Patterns of Change

Invention or ideas lead to innovation and change, often championed by someone other than the originator – think of Carnegie, Morgan, Rockefeller and Vanderbilt.  The change agent builds an empire around the innovation, typically aspiring to monopolize the commercial value of the innovation.  The empire becomes exploitive of customers, employees, and the environment.  Eventually, the world pushes back.

Competitors may provide the counterbalance.  IBM dominated computers until Digital countered with minicomputers and then Apple surprised everyone with microcomputers, after which IBM rebounded for a while before ceding the market to Dell, HP, and Lenovo.  Most recently, microcomputers have given away to portable tablets and other devices.  Networked computer and communications technology has replaced the dominance of big hardware.

The automobile industry provides another compelling example.  Henry Ford transformed the industry with mass production.  Ford dominated until Alfred Sloan changed the game with new models each year and differentiated brands.  Customers wanted more than the lowest priced black vehicle.  By the 1950s and 60s, the Big Three dominated, banishing many smaller brands to oblivion.

This led to decades of poor quality vehicles, with brands becoming decreasingly distinguishable due to sharing of components and platforms to save production costs.  The Big Three seemed to think that consumers would buy whatever these companies decided consumers wanted.  They were right — briefly.  Globalization led to higher quality, reasonably priced vehicles, especially from Japan, resulting in the Toyota Camry and Honda Accord replacing the Ford Galaxie and Chevrolet Impala as the best selling cars in the United States.

Government can also be the counterbalance.  The Progressive Era followed the excess and oppression of the Gilded Age.  The Sherman Antitrust Act (1890), the Federal Reserve Bank (1913), the Securities and Exchange Commission (1934), and the National Labor Relations Board (1935), first championed by Theodore Roosevelt and later by Franklin Roosevelt, reigned in and later broke up the trust empires.  The Dodd–Frank Wall Street Reform and Consumer Protection Act (2010) is perhaps the most recent example of government countering excess.

Nevertheless, the exploitive change agents become enormously wealthy, often famous and are sought after for their opinions far afield from anything related to their expertise.  They, of course, eventually pass away, although their heirs and assets may remain prominent for a couple of generations.  These change agents were usually of great value to society, first for the creative destruction their original innovation fostered, and subsequently for the creative destruction their exploitations motivated.

 

Fully Understanding

I have been lately digesting an enormous amount of material on biological systems and urban systems.  For both systems, I am interested in their health.  The focus in biology has been on cancer and understanding the signaling mechanisms whose aberrations allow uncontrolled cell growth.  Within cities, I have been exploring urban resilience, including historical narratives in the US for the last four centuries.  Both of these endeavors were motivated by very different opportunities.

Nevertheless, serendipity has intervened as usual and I find myself contrasting the two domains.  The scale of both humans and cities are mind boggling – 50 trillion cells in a human body and 10-20 million people in a city.  Of course, the 50 trillion cells have much less discretion than the 10-20 million residents in a city.  Thus, the two systems may be more comparable in complexity than the difference in the two numbers might lead one to believe.

For example, getting all the cells in a human body to walk in one direction would be much easier than convincing all the inhabitants of a city to walk in the same direction.  The owner of the human body simply has to start walking and all his or her cells follow along.  There is no comparable entity in a city.  On the other hand, getting all the citizens in a city to vote would be much, much easier than getting all the cells in a body to express any intention except birth, growth, and death.

It seems that cells in a human body and citizens in an urban area may not be very good analogies of each other.  However, they both are really difficult to fully understand.  There are too many levels and far too many interactions to be able succinctly describe the essence of either system.  Of course, you could make the same argument about a rabbit or a tree.

This begs a definition of “fully understand.”  It would seem that the definition depends on why one is trying to understand something.  I cannot imagine that anyone really wants to understand everything about a human, a city, a rabbit, or a tree.  Are weight, volume, density, and molecular structure of interest?  How about the current charge of every electron in every atom of every molecule of every substance in a city?

