific
agricultural production plan.

Fragmented Supply
DOES Make Sense!

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Logistics Crowdsourcing

Logistics is going to build


"great arteries" or "blood
capillary"?

Inter city Last mile delivery


transportation cost
cost

Intelligent integration of Transportation


cost between
fragmented supply capacity warehouses

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AI Augmentation

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Deep Blue won Gary Kasparov (1997)

http://www.turbulence.org/spotlight/thinking/chess.html
http://www.bewitched.com/chess/
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Nowadays robotics

Google Car
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Non-power AI
Google Translation

Source: http://www.nytimes.com/2010/03/09/technology/09translate.html
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Non-power AI
 IBM Watson

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Non-power AI
Computer can be artists!
Two paintings about Aaron Program developed by Harold
Cohen:

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Non-power AI
 Computers can be an artist!
清平乐·黄菊 西江月·饮酒 点绛唇·佳人

相逢缥缈 饮酒开怀酣畅 人静风清


窗外又拂晓 洞箫笑语尊前 兰心蕙性盼如许
长忆清弦弄浅笑 欲看尽岁岁年年 夜寒疏雨
只恨人间花少 悠然轻云一片 临水闻娇语

黄菊不待清尊 赏美景开新酿 佳人多情


相思飘落无痕 人生堪笑欢颜 千里独回首
风雨重阳又过 故人何处向天边 别离后
登高多少黄昏 醉里时光渐渐 泪痕衣袖
惜梦回依旧
Zhou Changle,You Wei,Ding Xiaojun,A Genetic Algorithm for the Automatic Generation of Song Poetry And Its
Realization by Machine,Journal of software,2010,21(3):427-437。

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The Commercialization of AI

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Commercialization Features of AI
 AI is able to learn quickly through the high-speed computation
(hardware acceleration + optimization algorithm), to achieve a
certain degree of intelligence.
 For example, a production planning model needs 82 years with computer and
linear programming algorithm in 1988 ; but in 2003, the same model only
needs one minute, almost 43,000,000 times fast, i.e., 1000 times because of
the increase of CPU, 43,000 times because of the algorithmic optimization.

 Features of AI
 Global optimization (calm, no blind spots)
 Feasible Solution Space, though very large!
 Ultrahigh speed
 Deep learning ability --- Innovation
 speed up! speed up! speed up!

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AI Augmentation
• The human
But all these abilities are gradually
brain is able to
hosted by machines.
store data,
process
information,
extract
knowledge and
create wisdom.

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Challenge You or Augment You?

What is still left?


Wisdom is partially taken over by
big data analytics.

Knowledge management is taken


over by Google, Wiki, etc.

Information processing is taken


over by SAP, Microsoft, etc.

Data storage is taken over by Oracle,


Cloud systems, etc.

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Imagination
- Expand the Solution Space to Infinite!
 You can
image
 Break the red
light…
 Drive off…
 Flies to the high
latitude space…
 ……


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Motive Power -
Technology Innovation

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Profit 
=
Revenue  – Cost 

Longtail Market AI Augmentation Crowdsourcing Platform

Information Technology
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Horse Manure Crisis
 in 1990s, the problems brought by the carriage:
Serious traffic congestion; unbearable noises of
wheels and hooves; many accidents (2 times of
today's accident accidents).

 But the most intolerable thing is horse manure. A horse excretes manure
about 24 pounds per day. A total of about 200,000 horses’ manure weighs
about 5 million lbs a day in New York.

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The Resolution of Horse Manure Crisis

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Untimely Business Technology Innovation
 Prof. Charles Babbage designed a theoretical model of
a mechanical computer in 1860.

It was too look-ahead for people to accept. But now he is


titled as one of the founding fathers of computer science
after 100+ years.
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Dr. Qiang Wei (卫强)
Associate Professor of Information Management
School of Economics and Management
Tsinghua University
Beijing 100084
China
weiq@sem.tsinghua.edu.cn

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