Category: Four pillars

So said Peter Drucker in one of his last books, Management Challenges for the 21st Century.

You’ll get your fill of Drucker quotes in this post, but I want to bring one more of his quotes into the front and centre of your attention:

The American regulation of business rests on the assumptions that to every industry pertains a unique technology and that to every end use pertains a specific and unique product or service. These are the assumptions on which antitrust legislation was based.
These are interesting times. Many would say the Net Neutrality debate is over, the incumbents have won. Many would say the same about Intellectual Property Rights and Digital Rights Management. Many would say that my views on identity and confidentiality and privacy are utopian and impracticable.

It would appear that the three Is that I have spent time arguing about are no longer worth arguing about: the internet, intellectual property and identity.

Time for dinosaurs like me to go quietly to the grave. Or so it would appear.

At times like these, I read. And think.

So I delved into Drucker. And chanced across something I hadn’t read for a while, entitled Technologies and End Uses. For those who haven’t read it, Drucker makes some very simple and worthwhile points:

• The assumptions about technology and end uses to a very large extent underlie the rise of modern business and of the modern economy altogether. They go back to the very early days of the Industrial Revolution.
• …..it was assumed — and with complete validity — that [each] industry had its own and unique technology.
• By now this assumption has become untenable…. In the nineteenth century and throughout the first half of the twentieth century, it could be taken for granted that technologies outside one’s own industry had no, or at least only minimal, impact on the industry.
• Now the assumption to start with is that the technologies that are likely to have the greatest impact on a company and an industry are technologies outside its own field.
• Today’s technologies, unlike those of the nineteenth century, no longer run in parallel lines. They constantly crisscross.
• Constantly, such outside technologies force an industry to learn, to acquire, to adapt, to change its very mind-set, let alone its technical knowledge.
• Equally important…. was a second assumption. End uses are fixed and given.
• This was accepted as obvious not only by business, industry and the consumer, but by governments as well. The American regulation of business rests on the assumptions that to every industry pertains a unique technology and that to every end use pertains a specific and unique product or service. These are the assumptions on which antitrust legislation was based.
• But by now it is clear that it is not just one material moving in on what was considered the “turf” of another one. Increasingly, the same want is being satisfied by very different means.
• It is the want that is unique, and not the means to satisfy it.

These two lock-in layers are fundamental. One that says every industry has its unique technology, the other that says end uses relate to unique and specific products/services.

These two lock-in layers have coloured our thinking, our investment processes, our valuations, our regulations.

These two lock-in layers are dead. Defunct. As in the Python Parrot.

It does not matter to me just how entrenched the incumbents and their lobbies are, it will not be possible to protect the lock-ins ad infinitum.

The ability to transfer disruptive technologies from one market to another, and the ability to vary end-use way beyond what the “inventors” ever dreamt of, these abilities are as American as motherhood and apple pie. They are the essence of innovation, something America has excelled at. And will excel at again. I’m not American, but I love innovation, and believe that the US of A got many things right in supporting and enhancing innovation. Now it looks like there are going to be a few backward steps taken. Tough. Frustrating for all concerned. But ultimately unsustainable.
It is these abilities that will be held back if the battle for the Three Is (Internet, Intellectual Property, Identity) continues the way it seems to be continuing. Held back, yes. Suppressed, no.

It is the want that is unique, and not the means to satisfy it.

It is the customer that does the wanting. The signalling of his intentions.
In markets that are conversations.

[Note: quotations from Drucker and the illustration from Monty Python appear here on a fair use basis; my thanks to the copyright holders]

Consider this article by Donna Bogatin courtesy of ZDNet. She quotes from the New York Times:

The bulk of the writing and editing on Wikipedia is done by a geographically diffuse group of 1,000 or so regulars, many of whom are administrators on the site. The administrators are all volunteers, most of them in their 20’s. They are in constant communication — in real-time online chats, on “talk” pages connected to each entry and via Internet mailing lists. The volunteers share the job of watching for vandalism, or what Mr. Wales called “drive-by nonsense.” Customized software — written by volunteers — also monitors changes to articles….It has a clear power structure that gives volunteer administrators the authority to exercise editorial control, delete unsuitable articles and protect those that are vulnerable to vandalism.

Then consider this article on Feedback Loops and Modelling Risk by Donald Mackenzie in the latest issue of Risk and Regulation. I quote from his conclusion:

Rather, the story of option theory’s effects on markets indicates good reason to be cautious about situations in which large numbers of participants are all using similar models to guide their trading and to control its risks – perhaps because market regulators are pushing them in this direction in respect to risk management. In such a situation, models may sometimes be performative – they may help shape reality to their contours – but the danger of counterperformativity will always lurk.

Again, my emphasis. Next, take a look at this article by Kim Krieger in the latest New Scientist. Questions being asked about the validity and significance of power-law patterns that suggest “scale-free” networks.

Somewhere in the dark recesses of my head, all three are related. Communities will always have moderators. Things that communities build will always be moderated. If you use things that communities build, then you need to have community sense. A sense of that which is common.

Common sense. Not rocket science. Opensource communities have always known this. So when the New York Times says that the bulk of Wikipedia is edited by a thousand-strong group of volunteers, and not ten million, I am not surprised.

I am elated. Because a core of a thousand is a very large core, a 1,000,000lb gorilla. Which is great news.

When the gorillas scale, everything scales. As long as you use community sense when using community products and services. Common sense.