Clearly the notion of understanding is very much intent determined, as are other constructs such as complexity, cognition, and emotion.  We have invented many constructs that are useful such as gravity, energy, and heat.  These are among our ways of labeling regularities in the universe as we experience them.  They help us to predict that things will fall, motion requires something to drive it, and days with higher temperature feel warmer.

But we do not – and cannot – fully understand these phenomena.  Yet, we can employ these constructs and various principles, e.g., conservation and continuity, to engineer useful processes and devices.  Our limited understanding has pragmatic value.  What do we lose by recognizing these limitations?

Much of what we characterize as rigorous research is laced with equations, theorems, and proofs.  However, we can only prove things within the confines of these artificial worlds that we have created.  We can only prove things in our model worlds.  We cannot prove theories in the physical world.  The best we can do is find evidence that supports theories as plausible, as well as be on the lookout for disconfirming evidence.

Optimal solutions in model worlds are, at best, pretty good solutions in the real world.  We have no way of knowing the best answer in the real world.  We make a wealth of assumptions to force reality into a set of equations.  These assumptions are almost never true, but they can be good enough to enable useful outcomes.  The primary value is in these outcomes rather than the equations.

Airlines and Quality of Service

The latest debate on air travel concerns whether a person should recline his or her seat if it inconveniences the long-legged person behind them.  Further, should the person behind be allowed to use the Knee Defender device that blocks a seat from reclining?  There have been thousands of impassioned opinions posted on the overall issue.

The most ingenious suggestion has been that the two passengers involved should stand up in the aisle and fight it out.  No weapons allowed.  Last person standing gets to decide what happens to the seat.  This will result in a lot of injuries, but air travel has its risks.  By the way, the airline would be indemnified from any lawsuits resulting.

Of course, the airline is the source of the problem.  They pack the seats so closely that people are in each other’s way.  They create a substantial amount of stress for an enormous number of people.  It is not just the spacing of the seats.  Everything the airlines do is focused on providing the minimally acceptable quality of service so that profits can be maximized.

I realize that profitable airline has often been an oxymoron.  This has been due to gross inefficiencies and incompetence, both legacies of having been regulated monopolies before 1978.  I know that was 36 years ago, but cultural norms and values only change very slowly – unless some external force compels change.  Here is an idea that might work.

Airlines should be forced to compensate passengers for poor performance.  Each passenger is paid one dollar per minute for delays in departure, taxi, landing, and gate arrival.  If each of these phases were delayed by 15 minutes, each passenger would receive 60 dollars.  For 200 passengers, this would amount to a $12,000 penalty.  Severe delays could easily cost an airline $100,000.

Some would argue that delays are not always the airlines’ fault.  That’s true, but the airlines should be very good at dealing with delays.  With my scheme, I bet they would get better and better.  They would also schedule flights to minimize delays. They would, of course, also price flights to hedge against potential penalties.  To create some balance in pricing, the penalty could be 1% of the ticket price per minute of delay.

This idea could completely change the outlook of passengers.  The pilot announces a one-hour air traffic control hold and the cabin explodes in applause.  Stuck on the tarmac with no arrival gate open?  More applause.  People would see their tickets as potential lottery winners.  They are betting that the airline will screw up, while the airline is betting they won’t.

What if an airline could not cope with this underlying uncertainty, could not perform, and failed as a business?  That would be creative destruction at work.  Poor performers would be weeded out, as they should be.  New airlines would emerge and absorb many of the employees whose jobs disappeared with the poorly performing airline.

How does this solve the reclining seat problem?  Much time is lost when loading and unloading the aircraft.  Two things would make it easier – more space per passenger in general and more control of luggage.  Checked luggage should be free and carry on luggage, other than an item that fits below the seat, should be something like $100 per roll-aboard.  But people do not like waiting at baggage claim.  They will if they are paid a dollar per minute of delay beyond 15 minutes after offloading of the aircraft.

