The Virtuous CIO  

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July 15, 2010 — Locking in on Trends

Now that we have examined some of the ways to identify trends in the technology world and follow them, we need to consider ways to use this knowledge in ways to advance our businesses and careers. Some of this stuff is so interesting I tend to forget why I study it and therefore look at it for the fun.

Good management requires leadership and decision making. We have previously looked at ways to develop good judgment. Now we need to look at ways to use the knowledge of industry trends to make decisions and implement strategies. Many analysts and decision makers clearly see the trends but are unable to correctly act upon them. Some basic (and some say common sense) strategies will always help with that.

Pay attention to Occam’s Razor – The simplest explanation is probably correct. Human beings have a love for conspiracies. Every major political event in this country is surrounded by theories of one conspiracy or another. While there have undoubtedly been some all encompassing and highly successful conspiracies in history, most rely upon a succession of highly unlikely events. It is much easier to build a complex structure of events than it is to make it happen.

The technology industry is peopled by highly independent, individualistic, impetuous, and unusual characters. The thought of them gathering in a conspiracy to control the industry is laughable. You have to ask yourself: Does this really make sense?

Be suspicious of the Conventional Wisdom – It is dangerous to embrace an idea everybody knows is true. It is easy to follow the crowd. As another author said, “There is always a reason for something, but it may not be a good reason.” The most successful innovators have stepped outside of the box and rejected the conventional wisdom in some particular.

Separate perceptions from preferences – Beware of emotional attachment to ideas. We are technologists because we have fallen in love with technology. We have fallen in love with specific technology. That is why such jokes as “you may be a Unix administrator if…” are so funny. The danger is we let our love for the product lead us down one-way streets.

Many years ago I fell in love with OS/2. Because it was such wonderful technology, I ignored the general failure of the product in the market. I paid no attention to IBM’s less than complete commitment to it. I allowed other better opportunities to pass me by because of my self-imposed blindness. I am still able to discuss the technological superiority of OS/2. It wasn’t until the introduction of Windows XP that Microsoft finally approached the functionality and reliability of OS/2. But what does it matter?

Follow intuition in spotting those upcoming seismic changes that rock the industry on a generational basis. I do not believe this is something that can be taught. By broadly studying the industry, both current events and the history, you can begin to develop a sense of when a particular area is stale, i.e. ripe for transforming innovation.

It is actually fairly easy to identify when specific companies have passed their prime – usually right when the transition occurs. IBM experienced something like that in the early 1980’s and suffered a painful realignment in the 1990’s, which appears to have been successful. Microsoft reached that state sometime between 1998 and 2005. They are currently struggling to maintain their current markets and move into new markets without cannibalizing their current businesses.

Once you have clearly recognized such a trend, it is relatively easy to develop a business strategy to either take advantage of the trend, or insulate yourselves from the effects.

Sample Trends

To help gain an understanding of what I have been talking about, we can look at some sample trends below.

The concrete to the abstract – This is one of the megatrends of the IT industry. As computing power grows, we are using more of it to reduce apparent complexity to developers and users. The evolution of programming languages is significant. We have gone from wire boards to machine code, to assemblers, to third generation languages, to drag-n-drop. This trend has lowered cost, lowered complexity and widened to field to more entrants.

Convergence – telecom and IT. This has been an obvious trend and everybody recognized it. It has, in fact, approached being the conventional wisdom.

From the generalized to the specialized – This was a non-obvious trend. Futurists in the 1950’s predicted a refrigerator sized computer in everyone’s basement. This computer controlled the house systems and provided computing power to the home owner. Commoditization realized dramatic decreases in size and cost along with enormous increases in computing power. The personal computer was an early result. Processors have become so inexpensive, we put them in everything. Now, instead of general purpose computers, we have specialized devices such as iPods.

Orders of magnitude changes – Some technologies change rapidly and greatly. Network speeds keep increasing exponentially. Disk drive capacity doubles every year. Transistor counts double every 18 months in the processor industry.

The fall of command economies and the dominance of the free market – The long term trend since World War II was to free markets and free trade. This trend probably tapered off around the turn of the century. The western governments are now on a trend to rapidly re-regulate in response to financial problems and years of accumulated structural deficits. The re-emergence of mercantilism is challenging the free trade position of the U.S. government and may cause the collapse of the trading system as we know it.

Conclusion

Being correct in assessing trends and basing business decisions on them has been described as magical, or as having a better crystal ball. More accurately, it is the result of in-depth study of the target technology, the environment and the movers; and learning from mistakes. It comes from paying attention to everything. This may be called situational awareness. Understanding these principles gives genuine competitive advantage to Information Technology professionals.