Machine Learning & Artificial Intelligence

Individual Assignment

Submitted to: Mr. Neil Harwani & Prof. Balakrishnan Unny R

Submitted By: Meet Shah

Roll No: 191331

Batch: MBA FT (2019-21)

Date of Submission:

Institute of Management, Nirma University

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 TABLE OF CONTENTS

Contents
Executive summary:..................................................................................................................................3
Main Problem:...........................................................................................................................................4
Key events..................................................................................................................................................4
Objectives...................................................................................................................................................4
A. Product Mission Philosophy:...........................................................................................................4
B. Fulfilling Objectives:........................................................................................................................5
Functional Analysis...................................................................................................................................5
A. Top Management:.............................................................................................................................5
B. Marketing:.........................................................................................................................................6
C. Finance and Accounting:..................................................................................................................6
D. Production and Operation:..............................................................................................................6
E. Research and Development:.............................................................................................................7
F. Legal:.................................................................................................................................................7
Why did Numenta have such a hard time to commercialize its technologies into a platform until
2015?...........................................................................................................................................................8
Will the current Numenta strategy be successful?..................................................................................9
What business model should Numenta implement?...............................................................................9
Strategic Alternatives & Solutions:........................................................................................................10
Recommendation & Implementation.....................................................................................................10

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Executive summary:
Numenta's Neuroscience study, artificial intelligence technologies (hierarchical temporal
memory), Numenta's business models from 2005 to 2016, and other business model threads were
explored in this event. The key problems are which company's approach is ideal for Numenta if
Numenta has discovered the best business model. Since Numenta is a technology distributor, I
believe the six different categories of licenses have provided good economic prospects. Numenta
should strive to expand the research and technology. Around the same time, progress into reverse
engineering the neocortex should be covered so that potential legal trials can be won.

Numenta is the organization under investigation. It was founded in 2005 with the aim of being
the leading organization in the field of artificial intelligence. The business offers a number of
data-processing solutions. The theory of neocortex, which was first identified by proponent Jeff
Hawkins, explains its biologically constructed technology. This technology is useful for
analyzing and interpreting data sets in order to predict trends in various types of data. One of
these firms is Numenta, which has made NUPIC (Numenta Platform for Intelligent Computing)
one of its main ventures. The company's offices are in Redwood City, California.

Numenta is a machine intelligence firm that has created a unified philosophy, core software,
hardware, and implementations. Jeff Hawkins, Donna Dubinsky, and Dileep George formed the
organization in 2005. The case concerns the founding of Numenta and the obstacles that Jeff
Hawkins encountered. Numenta is currently dealing with several issues about the company's
prospects, and they must devise a solution.

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Main Problem:
There are a few issues that the organization is now dealing with. Commercialization of their
HTM technologies is one of them. HTM (Hierarchical Temporal Memory) is a pattern
recognition and detection algorithm for computers. Jeff Hawkins developed HTM in 2004. The
corporation is having trouble figuring out how to incorporate HTM into daily operations.
Another challenge the organization faces is that it needs a big sum of capital right away in order
to boost HTM. The company's existing financial resources are insufficient to sustain HTM
technology in the long run. The founders began to consider forming a corporate relationship with
a major tech firm. Even, though Numenta is the first in its sector, competitors will emerge soon.
IBM's Stream system has also been unveiled. Park Stream was acquired by Google, and HNC
Software was acquired by FIC. Another significant issue is intellectual property rights.
Numenta's HTM platform is protected by two patents. However, keeping patents in the electronic
software field is very difficult when judges sometimes rule that computer software is ineligible
for patent rights. Numenta has had to deal with this problem on many occasions. Numenta's main
issue is with management and accounting within the company's system and organization.
Another major question for Numenta was whether the business could continue to expand through
open innovation or secure Machine language innovation through intellectual property (IP)

Key events
Jeff Hawkins' interest sparked the whole thing. Hawkins began research on the workings of the
human brain after graduating from Cornell University. He attempted to discover and copy the
operating theory of the human brain in order to apply it to machines and make them artificial
intelligence. With this in mind, he began working at IBM. Hawkins attempted to explain his
"brain hypothesis" to Ted Hoff, IBM's chief scientist, but Hoff determined that Hawkins' theory
was unsuitable for commercial applications. In 1982, he began a new job at GRID, which
provided him with more resources and workspace. He formed RNI (Redwood Neuroscience
Institute) in 2002 and Numenta with George and Dubinsky in 2005.