Overall, we need an incentive scheme that highly motivates airlines to dramatically improve quality of service, while also providing passengers some respite when service degrades.

Plucking Geese

Over the past two years, I have become a frequent train traveler between New York and mostly Washington, but also Albany and Boston.  The Acela is more expensive than flying but much more convenient and usually on time.

The other Amtrak trains provide much poorer service. Delays are frequent; an hour or more is not unusual. Multiple gate changes can happen, resulting in huge swathes of people flooding from one gate to another and then another. Agents often seen uninformed and confused.

Why is there such disparate service when the same organization provides both services?  A strong possibility is that the Acela gets priority because it provides much better revenue and profits.  I have several times experienced the Northeast Regional being sidetracked to let the Acela pass.

Of course, I could always fly. The captains of private industry should know how to provide high quality service compared to the semi-public sector passenger train business. But, they do not!

In fact, this segment of the private sector could not be much worse. We should hear almost daily of airline CEO firings.  But, we do not. Their Boards of Directors seem content with their companies being hated. Clearly, the commercial aviation industry has completely lost its luster.

To be fair, however, first-rate airlines still exist, for example, Cathy Pacific and Singapore Airlines. There are also excellent automobile companies such as BMW, Honda, Mercedes, and Toyota.  The US still has leading high tech companies like Apple, Intel, and Texas Instruments, although global competitors are snapping at their heels.

How have US airlines and automotive companies become mediocre?  The primary answer is leadership. When these companies were still high performers, they persistently hired CEOs to be stewards of the status quo. They needed to “hit the numbers” in any way possible.

Consequently, truly strategic thinking about customers and innovation were limited to litanies of buzz words.  These companies increasingly antagonized and confused customers. No one any longer believes US airlines marketing slogans. As one airline executive told me, “We keep pulling feathers until just before the goose honks.”

We lost Mercury, Oldsmobile, Plymouth, and Pontiac as the Big Three cut costs and quality, rendering these brands effectively de-badged.  The wonder is that these companies’ leaders did not think customers would notice. They must have imagined that they would be just like the airlines’ geese.

Stewards of the status quo cannot imagine being anywhere except at the top of the heap. A key competency is ease of being deluded. If this is combined with a strong dose of arrogance, a top firm is well on its way to creative destruction, having cooked its own goose.

Complexity Overload

How many user names and passwords do you have? Do you need passwords with exactly six or eight or ten characters including as least one numeric character and one non-alphabetic or non-numeric character? How often are you required to change them for security reasons?   Do you have a list, tucked away physically or electronically that helps you manage this information?  In general, how do you keep track of all the essentials of connectivity?

Many of these user names and passwords enable access to websites for your bank accounts, investment accounts, airlines, various utilities, seemingly endless retailers, and countless news sites.  For the most part, transactions on these websites are easy and successful.  However, when something goes wrong, e.g., a credit card or an address is not acceptable, it can take enormous effort to straighten things out.

The problem, of course, is that there is no knowledgeable human to ask for help.  Some sites provide a phone number to call for help; some of the helpers are actually knowledgeable.  Many sites, however, provide limited or no access to help.  The objective of the enterprises associated with these sites is, I assume, to minimize labor costs.  Further, they expect to regularly lose irritated customers and see this as just part of business.

This ever-growing connectivity infrastructure provides us with a vast number of choices of ways to spend (or possibly invest) our money and consume seemingly endless goodies and entertainment.  Beyond these benefits, what are the costs of this wild west of opportunities?  Certainly there are occasional frustrations as noted above.  There is also sporadic electronic fraud that might affect one of your credit cards or retail accounts, e.g., the recent Target fiasco.

