Erik Brynjolfsson is a leading expert on the new relationship between man and machine and the challenges that emerge when innovation is decoupled from growth in jobs and incomes. He discusses that relationship during this conversation with McKinsey Publishing’s Rik Kirkland for The McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, and register to receive email alerts, please click here.

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“We’re finally getting at that seminal moment in human history when we can talk to our machines and our machines will understand us in regular, natural language,” says Massachusetts Institute of Technology (MIT) professor Erik Brynjolfsson. In this video, he explores the role of big data in business performance, the rise of robotics, and the decoupling of the historical relationship between gains in productivity, incomes, and jobs. He is the coauthor, with MIT research scientist Andrew McAfee, of Race Against the Machine (Digital Frontier Press, October 2011). This interview was conducted by McKinsey Publishing’s Rik Kirkland. What follows is [a portion of] an edited transcript of Brynjolfsson’s remarks.

Technologies to watch

We see a slew of amazing innovations already in the pipeline. We’ve had a chance to look at some of them. A few of them are beginning to have significant effects now, and I think more of them will have even bigger effects in the next five or ten years. Obviously, big data has got to be at or near the top of that list.

Andy [Andrew McAfee] and I have done a lot of work on looking at how big data is changing companies. It’s very striking to us how the companies that are measuring their operations more carefully, taking these very large volumes of data and creating more analytical types of management practices, are dramatically outperforming their competitors.

We’ve spent some time looking at different kinds of robotics. For instance, our friend Rodney Brooks has a company called Rethink Robotics. We play with a robot called Baxter, and it works for less than $4 an hour, and can do a lot of basic, routine manual tasks. And the big advances there were improvements in vision; sensory systems, more generally; touch; relatively fine motor control; and it can work more autonomously than other robots.

Another very striking example is the Google self-driving car. I had a thrilling experience riding down Route 101, and at first, it was kind of scary because you’re just sitting there and there’s no driver. But then, after a while, you kind of feel like, “Hey, this is kind of cool.” And by the end of the ride, I think I was almost bored. It was like, “Hey, this is driving so smoothly and confidently, I almost feel more secure in this car.” In fact, I did feel more secure in that car than I did riding with a typical Boston taxi driver.

Another big category is in using different kinds of artificial intelligence to answer questions. We had IBM’s Watson supercomputer come and play our team of MIT students, and Watson completely kicked their butt playing Jeopardy! But, of course, they didn’t build it just to win $75,000 at Jeopardy! They have it answering questions at call centers—a whole variety of unexpected questions. They have it doing medical diagnoses, legal recommendations, and financial- services recommendations.

And I can just see a plethora of opportunities there to answer all sorts of unstructured queries from very large data sets in a way that not just matches but exceeds human capabilities. And there are a lot of jobs that are going to be affected by that, and a lot of wealth that can be potentially created from that.

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To read the complete transcript of the conversation, please click here.

Erik Brynjolfsson is the Schussel Family Professor of Management at MIT’s Sloan School of Management. This interview was conducted by McKinsey Publishing’s Rik Kirkland.