The search for value

imageThe pursuit of value is usually a tenuous and uncertain quest for meaning. There are often many applications of technology that are possible, but only a relatively small portion of them may be relevant to a particular set of needs. Even when these stars align, resource availability often limits the extent to which such opportunities can be pursued. And when these resources are available, circumstances may preclude the pivots necessary to exploit them.

Like most qualities, the characteristics we seek in the pursuit of value are usually specific to the eyes and circumstances of each beholder. As Thomas Sowell describes it:

How well one thing substitutes for another cannot be determined by how similar they are in physical characteristics, or indeed, by any purely objective criteria. Economists define substitutability in terms of people's subjective preferences as revealed by their overt behavior. If a rise in the price of coffee causes people to buy more tea, then economically speaking, we can say that they are substitutes without having to investigate the chemical or physical characteristics of either...

Simple as all this is, it goes completely counter to rhetoric that is often heard, and sometimes heeded, about the urgent need to "establish priorities" either nationally or in a business or other organization. At the instant that such rhetoric is uttered, there may indeed be an urgent need for more of one thing at the expense of something else, but it is only a matter of time before the changing proportions of the two things change the relative urgency of adding more of each. Categorical priorities ignore this fact, unless they are very flexible and reversible-in which case they are not really "priorities." But because sober analysis seldom has the appeal of ringing rhetoric, priorities often do get established, and outlive the necessities that gave rise to them.

Value being ultimately subjective, it varies not only from person to person but from time to time with the same person, and varies also according to how much of the given good he already has. Obviously a man in the desert dying of thirst would sacrifice much more for a glass of water than he would in his home, with water available from his faucet. In short, even for the same individual, the value of water can vary from virtually everything he has down to zero-or even below zero, since he would pay to have water taken away if his basement were flooded...

While an individual or an economy may appear at first to be weighing the subjective value of a good against its objective cost, ultimately what is being weighed is the subjective value of one good against the subjective value of another good. Faced with identical technology and resources setting the limits of what is possible at a given time, different combinations of goods may be produced, according to the subjective preferences of the decision makers, whether those decision makers are consumers, central planners, or royalty...

Different stakeholders will evaluate the utility provided by a proposed solution in different ways, because of varying levels of accessibility to information, experience, or frames of reference which they perform their evaluations from. Their valuation thus depends upon their assumptions, domain expertise, lifecycle insights, and basis of understanding of the environment in which the business operates. Since each stakeholder's perspective will be constrained and biased, it can be quite difficult to synthesize all of their perspectives into a clear direction which will guide decision-making and enable tradeoffs. Biases, delays, or hedges in selection of this sweet spot can waste precious resources on unsustainable paths, fatal dead ends, or paradoxes of choice.

The size of the intersection of all of these factors may be quite small, presenting the creation of new things with a challenging target to attempt to hit. It is important to search for the target wisely. In the Brain of the Firm, Stanford Beer suggests solutions needs to be considered from many different dimensions:

We can illustrate the kind of questioning we have in mind by seriously asking "What is a word processor”. The first thing to recognize is that different answers grow from the concerns of different individuals. For the manager of a factory that builds word processors, they are assemblies of electronic and mechanical devices, to be constructed, tested, and shipped. For the person who programs the word processor, it is a particular collection of software, dealing with the input, storage, and output of bytes of information. It operates through some kind of interface to a user who generates and modifies that information.

These are both perfectly valid answers, arising in particular domains to which the theories of computation and electronics are relevant. If we want to understand a breakdown of the hardware or software, we operate in their terms and turn to them for predictions. But these answers do not deal with what a word processor does - with the fact that it is a medium for the creation and modification of linguistic structures that play a role in human communication. For the purchaser of a word processor, this is the relevant domain. The word processor exists as a collection of hardware or programs only when it breaks down. In its use, one is concerned with the actions of creating and modifying documents and producing physical presentations of them on a screen or printed page. The relevant domain is not a computational one, but one that emerged long ago with the first writing instruments. It brings with it concerns of visual presentation issues of layout, type fonts, and integration of text with illustrations. Many current computer products are designed with a primary concern for this domain. They deal at length with formats and typography, focussing on the document as the thing being produced.

But still with this, we have not reached a full understanding of the word processor. We cannot take the activity of writing as an independent phenomenon. Writing is an instrument - a tool we use in our interactions with other people. The computer, like any other medium, must be understood in the context of communication and the larger network of equipment and practices in which it is situated. A person who sits down at a word processor is not just creating a document, but is writing a letter or a book. There is a complex social network in which these activities make sense. It includes institutions (such as post offices and publishing companies), equipment (including word processors and computers, but also all older technologies with which they exist), practices (such as buying books and reading the daily mail), and conventions (such as the legal status of written documents).