More pervasively, how do you feel about unknown entities that know every online transaction and cellular call you make?  How about their knowing every email you send, every movie you watch and every download you make?  How about their knowing your every keystroke?  Of course, we willingly give up all this information in exchange for the things we seek.  By searching, downloading, etc., we “opt in” to divulging the basic transactions of most of our lives.

If you reflect on all of the above, the complexity of everyday life has increased substantially.  The number of things you need to know and relationships you need to manage has burgeoned.  The probability, albeit extremely small, that all your assets could suddenly disappear is very real.  When you call about your suddenly zeroed accounts, you will hear, “Chose 7 if your account balances are now zero.”  Once you choose 7, you will hear, “Our customer support center for this service is open on Tuesdays between 7:00 and 8:00AM, IST (India Standard Time).”

How Great Companies Transform — Then Fizzle

From many years in Atlanta, I have known many UPS executives, including CEO Mike Eskew who led the transformation of UPS from a package delivery company to a global supply chain services company.  I use a case study of this transformation in my classes and workshops on enterprise transformation.  It is one of my favorite success stories.

Well, at least I thought it was until recent experiences trying to ship several boxes via UPS.com.  These recent negative experiences, detailed below, led me to the local UPS store a few times for explanations of various practices.  In the process, I discovered that the UPS franchised stores have a very arms-length relationship with the corporation that owns all the brown trucks.  Put simply, they use UPS as their shipper – as a vendor of services – but cannot help you with anything about UPS.  I might as well have asked my UPS-related questions at McDonalds or Baskin-Robbins.

I had hoped to ship several boxes by using UPS.com to print labels, schedule a pickup, and pay in advance.  I created an account on UPS.com, but found that this was not really a UPS account; it was only access to the website.  So, I needed to set up another personal account, but it would not allow this because my address is on a university campus.  When I tried a different address, it would not accept it because it was not the address associated with my credit card.

So, I called customer service.  The representative told me that I could schedule a pickup and then do all the paperwork with the driver, including printing out the shipping labels.  She could not help with the address and credit card problem at all.  When the driver arrived the next day, he would not take the boxes because I had not completed the online transaction and printed the labels.  In fact, he never prints labels.

I eventually got the boxes shipped three days later by manually lugging the five large boxes to the UPS store.  This experience caused me to explore other people’s experiences with UPS.  I found an enormous wealth of complaints, far too many to detail here.  Interestingly, one of the most common complaints is that there is no mechanism to complain, other than via your state’s consumer protection agency.  UPS clearly does not want to know about unhappy customers.  Thus, they can avoid learning and adapting to customers’ desires and expectations.

This is not the UPS that I knew ten years ago.  Of course, their Atlanta neighbor, Delta Air Lines, is also not the company I used to know, in their case twenty years ago.  In both cases, excellent service has been severely compromised in the pursuit of efficiency.  The fact that many customers now despise them is not of concern.  You have to conform to their rules and accept whatever level of service they provide, or you have to choose among all the other companies with the same philosophies of service.

Are there implications of such changes, or is the demise of service quality simply a fact of life?  My limited data on UPS and extensive data on Delta suggest that customers are very much looking for alternatives.  I have heard many premium Delta customers say, “I used to be a huge Delta fan; now I wish they would go bankrupt and out of business.  I really hate Delta Air Lines.”  Similarly, my limited UPS data says the love is gone.  Many customers are looking forward to the creative destruction of these companies by innovative new concepts and technologies.

What Might Happen

Various pundits in sundry domains attempt to predict what will happen.   In domains such as climate change, urban systems, and national politics, which are laced with human and social phenomena, such predictions are folly.  There are far too many possible ways in which individuals and social groups can behave in response to evolving events, whether they be physical (e.g., environmental threats), economic (e.g., new financial bubbles), or social (e.g., changed attitudes towards social issues).

