Digital Economy Dispatch #066

12th December 2021

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The 10 Laws Beneath Your Digital Transformation

Digital transformation can be a messy business. Now that organizations have moved beyond the introduction of websites and mobile apps, they are finding that core elements of their ways of working are challenged as they move from small-scale automation activities and technology upgrades toward widescale changes in the way they design, delivery, and support their products and services. Too late they begin to recognize that what started as a technology refreshment programme has now become a revamp of the organization’s strategy, structure, and culture.

Consequently, it is no surprise to read that a large number of organizations underestimate the broad impact of digitization and the behavioural changes that result. Still locked into traditional annual budget and planning cycles, they seek certainty and stability in a world turned upside down. Rather than recognize that they are taking a voyage into the unknown, they look to their digital leaders to provide the magic formulae that ensures their digital journey goes smoothly.

Yet, despite best intensions, carefully planned strategies and plans rarely run smoothly when faced with the reality of making a significant shift in digital technology, processes, and ways of working. With many moving parts and dependencies, leaders often feel disoriented and confused by the uncertainties they face. As old ways of viewing their environment become less relevant, they look for the new principles that can bring structure and insight to their world.

What Lies Beneath

Hence, it is natural to find organizations asking for help to describe the rules that will guide their digital transformation efforts. Is there a set of laws governing digital transformation that they can apply to help ensure success?

I believe that we are still too early in the digital transformation experience to offer a meaningful answer to this question. Not enough is known about the many causes and effects of digital disruption. There is insufficient data and analysis to be able to say with any certainty that we know where to focus and what are the right levers to pull.

However, that does not mean that we are in the dark. Underlying digital transformation is a core set of digital technologies founded on 3 core elements: Software, Hardware, and Networks. And we now have over 50 years of experience in their development, delivery, and evolution across a very wide variety of scenarios. These experiences offer important insights that are fundamental to the way digital technologies are applied.

Here are 10 laws that have been identified by key practitioners and commentators over the last 50 years that guide the development and use of digital technology. These observations capture emerging principles and describe useful patterns that are important for all those involved in digital transformation.

Moore’s Law is perhaps the most well cited of these principles and addresses the ever-increasing capability and capacity of computing technology. As defined by Geoffrey Moore, the number of transistors on a microchip doubles every two years, while the cost of computers is halved. As a result, we have been able to expand the use of digital technology in many domains and rely on the increasing computing power to go faster and keep down costs.

Metcalf’s Law describes the power of connectivity and is critical to understand the importance of networks to expand communication. Formally, it states that a network’s impact is the square of the number of nodes in the network. More informally, it indicates that working to grow your network connections is critical to maximize impact and expand your footprint. Recognizing its importance is a cornerstone of social networks and supply chain ecosystems.

Nielsen’s Law addresses the constant increase in data flow bandwidth to high-end users. Looking at the data over more than 2 decades, Nielsen observed that bandwidth grows by over 50% per year. While this is a significant increase, it lags the increase in compute power as defined by Moore’s law. This on-going battle between increasing compute power and bandwidth has had a significant impact in digital transformation over the past few years and will be an important consideration in planning future technology use.

Halstead’s Law is essentially a set of metrics for understanding the complexity of software. As software is the foundation of digital transformation, with increasing amounts of software we must pay careful attention to managing algorithmic complexity to ensure it is understandable, stable, and low in errors. By paying attention to software complexity, we can reduce the overall cost of maintaining and evolving digital solutions.

Conway’s Law is a recognition that the way an organization is structured has significant impact on the digital solutions it creates. Conway observed that the communication patterns among the various organizational units are reflected in the designs it creates. This is seen most often in organizations with strong boundaries between functional teams. Careful attention is required to how you set up your organization as it will have significant impact on the products and services delivered.

Wirth’s Law is a way to bring attention to the disparity between improvements in the performance of hardware and software. As a consequence, slower advances in software efficiency mean that the rapid increases in hardware capabilities are not always seen by end users. The short-term improvements from adding new hardware will often be eaten up by the software. This is sometimes summarised as “software expands to fill the spaces created by hardware”. Or perhaps more whimsically as “What Intel gives, Microsoft takes away”.

