Wired magazine recently announced on its cover that the Web is Dead. I confess I really like the magazine despite some of the hyperbolic rants that Chris Anderson, Wired’s editor creates like his book “Free” — which is completely indefensible from an intellectual or factual standpoint. In this case, I think the magazine is “right” — more and more digital traffic is going non-web mechanism but rather in peer to peer activities like Twitter, or Netflix’s movie streaming, or listening to Pandora radio. We are less and less interacting with the “traditional” web. Anderson and co-author Michael Wolff note that Marc Andreessen famously said that applications would be open, free and out of control — and here we are.
But how radical is this? I believe it is just another turn of what I call the modularity cycle. Modularity cycles tend to come from two sources. Either, you have an innovator who comes up with a complete design — the way Edison and Westinghouse did for their electrical infrastructures. This type of systemic innovation creates an entire value chain and business model. Alexander Graham Bell did the same thing with the telephone. Over time, these “systems” become more open and each module of value from the phone to the phone line, become fiercely competitive. Big, successful systemic innovations create entire industry clusters — as Swift did for meat, Sears for retailing, and DuPont in chemicals.
I don’t see many entirely new business systems occurring in the digital world right now. (You could argue that Google and Apple are close.) I believe this lack of systemic innovation is due to the fact that too many parts of the infrastructure — especially access to bandwidth — are so heavily regulated, making it difficult for new business models to completely arise. For example, if there were free access to a chunk of spectrum on a national basis, it would be possible for Ford or GM to launch an entirely peer to peer telecommunications infrastructure — with their cars becoming transceiving stations. Car use goes in the same density as telecommunications demand, so it would give rise to bandwidth in a pattern shaped like the demand for the bits. Given that many households spend around as much on entertainment and communications as they do on a car payment, one could imagine these companies finding entirely new profit pools. But, given the regulatory infrastructure such a radical, systemic, innovation is unlikely in the new world.
The other way for the modularity cycle to begin is for a very simple application or product to become popular and more and more functionality can be layered on top. For example, Twitter is starting to build its own applications to compete with more open platforms. Today, they released their own application for the iPad and iPhone which will compete with the likes of Tweetdeck and Twitteriffic. I believe Twitter will try to continue to incorporate more and more functionality in it’s “base” product.
So, the observation of the folks at Wired is simply noting that the sun is going down, before it is to rise again. Modularity versus systemic innovation is an old and well documented story. (It is also true that publications are often in the business to hype variance, not seek truth — so, all cycles are turned into impending trends to grab attention.)
For businesses, one important thing is to make sure that you can sample functionality and integrate new things on top of your “systems”.
You need to be able to enable your internal applications with existing, external applications as they arise from the modularity cycle. Here are three thoughts:
- Can you easily grab your employees information from their public pages on Linked-In? Why not, it will save you time and money and connect them more easily to customers and recruits.
- Can you map your customers onto a Google map, along with their revenue and growth? Why not? Wouldn’t you like to be able to “see” your demand?
- Can you get access to all and any information about your brand and your customer’s brand’s easily — a brand radar if you will? If not, why not?
Wired’s Anderson is right about one thing, you do need to be able to access this new ecosystem of modules and I’d add, you should understand the emerging systemic innovations too!
{ 2 comments… read them below or add one }
Thanks for the post. It’s also interesting to note that many industries are experiencing an opposite, but similar trend in how they source. For example, in the advertising industry, many clients are viewing the historic creation model in a modular perspective. Rather than taking the entire spectrum of offerings, there’s been a rapidly growing trend to view service (from strategy, through ideation, production and implementation) as individual modules … using whatever lowest cost provider has the best technology to deliver each module. Often times, clients add layers internally. Other times, they go with the cheapest service regardless of impact on the overall delivery system (and still generally add internal layers to manage the growing cast of players). Today, it creates chaos, especially with global advertisers and procurement departments who generally don’t understand technology or the creative development process … but do understand “cheaper” external costs, without regard to growing internal costs. Even the so called “digital agencies” are experiencing similar dynamics. In a few years, the lagging modularity response will either kill off the big agency players who haven’t been able to adapt or force actions that will hopefully benefit a long struggling industry. In the meantime, it’s another example where (despite the hype) digital hasn’t yet produced an entirely new business system.
Thanks.
John,
The way I see it is that as the Web becomes more powerful, traditional desktop applications start showing up on the web (everything from media players to office tools).
Your points on “integration” with LinkedIn is an excellent example — we’re at the point where we’ve directories or phone-books of people. Professional contacts? LinkedIn. Friends? Facebook. Photography hobby? Flickr.
And as that happens, the Web as it once stood for starts going away. We approach (what I call) the”desktop-ization” of the Web. Does it matter that our phone-books and office tools are a lot more detailed and are somewhere out in the cloud? We still interact with them as though they are on our desktops, and that’s what matters.
In that regard, as you say, it’s the same old story between modularity versus systemic innovation. However, I think that with the Web, we are beyond autonomous or systemic innovation – we are at a point of “architectural” innovation. The modules and the system remain intact, but they are rearranged to come up with interesting patterns (e.g. combining social media with traditional office applications, such as your examples). And these interesting patterns will only become more pervasive as new technologies become ubiquitous.