Pundits may try to hedge their predictions by making them contingent on particular assumptions such as “if humans continue to consume resources as they currently do,” or “if economic growth follows the historical average.”  These types of assumptions certainly narrow the range of uncertainties if the assumptions are warranted.  However, we are left to wonder about the probabilities of the assumptions being true over the time periods of interest.

I have lately become attracted to a new line of reasoning that focuses on what might happen.  This perspective allows us to consider a variety of things that might happen and the conditions under which they might happen.  Some of the things that might happen will be appealing; others will not be at all appealing.  Such differentiation by level of appeal can prompt an exploration of the differing conditions leading to likely outcomes.  This enables a discussion of how we can foster the conditions that seemingly lead to more appealing outcomes.

This approach suggests that problem solving and planning should not focus on predicting a particular future.  It should instead be a discussion and exploration of alternative futures, how these futures might emerge, and how today’s choices might influence the possibilities of these futures.  If we find that X almost always leads to appealing futures, and Y almost always results in unappealing futures, we should try to facilitate X and avoid Y.

This approach has enormous implications for planning and control of enterprises, organizations, and even careers.  Instead of having specific targets, which drive actions and determine controls, attention should be focused on a portfolio of possible scenarios, leading indicators of emergence, and lagging indicators of performance.  Instead of focusing on how well targets are being hit, e.g., 10% revenue increase and 20% profit increase, the key questions should be, “What is happening?  What might happen next?”

Consequently, strategies and plans are needed for each current and nascent scenario.  This requires careful consideration of situation assessment, strategic planning, and the efficiency and effectiveness of execution.  Traditional metrics, such as revenues and profits are the consequences of accurate assessments, effective strategies and plans, and efficient execution of plans.  However, one should first make sure that the right things are being pursued.

How can we project what might happen?  There are data sets and analytic tools that can help, but they seldom enable clairvoyance.  I have found that the keys are understanding, sustaining, and enhancing the organization’s relationship network with key current stakeholders and prospective stakeholders, including competitors, customers, suppliers, and employees, as well as thought leaders in the realms of economics, politics, and technology.  Their concerns and insights, as well as their reactions to your ideas, can be invaluable.

Encounters with stakeholders can happen in a variety of ways – meetings, telephone calls, emails, etc.  The key is to capture knowledge from each encounter, planned or otherwise.  Many questions are of interest.  What would customers like next?  What are competitors thinking of doing next?  What technologies are maturing to the point of realistic deployment?  What effects are healthcare reforms likely to have?  What aspects of climate change are undoubtedly real and likely to have impacts sooner rather than later?

Answers to these questions should be captured, compared, and contrasted.  Opportunities and challenges should be gleaned from this information and lead to further questions for subsequent encounters.  Insights should be curated with links to information sources.  This accumulating wealth of information will, over time, enable understanding what might happen.

Converging Experiences

Recently, I went to Kara Schlichting’s lecture, “From Dumps to Glory: City Planning, Coastal Reclamation, and the Rebirth of Flushing Meadow for the 1939-1940 New York World’s Fair.”  The next morning, I read Russ Buettner’s article in the New York Times, “They Kept a Lower East Side Lot Vacant for Decades.”  That afternoon, I went to the Lower East Side Tenement Museum and, in particular, watched their 20-30 minute movie on the evolution of the Lower East Side from 1840 on.

So, in 24 hours, I experienced the complexity of how cities evolve – three times.  It seems like a chaotic mess of conflicting interests, struggles for power, and strong personalities.  In the midst of all this, there are thousands or millions of people and families trying to make ends meet, get their children educated, and occasionally have some fun.  A few people make a lot of money and everybody tries to do a bit better tomorrow.

It strikes me that cities do not get engineered.  Road networks, sewer systems, and subways are engineered.  Infrastructure and buildings are engineered.  However, the cultural fabric of cities is not engineered.  It emerges from the hustle and bustle of people seeking to make money, get a job, earn a promotion, educate their kids, play a game of cards, and enjoy a ball game.  We cannot predict where all that will lead, what serendipity will prompt.