Larman’s Law addresses organizational behaviour. In his work introducing lean practices to large organizations, Craig Larman observed that the organization’s structure has a major influence on its culture. Extending Conway’s Law, Larman take it further to say that changing an organization’s culture (for example, to introduce more agility) you must change the organization’s structure. He also noted that the larger the organization, the more this is the case.

Linus’ Law is based on his crowdsourced approach to largescale system delivery. He uses the power of the crowd in a disciplined way to develop, support, and evolve the Linux operating system. By distributing these tasks to a large community, he highlighted that you bring a lot of energy to solve problems and therefore “all bugs are shallow”. His comments remind us that it is possible to make rapid, controlled progress by coordinating the insights from a broad community of supporters.

Brooke’s Law is extracted from his seminal book, “The Mythical Man-Month”. In the development of the software running the IBM 360, Fred Brooks observed that the temptation when projects are delayed is to add more people to speed them up. Unfailingly, this unfortunately had the opposite effect and added to the delays. Larger teams introduce additional communication challenges and heighten reporting, management, and measurement challenges. Short, focused teams are more effective in most situations and should be the dominant way of organizing to cope with change and uncertainty.

Reed’s Law is a broad observation about the utility of networks. In Peter Reed’s work, he noted that the value of “network effects” grows exponentially as the network expands. He believed that Metcalf’s Law underestimated this phenomenon. In digital platforms, for example, network effects dominate their growth and determine their success. Reed pushes us consider platform models as critical forms organizing and delivering fast paced growth.

Mooer’s Law is a reminder about the hesitancy of individuals to use IT systems if they are not easy to use and do not clearly provide value to their intended clients. Originally made in respect to information retrieval systems, a broader interpretation of Mooer’s comments highlights the importance of investing effort to work with stakeholders to ensure a system is appropriate to its users.

What Matters Now

The challenges we face in digital transformation can often seem insurmountable. So many areas of the organization are affected that it is easy to become convinced that there are few principles on which to base a well-defined digital strategy. Yet, over the past 50 years a variety of important observations about large-scale technology evolution have been made that offer hope that a more disciplined approach is possible. Here we have identified 10 laws that are often cited as useful ways to view our changing technology landscape and characterize its effects. Perhaps these will help you in your digital transformation as you discover what lies beneath the surface.

Digital Economy Tidbits

Wearable Technology in Healthcare: Getting better all the time. Link.

Always interesting to see the latest progress and trends in wearable technology. Something of a bellwether for the digital economy.

Advances in sensors and artificial intelligence (AI) are helping millions detect and manage chronic health conditions and avoid serious illness on devices small enough to be worn on a wrist or penny-sized patch. Deloitte Global predicts that 320 million consumer health and wellness wearable devices will ship worldwide in 2022 (figure 1). By 2024, that figure will likely reach nearly 440 million units as new offerings hit the market and more health care providers become comfortable with using them. These numbers include both smartwatches, which are marketed to and purchased by consumers, and medical-grade wearables—typically called “smart patches”—which are often prescribed by health care professionals but are increasingly becoming available off the shelf.


Why Managers Fear a Remote Work Future. Link.

The debate about remote working seems to be acting like a very interesting microcosm of the digital transformation debate about how much digital disruption should be seen as digitizing what we do and evolving our practices versus revolutionizing from the ground up by exposing inefficiencies and delivering a different value proposition for a new age.

Remote work lays bare many brutal inefficiencies and problems that executives don’t want to deal with because they reflect poorly on leaders and those they’ve hired. Remote work empowers those who produce and disempowers those who have succeeded by being excellent diplomats and poor workers, along with those who have succeeded by always finding someone to blame for their failures. It removes the ability to seem productive (by sitting at your desk looking stressed or always being on the phone), and also, crucially, may reveal how many bosses and managers simply don’t contribute to the bottom line.

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