Day: 2 February 2018
TV, retail, advertising and cascading collapses
The bigger the underlying change, the bigger the second (and higher) order effects. Those effects often get overlooked in looking at the impact of change (and in trying to understand why expected impacts haven’t happened). Benedict Evans has always been good at spotting and exploring the more distant consequences of technology-driven change, for example in his recent piece on ten-year futures. ‘Cascading collapse’ is a good way of putting it: if the long-heralded but slow to materialise collapse of physical retail is beginning to appear, what consequences flow from that?
Today HMRC announced that 92.5% of this year’s tax returns were submitted online. That too has been a slow but inexorable growth, taking twenty years to go from expensive sideshow to near complete dominance. There is more to do to reflect on the cascading collapses that that and other changes will wreak not just on government, but through government to society and the economy more widely.
In The Eternal Inferno, Fiends Torment Ronald Coase With The Fate Of His Ideas
Organisations, including governments, follow fashions. Some of those fashions change on short cycles, others move more slowly, sometimes creating the illusion of permanence. The fashion for outsourcing, for buying rather than making, has been in place in government for many years, but there are some interesting signs that change may be coming. One immediate cause and signal of that change is the collapse of Carillion, but that happened at point when the debate was already beginning to change.
This post goes back to the roots of the make or buy choice in the work of Ronald Coase on the nature of the firm. The principle is simple enough, that it makes sense to buy things when the overhead of creating and managing contracts is low and to make them when the overheads are high. The mistake, it is argued here, is that organisations, particularly governments, have systematically misunderstood the cost and complexity of contract management, resulting in the creation of large businesses and networks of businesses whose primary competence is the creation and management of contracts.
One consequence of that is that it becomes difficult or impossible to understand the true level of costs within a contractual system (because prices quickly stop carrying that information) or to understand how the system works (because tacit knowledge is not costed or paid for).
All very thought provoking, and apparently the first in a series of posts. It will be worth looking out for the others.