How can we research this?  I think we need to focus on insights rather than predictions.  It is reasonable to assume that the actors are rational, although they will not necessarily conform to classical economics.  I think we can assume that they will take advantage of and adapt to the environment.  However, all the rationality and adaptability of enormous numbers of independent actors will lead to an abundance of possible paths and outcomes.  Our understanding will be limited to how particular paths and outcomes might emerge.

The best approach to gaining this understanding will, in my opinion, result from studies of virtual urban worlds.  Simulated immersive representations of Hoboken, NJ and Red Hook, NY, for example, will enable exploring how “humans in the loop” as well as synthetic avatars respond to emergency warnings, actual weather, power outages, terrorist events, and perhaps even economic opportunities due to redevelopment.  We will learn about how people “game” the system and, in the process, learn what innovations to encourage and what behaviors to inhibit.

We cannot approach cities in the same ways we address airplanes, factories, and power plants.  Cities are laced with too many complex behavioral and social phenomena.  Yet we can systematically explore the ways in which cities might respond to opportunities, incentives, and inhibitions, and identify the conditions more likely to lead to one response rather than another.  Then we can think about how we might engender the conditions leading to more appealing responses.  Our methodology should focus on how to get a city to design itself in ways that improve the quality of life for everyone.

Transformation as a Wicked Problem

In 1973, Horst Rittel and Melvin Webber published “Dilemmas in a General Theory of Planning” in the journal Policy Science (volume 4, pp. 155-169).  In this article, they characterized “wicked problems” as follows:

  • —  There is no definitive formulation of a wicked problem
  • —  Wicked problems have no stopping rule – there is always a better solution
  • —  Solutions to wicked problems are not true or false, but good or bad
  • —  There is no immediate nor ultimate test of a solution to a wicked problem
  • —  Wicked problem are not amenable to trial and error solutions
  • —  There is no innumerable (or an exhaustively describable) set of potential solutions and permissible operations
  • —  Every wicked problem is essentially unique
  • —  Every wicked problem can be considered a symptom of another problem
  • —  Discrepancies in representations can be explained in numerous ways – the choice of explanation determines the nature of problem’s resolution
  • —  Problem solvers are liable for the consequences of the actions their solutions generate.

It can be useful to look at enterprise transformation as a wicked problem.   Rather than exhaustively discussing every characteristic in the above list, let’s just focus on three – no stopping rule, no trial and error, and liability for consequences.

Transformation is never done.  There may be ebbs and flows of change, but the need for change is persistent.  The nature and level of value desired by markets and other constituencies continually evolve, sometimes very slowly, but other times quite quickly as, for example, technology breakthroughs such as electric lighting are suddenly available.  The key insight here is that you need to get good at changing rather than thinking that change is something you finish.

Transformation is not amenable to nibbling.  You cannot experiment with a wide range of ways of changing and then adopt the winner.  Empirical confirmation that a new value proposition works is certainly valuable.  However, such evidence is only meaningful and useful if you have clear intentions and plans for how to accomplish changes.  Otherwise, all you have is ideas.

Transformation is real.  Good outcomes are sought but bad outcomes are possible, with the enterprise leadership liable for the outcomes.  You can lower the risk by adopting changes that others have perfected, for example, back office and supply chain efficiencies.  But, this just keeps you in the game and will not win the market returns of being the innovator rather than the follower.

Another very important consideration is not in the above list.  You need to balance creativity and continuity.  Creative new value propositions drive market innovations – and creative destruction.  New approaches to value are likely to need new competencies and capacities, while obsoleting older ones.  Organizations usually have limited capacities to absorb such changes.  Yesterdays’ machinists may not be easily transformed into tomorrows’ computer programmers.  People highly skilled at a particular set of tasks cannot quickly become highly skilled at a very different set of tasks.

