Irving Wladawsky-Berger

Cloud, Services and the Transformation of Production

Ever since cloud computing first appeared in the IT world, people have struggled to define what it is and why it’s so important. “There is a clear consensus that there is no real consensus on what cloud computing is,” said the organizer of a 2008 cloud conference in his closing remarks.  Just about everyone agreed that something big and profound was going on, although we were not totally sure what it was yet. 

Is cloud the 21st century version of time sharing, enabling users to get virtual access to different kinds of IT resources and software capabilities without having to own computers?  Is it a return to centralized computing, driven by the rising complexities, management costs and energy inefficiencies of distributed systems?  Is it the evolution to utility computing, where, as with electricity and water, you get your IT from large service providers and pay for it based on usage? 

Or, as The Economist said in an excellent 2008 article, is cloud the next step in the brief history of computers, as the machines “are evaporating altogether and becoming accessible from anywhere”. . . as computing is becoming “more and more disembodied and will be consumed where and when it is needed.” 

“The rise of the cloud is more than just another platform shift that gets geeks excited,” it presciently added.  “It will undoubtedly transform the information technology (IT) industry, but it will also profoundly change the way people work and companies operate.  It will allow digital technology to penetrate every nook and cranny of the economy and of society, creating some tricky political problems along the way.”

Bigger is Not Necessarily Better in Our Information-Rich Digital Economy

I recently read an intriguing column, - The End of Mass Production, - by technology author and columnist Kevin Maney.  I first met Maney several years ago when he was at USA Today, and have always enjoyed his columns and books. 

The mass production of standardized products is a defining hallmark of the 20th century industrial economy, bringing high productivity and low costs to a wide variety of products, - from household appliances to cars.  But, according to Maney, another mass-related concept became a hallmark of the second half of the 20th century, - the hotel chain.   “Hotel chains grew out of a lack of information,” he explains.

“In the middle of last century, cars and highways made the world far more mobile.  Many more people traveled to towns they didn’t know, and they needed places to sleep.  They had no way to know which hotel or boarding house might be nice or offer amenities they wanted.  Travel guides, like Mobil’s, popped up in the 1950s, but for the most part information remained scarce.” 

“Chains took advantage of that data deficit.  If you knew a Holiday Inn in one town, you knew the Holiday Inn in the next town would be roughly the same. The brand’s motto played off this: The best surprise is no surprise.  The uniformity and comfort of a chain trumped the risk of an unknown, independent place.”

Big-Bang Disruptions: The Innovator’s Dilemma in the Digital Economy

I recently read a very interesting article, - Big-Bang Disruption.  The article was written by Larry Downes and Paul Nunes and published in the March, 2013 issue of the Harvard Business Review.  It was later expanded into a book, Big Bang Theory: Strategy in the Age of Devastating Innovation published this past January. 

The authors’ key premise is that innovation is once more undergoing drastic changes, driven by the exponential advances in digital technologies.  Companies are now able to create products that are simultaneously better, cheaper and more appealing than those of competitors.  As a result, “entire product lines and whole markets are now being created or destroyed overnight.”  Examples include Skype, iTunes, the Kindle, Netflix, Facebook, Twitter, and smartphone apps like Google maps and Angry Birds. 

Big-bang disruptions are often unplanned and unintentional.  They are typically discovered through continuous market experimentation.  They upend the conventional thinking on strategy, marketing and innovation, giving rise to a new set of business rules.  “Nearly everything you think you know about strategy and innovation is wrong,” they note.

Is the Link Now Broken Between Innovation, Jobs and a Higher Standard of Living?

Last week I wrote about innovation in the digital economy and some of the puzzling questions we are now wrestling with.  Is innovation accelerating or slowing down?  Have we stopped solving big problems or are we solving bigger problems than ever before?  Is innovation in the digital economy fundamentally different from the industrial age innovation of the past two hundred years? 

But, there is no more puzzling and important question than whether the link is now broken between innovation, productivity, jobs and the overall standard of living in the US and other advanced economies.  Given the torrid pace of technology advances and new ideas, how come the US is continuing to experience slow economic growth, stagnant wages and high long-term unemployment?  Are we now in an economy in which technology and innovation do not necessarily lead to a higher standard of living and quality of life?