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Objectives
A. Product Mission Philosophy: Numenta's product goal is to optimize the effect of Jeff
Hawkins' Hierarchal Temporal Memory (HTM) Technology, which he invented.

B. Fulfilling Objectives: To get the most out of HTM technologies. Since the possible uses for
Numenta's technologies are numerous, the company has designed their technology as a portal.
This well-structured forum would pave the way for the development of a self-contained
ecosystem of web developers. They'll make money by selling support, software licenses, and
intellectual property licensing. The precise sales balance will vary over time, but Numenta will
still strive to help their developer partners succeed while still succeeding. They gauge their
progress by the number of developers with whom they have collaborated.

Identification of the Consumer Scenario: Numenta's target demographic is developers who are
searching for a long-term financial return.

Identification of the Management Stance: The center of influence is Jeff Hawkins and Donna
Dubinksy. Hawkins is the company's founder and research chairman, while Dubinksy serves as
the company's CEO and board member. They are the decision-makers who propel the business
ahead.

Mintzberg Stance: Numenta is a for-profit organization. They became the first to work in the
HTM area after Hawkins invented it. Hawkins is a prolific inventor who has worked on a
number of groundbreaking technology projects, including the Palm Pilot. At Palm and
Handspring, he collaborated with Dubinksy. The Dubinksy-Hawkins business relationship has a
track record of success. Hawkins was right in his prediction that everyone in the future will have
a pocket-sized device (smartphones). This realization demonstrates his entrepreneurial skills and
way of thought even further.

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Functional Analysis
A. Top Management: Jeff Hawkins and Donna Dubinsky, the company's owners, manage
Numenta. Hawkins is in charge of analysis, and Dubinksy is the company's CEO and board
chair. Dubinksy worked with Apple Computer and Claris (an Apple subsidiary) for ten years,
gaining useful expertise in operations and policy. When the company was formed in March
2005, Dileep George was a co-founder and chief technical officer, but in May 2010, he took “an
indefinite leave of absence from Numenta to consider founding a new company focusing on
applications.” Hawkins' brain hypothesis was operationalized thanks to Dileep George's thesis as
a doctoral student at Stanford University. Numenta has a large scientific advisory board that
comprises specialists in developmental biology, computer science, neuroscience, and electrical
engineering.

B. Marketing: The case would not go into detail about Numenta's marketing strategies. It does,
however, state that their headquarters are in Redwood City, California, which is located in
Silicon Valley. Since it is one of the world's leading high-tech centers and host to a vast range of
cutting-edge developers, engineers, and venture capitalists, this venue provides Numenta with a
variety of resources for increasing its creative capacity. Some of their eight existing collaborators
marketing the commodity are also listed in the event. Vitamin D is a video monitoring
technology that employs HTM to distinguish genuine risks from false alarms at a fraction of the
expense of traditional video streams. EDSA claims HTM will function as the system's "brains,"
learning to distinguish between "routine" and "non-routine" incidents and alerting the
organization to disturbances that trigger power outages. Forbes.com employs HTM to monitor
user page clicks and anticipate user interests. In comparison to existing technology, the
programme demonstrated higher degrees of accuracy. An unnamed automaker, Lockheed Martin
Advanced Technology Laboratories, and an oil firm are among the other partners. Numenta is
also looking for potential partners that can contribute capital to provide training data, domain
experience, and go-to-market capabilities. They don't sell themselves vigorously.

C. Finance and Accounting: In this situation, no detailed financial detail is given. Hawkins and
Dubinksy were said to be investing Numenta on their own with money gained by Palm and
Handspring. Numenta lacks the financial capital that organizations like IBM have, causing them
to outspend and out promote them.

