Saturday, July 20, 2013

On Evolution, Strategy, Cycles and Bias

On Evolution

Many years ago I developed a model of how activities (i.e. things we do) evolve due to competition both demand (user) and supply side from the genesis of the act to commodity and utility provision. See figure 1.

Figure 1 - Evolution

Whilst this process appears self evident i.e. simply looking around seems to show that the once novel and new (genesis) becomes commodity, I took the time (about 6 months) in 2007 to collect 4,088 pieces of data to plot this out and have since then extended the data set. Whilst this represents a weak hypothesis, I have yet to find a better model to explain what is happening though I continue to look.

The process is unavoidable because it depends upon the actions of actors in the market (i.e competition). So, you can't stop it unless you prevent competition. This is also a good thing because it drives development of higher order systems through provision of defined interfaces (an effect known as componentisation) and without it our society would not have become so technologically advanced (see figure 2).

Figure 2 - Componentisation

We don't live in a society where everyone has their own home grown custom built nuts and bolts or home grown custom built electricity supply ... if we did, we almost certainly wouldn't have got much further than home grown custom built light bulbs.

On Strategy

Now evolution is part of one axis of a landscape map which is a technique I use (and others) in determining strategic play. However, mapping is not what I actually want to talk about but instead the importance of strategic play.

Some time ago, I did a piece of work which looked at the level of strategic play between companies and their use of open techniques to manipulate the market (see figure 3). It turned out that some companies were highly strategic players who manipulated environments with open techniques whilst others were not. The size of bubbles in the figure represent number of companies at that particular point.

Figure 3 - Strategic vs Open

What was interesting is that when it came to looking at commercial success then the level of strategic play was a much greater indicator of success than the meme (whether open, cloud etc). This piece of work provided weight to a suspicion that I had but had not been able to previously test. Many companies survive not because of excellence but because competitors are equally incompetent.

On Cycles

Now, it turns out that as a result of competition and the evolution of activities we create inertia to change. That inertia is actually incredibly important as it delineates multiple states of competition which occur at a macro and micro level. These states are known as Wonder, Peace and War.

In the state of war, a pre-existing act is commoditising usually initiated by new entrants whilst past suppliers are stuck behind inertia barriers. It causes a punctuated equilibrium (a period of rapid change) where new organisational forms appear and the past is flushed away (see figure 4)

Figure 4 - Wonder, Peace and War

Now, this model was developed some time ago but unfortunately there was no way of testing it until a cycle occurred. Fortunately cloud computing gave the perfect opportunity to test and in 2011 using a set of  techniques from population genetics (I'm a former geneticist by training) we detected one of the consequences occurring - a new form of organisation budding, a Next Generation. I've written on the characteristics of the Next Generation many times before.

On Bias

The problem for many companies, is in this state of war in IT caused by the inevitable commoditisation of pre-existing acts through competition then not only do we have inertia but a change in economic state, a punctuated equilibrium and a new forms of organisation. The level of strategic play is critical here because you can no longer rely upon the incompetence of competitors. There are a new breed of organisations out there and they use ecosystems, they use technology and open source as a weapon, they understand the landscape and they have great situational awareness.

Strategic play is critical in this world.

So, why do I think AWS is going to be the dominant force in infrastructure services. Well, because of their level of game play (use of ecosystems etc). I think Google Compute Engine is a serious threat and MSFT is dangerous but it has its own problems (i.e. the biggest threat to MSFT is MSFT).

Why do I think OpenStack is likely to be a dead duck? For exactly the same reasons. The level of game play sucks (e.g. collective prisoner dilemma, focus on a transitional market of private, differential play rather than co-opt). Unless a real player enters the space around OpenStack then I don't rate its chances.

Unfortunately this stuff is uncomfortable reading for some especially when their commercial self interest is at stake. So, I've been called everything under the sun from buffoon, to gaga, to pundit, to fake academic, to zealot ... it's a long list with usual questioning of my integrity by self proclaimed men of reason. What they don't do is attack the model by providing a better model to explain the changes we see, they just proclaim it is wrong and ask we believe them. Well, I don't.

I'm a skeptic. I don't even believe the model because that's all it is - a model. I simply understand that it's the best one that I have found until I find better. If you find it useful, good but if you want to take it apart then just provide one activity which won't commoditise through competition or provide me with a better model. I've yet to find it, I'll be very happy if someone can point me to one.

I'm also happy to report that the process of competition driving commoditisation of activities still seems to be occurring. It's not going away. Nothing has changed.

 Get used to it.


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