Thus, a central driver of transformation is that once you become really good at something, there is a significant risk that what you are really good at will eventually no longer be valued.  What you were really good at it – perhaps the best – was likely of great value to the economy and society.  But new innovations will eventually creatively destroy that value proposition.

How long should you cling to hard-won competencies and capacities?  When is it time to shift attention and resources to new value propositions?  There is no “starting rule.”  We can add this to the list of characteristics of wicked problems.  It is not at all clear how you decide that now the wicked problem really has to be addressed.  You can always wait until tomorrow.  Eventually time and resources are no longer available and change is impossible.   This dilemma is certainly wicked.

Levels of Change

Fundamental change is pervasive across every level of life.  In this post, I compare four levels and time scales of change including evolution (millions of years), history (thousands of years), industry (centuries), and technology (decades).  This comparison leads to a few overall observations about transformation and a few insights into how people think about fundamental change.

Central concepts in evolution are species, populations, and extinctions.  Example species, in order of appearance, include plants, insects, reptiles, mammals, and birds. Relatively recent are primates, which include Homo sapiens (humans), all within the mammal species.  The populations of species tend to grow unless predators weed them out.  More significant are mass extinctions, which are defined by more than 50% of all species being eliminated.

There have been five mass extinctions, the last one of which eliminated the dinosaurs.  Some scientists argue that we are on the verge of a sixth mass extinction.  Fortunately, the time scale on which mass extinctions happen is such that we need not worry about this right now.  Nevertheless, this possibility doubtlessly represents transformative fundamental change.

Central concepts in history include civilizations, empires, revolutions and conquests.  Notable civilizations and empires include Egypt, Mesopotamia, China, Maya, Greece, and Rome.  All of these empires ended, often due to internal strife (revolutions) or external sources (conquests).  In some cases civilization ended.  It appears that the typical life of a civilization is one thousand years or so.  This does not mean that all the people disappear, but standards of living usually plummet.

Core ideas for industry include needs, markets, and creative destruction.  Markets emerge to meet human needs for food, housing, energy, transportation, finance, etc.  Industries change due to increased efficiencies (e.g., agriculture), technology replacement (e.g., horse-drawn streetcars), and consolidation (e.g., airplane manufacturing).  The winners of the competition perfect their offerings, which greatly benefits customers, until their offerings (e.g., buggy whips) are no longer needed.  Then industries face creative destruction, in part due to new technologies.

Key notions in technology are invention, innovation, and obsolescence.  Over millennia, humankind has invented tools, wheels, propellers, crossbows, and gunpowder; waterwheels, steam engines, and gears; aqueducts, drainage, sails, and rudders; steamboats, railroads, automobiles, and airplanes; and electricity, telephones, computers, and Internet.  These inventions, often rather slowly, became market innovations as technologies and infrastructures matured.  As they were perfected, these offerings tended to become commodities or, in many cases, obsolete.  In the process, most companies and, sometimes, whole industries were creatively destroyed by new market innovations and value propositions.

Reflection on these four levels of transformation prompts a notional life cycle of change operating on all four levels:

  1. New epochs eventually lead to consolidation and refinement or perfection
  2. Assumptions on which perfection is based are eventually no longer tenable
  3. New entities emerge to exploit new assumptions, but are bit players at first
  4. Existing entities attempt to adapt, even transform, but almost always fail
  5. New epochs emerge — go to step 1

If transformation inevitably fails, at least eventually, why try?  First of all, you cannot know a new epoch is emerging until after it happens.  There are economic and social benefits to sustaining the current epoch.  For example, capital assets cannot be quickly redeployed, unless via liquidation.  Further, the stewards of the current epoch will inevitably attempt to survive.  Overall, it seems reasonable to observe that, despite their inevitability, extinctions, revolutions, conquests, destruction and obsolescence are only addressed when their time has come.  We strive to hold them off even though we know they are inevitable because such is the only rational and productive strategy.