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D. Production and Operation: Hierarchical Temporal Memory (HTM) is superior to Artificial
Intelligence (AI) in Hawkins' view (See Exhibit A). HTM provides knowledge to the machine,
which then learns on its own through observations in two ways: by searching for common spatial
patterns and by analyzing those patterns over time. HTM will make forecasts so it knows what it
can expect next. It's a silicon-based machine, which means it's orders of magnitude better than a
person at analyzing data and doing calculations. Human neurons work in milliseconds, while
HTM works in nanoseconds. HTM has the capability to store an infinite amount of data. Another
benefit of HTM is that it is not limited to human senses, allowing it to perform activities that are
outside the capability of ordinary humans. Numenta first launched NuPIC (Numenta Framework
for Intelligent Computing) in 2007, which is a technology platform for HTM deployment that
runs on Windows, Linux, and Mac OS X. Hawkins concluded that promising developers’
financial gains in the future was the quickest path to commercial success. Numenta's website has
a forum, wikis, and a blog written by members of the Numenta team to support these developers.
Users are then invited to participate actively, post their work, fix bugs, and contribute to forums.
Users of HTM are encouraged to provide active reviews to the organization as a result of this
approach. Numenta now has a Partner Program, which is a fee-based assistance initiative that
provides members with high-level consulting and technical support. Numenta now has 100-200
developers and eight member firms as a result of this scheme.

E. Research and Development: In 2011, Numenta intended to release its second-generation

tech, which will be built on newer algorithms. Present consumers of the first-generation platform
must choose between updating to the newest version or choosing to use the older version without
Numenta's assistance. The potential for growth is dependent on Hawkins' expectations since
HTM is already in development. HTM could be used in a variety of ways in the future, according
to the situation. Computer crashes, big natural disasters and their causes, and asset markets may
all be predicted using HTM. The FBI and CIA may also use HTM to study e-mail records and
voice data to forecast the probability, date, location, and nature of potential terrorist attacks.

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F. Legal: Numenta is the owner of two patents on HTM and has some others pending. Abstract
inventions, such as mathematical algorithms, were not found patentable prior to the Supreme
Court's State Street Bank ruling in 1998. The decision was overturned, with the court ruling that
an invention is patentable if it “produces a useful, real, and observable result.” Although
defending intellectual rights has become simpler, many tech companies now find it almost
difficult to write new software without infringing on existing patents, which can result in
multimillion-dollar litigation. Numenta is in a legal bind, torn between wanting to defend the
intellectual rights and wanting to make HTM accessible to developers in order to advance the
technology. Numenta pledged in a January 2011 announcement that it would not enforce its
existing patent rights against the invention or use of independent HTM systems as long as they
were being used for testing and not for commercial or manufacturing purposes. ‘Training an
HTM network with the goal of later implementing the trained network or programme for
commercial or production purposes, and using or allowing others to use the output from HTM
technology for commercial or production purposes' is what commercial or production use means.

Why did Numenta have such a hard time to commercialize its technologies into a platform
until 2015?
This occurred as a result of the factors listed below. The introduction of HTM technology was
initially too difficult for developers to comprehend, which hampered its widespread adoption. As
they progressed, they realized that their algorithm was not entirely suitable for solving the
problem, so they had to change it. Furthermore, fine-tuning these algorithms would have
relegated them to a vision corporation with small opportunities.

• Finding the best implementation in the market where their technology could be useful proved
problematic, causing the project to be postponed.

• After that, finding out how to incorporate their technologies with current infrastructure was
incredibly complicated.

• Another issue was that, because their technology was complex and new, they had to recruit
developers out of their own wallets to build up and help their customers.

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• They were still unsure about whether to do it commercial or large first, and they were more
concerned about making their idea more technically sophisticated than with making money at
first.

Prior to 2015, Numenta failed to commercialize their technologies for a variety of reasons,
including opposition to their technology from certain artificial intelligence industry players. Any
artificial intelligence specialists were opposed to the concept of integrating biological models
into artificial intelligence, believing it to be much too complex and dangerous, so it took a long
time to persuade them to accept the idea and conform to it, thus assisting in its adaptation and
application. Numenta's technology demanded constant improvement and it was a challenging
technology for users to utilize. As a result, the company needed to find a way to make the
technology more understandable to people who had shown interest in it to be able to use it
properly without any difficulty due to its complexities. Often, because of the technicality and
sophistication of the technologies they developed, it was difficult to identify issues and
technicalities that were suitable for using the technology, so it could not be readily
commercialized due to a lack of consumers who could appeal to it.

Will the current Numenta strategy be successful?

The new Numenta plan would succeed when the business is organized as a non-profit entity,
allowing for executive recruiting and investor attraction. Adding new hires would boost the
company's competitiveness and performance, indicating that Numenta's plan has a good chance
of succeeding.

In the field of machine intelligence, the world is now witnessing a change close to the transition
from analogue to digital computers in the 1940s. But they're just fine-tuning the applications
they've developed. The algorithm is being fine-tuned. But, at the same time, the corporation must
succeed, and in order to do so, they must continue to launch new products into the market, in the
hope that one day they will become a success.

