[p2p-research] Thinking about predictability: More musings about Push and Pull

[Ryan]

Brilliant...

Sent to you by Ryan via Google Reader: Thinking about predictability:
More musings about Push and Pull via confused of calcutta by JP on
5/3/10

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. Esmeralda Fortune Teller Machine:
courtesy of MiniatureMadness 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. My tea leaves: courtesy of Katherine
Finch. 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.
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