• Markets are conversations, as per Cluetrain.
• Markets contain risk.
• Conversations can help you manage that risk.
• Social software can help you extract what you need from those conversations and thereby help you manage the risk.

I was reading the latest issue of Risk and Regulation, published by the Centre for Analysis of Risk and Regulation (CARR) at the London School of Economics and Political Science (LSE). I’ve read the publication ever since I had lunch with Michael Power, the author of The Risk Management of Everything. If you haven’t read that pamphlet yet, I can do no more than recommend as strongly as possible that you do. It is as fundamental to Four Pillars as Cluetrain and Social Life of Information and Emergence.

An aside: Here’s the description of Risk Management of Everything:

We live in the age of the risk management of everything. Paradoxically this still leaves organisations that diligently engage in risk management exposed to what Donald Rumsfeld called ‘unknown unknowns’ which, by definition, are out of reach of risk management.

This warning about the escalation of the risk management of everything should be taken seriously. In his first Demos book, The Audit Explosion, Michael Power warned against that companies and governments preoccupation with measuring what is measurable – the now discredited ‘targets culture’.

Power traces the start of the risk management of everything back to 1995 – the year of the collapse Barings bank Shell’s Brent Spar PR disaster. Those events illustrated the two key aspects of the new obsession with risk management: internal control and reputation.

The ability of a rogue trader to bring down a bank has prompted organisations to redouble their efforts to use internal control systems to manage risk. But the danger is that the focus on internal controls to manage risks of ‘known unknowns’ leaves organisations vulnerable to ‘unknown unknowns’.

“Reputation has become a new source of anxiety where organisational identity and economic survival are at stake And if everything may impact on organisational reputation, then reputational risk management demands the risk management of everything.”

The anxiety about reputation means that experts and professional bodies are increasingly taking defensive steps to protect their own name, rather than managing risks on behalf of the public. One example of this the proliferation of ‘small print’ as professionals ranging from doctors to accountants attempt to hand risk back to customers, clients or society as a whole.

Now if that doesn’t get you to read the pamphlet, nothing else will. I will explain later why this is fundamental to Four Pillars.

Back to the magazine. As usual, there were a number of thought-provoking articles. All its authors should blog. Are you listening, LSE?

One of them, titled Harnessing Hindsight, looks at how, for example, near-miss incident reports are used to improve risk management in aviation.

I quote from the conclusion to the article:

What implications does this examination of practice hold for current theory? First, it suggests that current models of risk management, and methods of risk analysis, could be productively extended by more fully attending to the ‘positive’ face of operational risk – the organizational practices and social processes that underpin organisational resilience – so moving beyond the current focus on predicting and avoiding failures, errors and harm. Second, it emphasises the central place of knowledge – and its dark side, ignorance – in dealing with risk. Assessing small moments of operational failure is an interpretive process that draws on forms of knowledge that are not readily quantified or formalised, such as the particulars, specifics and details garnered from practical operational experience, or vicarious knowledge of similar events experienced by other organisations. And identifying signs of ignorance, in the form of suspicions that arise from subtle relations and mismatches between current knowledge and organisational events, equally appears to offer a useful proxy for identifying latent risks. Third, it points to the importance of institutional designs that balance the tensions between central oversight and local participation and action, and that establish organisational spaces for collective enquiry and sensemaking around risk events.

Emphases mine. I couldn’t have written a better rationale for the use of social software in risk management. Collective enquiry and sensemaking around risk events.

More later on this theme. Do read the article, even if you have zero interest in aviation. Consider how powerful social software and emergence and P2P models are in this context.

Part of the reason I blog is to improve my understanding of things, even change my opinion as and when I have reason to. This I cannot do unless I read blogs of people whose views are somewhat different from mine, natural selection applied to opensource thought.
Which is why I read Agile Management‘s comments on one of my posts with interest. David Anderson works for Microsoft and holds patents in the internet and telco spaces. So I could be pretty sure his DNA and mine would be somewhat different :-)
So I read. And learned. And I was enjoying it.
Until I saw this:

Confused of Calcutta suggests that commodity features should always be developed as open source projects.
Again at Microsoft we wouldn’t completely agree with this. [And then this] Often open source projects are created as “spoilers” to spoil a profitable market for someone else.

Oh puh-leese. Does he really believe that? Does anyone? Is there something they put in the water (or some other shared utility) to make people think like that?
Opensource is not anticapitalist. It is anti-loss-of-freedom and anti-wasting-money-and-effort and anti-unnecessarily-sometimes-unfairly-constrained markets.

David says “spoiling”.

I say “disrupting”.

Big difference.

In my last post I mentioned how much I enjoyed reading what he had to say. I now find he has a blog as well, to be found here. A taster, taken from this post entitled Surprising Findings On Software Reuse:

Kevin DeSouza and his colleagues in a recent article in the Communications of the ACM published some surprising findings regarding software reuse: reuse happens more by novices rather than by experts, within projects rather than across them, and in transient teams rather than permanent ones. The statement regarding the higher propensity of rookies to reuse compared to older professionals rang particularly true to my ears.

…………………………………

I was surprised when Markos finished the project I considered a tarpit in record time and with resounding success. What he did was to follow a piece of advice I wrote in Code Reading and also give in my classes, but did not follow myself: when reuse at one level of granularity (method, class, package, system) fails, try to reuse at the next higher level.

I feel a need to link coming…..