Chichen Itza photograph courtesy JuanRojo
If you’ve been following this blog for long, then you’ll probably know that I’ve been interested in a number of themes to do with information and its implications on business structures and process. You will also know that every now and then, I use the arenas of food and music to illustrate points or issues.
Of late, much of my time has been taken up in reading (and re-reading) The Power of Pull, and I’ve written a couple of posts on the subject. Messrs Hagel, Seely Brown and Davison have really made me think about things; they’ve answered some of the questions I’ve had for a while, and raised a number of new ones.
In parallel, I’ve also been delving into collapse theory, sparked off by Clay Shirky’s excellent post on the collapse of complex business models. That led me on to digging deeper into Joseph Tainter; I ordered and read The Collapse of Complex Societies straightaway; if any of you is interested in collapse theory, I would strongly recommend you read it; it is also really worth reading a long book review that Professor Tainter did, headlined Collapse, Sustainability and the Environment: How Authors Choose to Fail or Succeed.
Clay has also been responsible for putting a third, connected, stream of thinking into my head, via Kevin Kelly, another must-read person. The Shirky Principle. [Incidentally, you can rest assured I will be reviewing Clay's upcoming book, Cognitive Surplus. I've already ordered it; how nice it was to see that the book was actually being released same-day US and UK. I am so sick of artificial scarcities.]
“Institutions will try to preserve the problem to which they are the solution.” — Clay Shirky
So that’s where my head is right now. Thinking about institutions built fundamentally around “push” principles trying to survive in a “pull” world. Thinking about institutions that are designed that way through no fault of their own; these principles have been the basis of management and economics thinking for the best part of a century. Thinking about institutions that “try to preserve the problem to which they are the solution”. Thinking about institutions that grow more and more complex over time, and then collapse.
Which leads me to the main point of this post. Predictability.
In the Power of Pull (pg 37) the authors articulate a number of “instincts, assumptions and beliefs” that make up “the philosophy of push”:
- There’s not enough to go around
- Elites do the deciding
- Organisations must be hierarchical
- People must be molded
- Bigger is better
- Demand can be forecast
- Resources can be allocated centrally
- Demand can be met
I am particularly taken with the Demand can be forecast/Demand can be met statements. For some years now, I have been bemused at the things institutions do in order to make something fundamentally unpredictable into something somehow more predictable.
Through sheer serendipity I was at Burroughs Corporation
when the firm, and the industry, began to realise that the money was moving from hardware to software; I was at Data General
when the firm, and the industry, began to realise that the money was moving from proprietary to open; I was at Cap Gemini
when the firm, and the industry, began to realise that IT services were moving from national to global scale; I was at Dresdner Kleinwort
when the firm, and the industry, began to realise that financial services were moving from analog to digital.
In each case, there was a significant shift taking place in the industry, one that was going to transform the entire market radically. In each case, there was a clear institutional response. And in each case, the response was expected to provide a predictability of outcome that was required to be of unusual precision for such an emergent venture in such a changing environment.
I saw the same thing when it came to “agile” methods and practices. Everybody seemed to understand what the methods and practices were; and then, for some strange reason, everyone expected some incredible level of precision in planning and outcome which militated against any concept of agility; this is what I was referring to as the “planning horizon” problem in a recent post
These behaviours caused a level of cognitive dissonance in me, and I’ve therefore been thinking about it for some time now. Right now I don’t want to go into why people want this predictability, suffice it to say that it appears to be a Push principle as articulated in the book. What I want to do is concentrate on the things people do in order to achieve this state of predictableness.
The easiest route to guaranteeing predictability is to control the market, have a monopoly. Many companies have tried this in the past, many continue to try this, despite legislation and regulation to prevent this. It is easier to do this in some jurisdictions rather than others; surprisingly, it would appear that some companies in “developed” countries seem to be as adept in sustaining monopolies while pretending to be otherwise, as their emerging-nation counterparts: the processes get more sophisticated and get called lobbying rather than bribing, but the outcome’s the same. Nevertheless, global monopolies are hard to sustain: artificial scarcities (eg region coding on DVDs) get met by artificial abundances (eg chipping of DVD players).
If you can’t have a monopoly, the next thing you do in your quest for predictability is to try and control your customer, make it hard for the customer to leave you. This is not surprising, since financial backers (quite possibly the ones wanting the predictability in the first place) are trained to ask “where’s your lock-in” as part of Due Diligence 101. Overt ways of controlling the customer start looking anti-competitive; as a result, the practice has begin to ease, although there are worrying signs that it will resurge in the guise of customer data import and export.
If you can’t lock in your customer, then you do the next best thing. You convince yourself
you have predictability. You use a variety of financial and reporting tools to sustain this pretence, often under the guise of “risk management”. [In this context, I would strongly recommend you read Michael Power's The Risk Management of Everything, a wonderful little tract that you can download for free here
.] Sometimes when I look at everything that happened in the financial markets, I cannot help but feel that the same principles that Clay Shirky speaks of in The Collapse of Complex Business Models applies in modern financial markets. The problem with this approach is that you land up having no defence for “black swans”
. In fact I would go so far as to state that the process of pretending predictability is one that systemically creates and increases black swan risk.
If you can’t convince yourself, then it all begans to unravel. Because you’re left with the temptation to convince others
of the predictable nature of business while not being convinced yourself. Why? Because “push” organisations work on this basis of precision in predictability. The techniques people use to “convince” others in this respect are immoral at the very least and illegal at the extreme.
Institutions, particularly “push” institutions, have grown up on the mother’s milk of predictability, of smoothed-out forecasts, of a level of precision that is no longer sustainable in a “Pull” world. They’ve resorted to using an extensive variety of techniques to try and hold on to that predictability; some of them are sustainable in the short term, some of them are downright illegal, none of them have any real value in the long term.
Which brings me to the question that’s keeping me awake. Can a traditional Push institution really become a Pull institution, bearing all this in mind? is that transition, that hybrid state, really possible? how long can one institution uphold two sets of radically different principles under one style of management?
I tried to imagine a Push institution outsourcing work to a Pull institution, to try and understand what the working agreement would look like. And I didn’t like the answer.
Comments and advice welcome.