A colleague recently emailed an argument that higher level computing providers like Heroku are doomed due to the “Fundamental Law of Another Mouth to Feed” where the margin requirements of the services these providers are reselling means they will eventually lose to someone without that margin in their supply chain. As with any asymptotic complexity argument, this is sound theoretical thinking, except it ignores the significance of constants in the equation. Following is a slightly cleaned up version of my response.
Tag: biz
The Fog of Innovation
The Fog of War is invoked to describe the uncertainty that permeates combat operations. This term is generally attributed to a quote by Clausewitz: “The great uncertainty of all data in war is a peculiar difficulty, because all action must, to a certain extent, be planned in a mere twilight, which in addition not infrequently — like the effect of a fog or moonshine — gives to things exaggerated dimensions and unnatural appearance.” (via wikipedia).
The evolution of an innovation or innovative company faces a similar fog. At any point in time, we extrapolate from current conditions a set of possible future outcomes and take action to try to bring the best outcome into being. In one view, we should make economically rational decisions, those that maximize our expected return over the outcomes weighted by their likelihood.
However, Nassim Nicholas Taleb’s “The Black Swan” argues convincingly us that the seeds of disruption and destruction lie in events that exist outside all reasonable extrapolations of a current state of affairs. The occurrence of a highly improbable event is, in fact, inevitable.
Since we can’t know anything for sure, innovators have to operate at a completely different level than analysts. It’s a chess game where the rules can change mid-play forcing a complete re-evaluation of strategy. For example, the iPhone was a Black Swan to the cellular industry, as this analyst’s perspective shows. This dynamnic is why you should ignore Forrester and other analysts – they tell you what the world will be like if nothing surprising happens, but surprising things always happen.
Discipline and Innovation
David Fore of Lybba forwarded me this article on innovation. It provides a set of beautiful examples of the role of discipline and standardization in fostering innovation.
At my first startup company, Silicon Spice, we were extremely disciplined in how we structured internal communications, identified and followed technology standards and incorporated automatic testing into all our technology development efforts. The company-wide discipline we established allowed for an unprecedented pace of product innovation in the rapidly evolving communications market of the late 90’s. Peaking at only 120 employees, we constructed a complex set of technology targeting telco equipment vendors including reference voice switching boxes, a 2.5 Watt 21-core DSP processor, companion ASIC devices, a vector compiler, a real-time OS, a fully-featured set of voice processing software and a complete suite of development tools for our platform. A few people in key roles were able to spot opportunities that spanned numerous product sub-teams and we were able to quickly implement coordinated design changes across our home-grown technology stack.
A lead engineer from Texas Instruments, our primary competitor, once commented to me that they couldn’t believe that we had build our product in only 3-4 years with 100 people; I didn’t have the heart to tell him the product they were evaluating for acquisition was built by an average of 50 people over 16 months! We seized 70% of the carrier-class market from them in the 18 months following our acquisition.
Frumious Abstractions 