Numenta's new approach is to rely on an engaged science environment, which allows the
organization's community to incorporate and develop general technologies that can aid in the
advancement of solutions to the community's daily issues. This strategy provides Numenta with
a great opportunity to grow their business by using their employees' creativity to develop

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technological solutions that will enable the market to find solutions to the technical problems
they face, allowing them to adapt to technology faster and, as a result, have a larger market in
which they can make an impact.

What business model should Numenta implement?

Grok's success hinges on its ability to transform its capital and capabilities into a sustainable
business model. The company's initial business model—a proprietary platform with dual
licensing—enabled the NuPIC programme to be developed quickly by fostering a group of open-
source developers who were given access under a free research license. Grok's website included
a forum, wikis, and a blog written by Grok team members to aid developers in their efforts.
Users were encouraged to participate actively, post their jobs, fix bugs, and participate in forums.
Grok has created a Partner Program, a fee-based funding project that provided high-level
advisory and logistical support to participants. Grok offered a fee-based commercial license until
a developer reached a stage where commercial value was generated. Grok had drawn between
100 and 200 developers and had eight partner companies collaborating on its HTM technology
prior to the product's commercial release.

In 2011, Grok launched a beta version of its second-generation tech, which is built on newer
HTM algorithms. The corporation halted aggressive maintenance of NuPIC and its associated
vision applications in preparation of this commercial rollout. Existing NuPIC users had the
option of upgrading to the newest version (at a cost), or continuing to use the legacy programme
without Grok's support.

Hawkins is likely to expect a business strategy similar to what Microsoft did for MS-DOS:
licensing it non-exclusively for a nominal fee to anybody who wants it. Microsoft was able to
make MS DOS the standard operating system for personal computers as a result of this. Grok has
already established strategic partnerships with EDSA Power Analytics (a tech company that
analyses electrical power systems), Lockheed Martin, DARPA, and Electronic Arts (a computer
game maker and marketer), as well as a host of energy and automotive firms. Other industries
that could benefit from this technology include military, aerospace, and health care.

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Strategic Alternatives & Solutions:
The three strategic alternatives & solutions can be:

 Raise capital from outside sources and invest in a "killer app" (Ahmad's preferred
option)
 Raise Numenta's IP profile by writing letters to researchers (Dubinsky and Colligan's
preferred option)
 Stick with it until the technology improves (Hawkins preferred option)

Recommendation & Implementation

Hawkins, in my opinion, is a safer choice. Raising outside funding would only raise the demand
to produce, which is negative for technology and science. Keeping on track has proven pointless
because funds are needed and are rapidly running out. Digital technologies advanced at a
breakneck pace from 1990 to 2010, but now that development seems to be diminishing in terms
of new developments, it could be a while before we see real-world implementations of HTM and
other brain technologies. However, if we cannot make money, the organization will be unable to
succeed, and the true goal will be lost. As a result, it's critical that we continue to make profits
while both doing analysis and fine-tuning our core competencies. Waymo (self-driving car) is an
example of this. Google does not make much money from this, but it is willing to invest in this
business because it has many other sources of revenue.

While raising external funds is a choice, Dubinsky believes that Numenta will be able to do so
because of her previous venture capital experience. When it comes to technical venture
financing, there was some inconsistency on the part of the VCs. There was also the question of
risk; they were reluctant to risk their money on items that had yet to be tested in the field, since
this would result in slow scaling. Without client validation, convincing them to finance the
project would be difficult.

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If I were in Dubinsky's shoes, my strategy for 2016 will be to stay the course until the technology
is more advanced (Hawkins preferred option). And this is when the maturation period starts.
People are now well aware of it. The corporation would profit further as a result of it. In 2016,
Hawkins' safest approach is to stay the course until the technology has matured. Given
Numenta's struggles to turn the technologies into a forum prior to 2015, the safest approach will
be to stick with it and track the technology until it is mature enough to expand or lift its profile.

Nothing had been implemented as of yet, and the paper was highly theoretical. The hypothesis
can be quite appealing, with ideas that are difficult to ignore when they are appealing, but once it
is put to the test and practiced, there is no clear proof of effectiveness. As a consequence,
whether or not to invest in the app and technologies can be determined by waiting until the
technology has been applied and watching how the consumer responds to it to see whether it will
be well accepted and successful or dismissed.

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