The significance of a new invention lies in how it fits into and changes this network. Many innovations are minor they simply improve some aspect of the network without altering its structure. The automatic transmission made automobiles easier to use, but did not change their role. Other inventions, such as the computer, are radical innovations that can not be understood in terms of the previously existing network. The printing press, the automobile, and television are all examples of radical innovations that opened up whole new domains of possibilities for the network of human interactions. Just as the automobile had impacts on our society far beyond speeding up what had been done with horses, the use of computers will lead to changes far beyond those of fancy typewriter. The nature of publishing, the structure of communication within organizations, and the social organization of knowledge will all be altered, as they were with the emergence of other technologies for language, such as the printing press.

One might think that the questioning can stop at this point. It is clear (and has been widely recognized) that one cannot understand a technology without having a functional understanding of how it is used. Further.more, that understanding must incorporate a holistic view of the network of technologies and activities into which it fits, rather than treating the technological devices in isolation. But this is still not enough. We can say that the word processor must be understood by virtue of the role it plays in communication, the distribution of information, and the accumulation knowledge. But in doing we take for granted the use of words like 'communications’, 'information’, and ‘knowledge’, which themselves require further examination. In this examination, we find ourselves being drawn into inquiries about basic human phenomena that have been called things like ‘intelligence’, 'language," and "rationality’.

As the use of a new technology changes human practices, our ways of speaking about that technology changes our language and understanding.

This leads creators to embark on a voyage of discovery, fueled by cycles of concurrent experimentation, evaluation, learning, and even the favor of luck. In his book on the power of adaptation, author Tim Harford compares this search for value to a journey across unfamiliar solution landscape:

One way to think about the quest for solutions is to imagine a vast, flat landscape, divided into a grid of billions of squares. On each square is a document: a recipe describing a particular strategy. Evolutionary theorists call this a ‘fitness landscape’. If the fitness landscape is biological, each strategy is a different genetic recipe: some squares describe fish; some describe birds; some describe human beings; while the majority describe a genetic mush that represents nothing that could ever survive in reality. But the fitness landscape might equally represent recipes for dinner: some produce curries; others produce salads; many produce dishes that are nauseating or even poisonous. Or the fitness landscape might contain business strategies: different ways to run an airline or a fast-food chain.

For any problem, it’s possible to imagine a huge range of potential solutions, each one carefully written down and scattered on this vast landscape. Imagine, too, that each recipe is very similar to its neighbours: two adjacent dinner recipes might be identical save for one demanding a little more salt and the other a slightly longer cooking time. Two neighbouring business strategies might advocate doing everything the same, except that one prescribes slightly higher prices and a bit more marketing.

Now let’s change the picture and say that on our fitness landscape: the better the solution, the higher the altitude of the square that contains it. Now the fitness landscape is a jumble of cliffs and chasms, plateaus and jagged summits. Valleys represent bad solutions; mountain tops are good. Problem-solving on a contoured fitness landscape means trying to find the high peaks. In dinner-party space, that’s not so hard. But in a biological ecosystem, or an economy, the peaks keep moving – sometimes slowly, sometimes quickly... As one peak subsides, others may not be clearly visible. The biological process of evolution through natural selection is entirely blind; finding a corporate strategy may or may not be a more deliberate and far-sighted process

While even the most treacherous terrain can often be eventually scaled with enough resources and time, those pursuing such ends will be at great risk. The constraints which must be overcome may not yet be apparent, inviting daredevils, downplaying obstacles, and encouraging shortcuts. In new product development endeavors, as in attempts to climb difficult terrain, the conditions for success can be fleeting. Overcoming one constraint often just allows us to see an even more difficult one ahead. Returning to Harford:

Evolution explores this landscape with a serendipitous mixture of wild leaps and small steps. The wild leaps usually end up at the bottom of some chasm, but sometimes they land in the foothills of some totally new range of mountains. The small steps lead uphill rather than down, but perhaps only to the top of a molehill.

As developers conduct this search, the teams they are on must learn to orient themselves so they can efficiently consume inputs, apply technology, and produce outputs which will satisfy a customer's or market's needs. These needs may be spread across different types of customers or organizations. Their decisions may be embedded within many different business models, or may only be accessible after a unique set of tailoring is performed that erodes the affordability of shared functions. Strategies like Marissa Mayer's development process offer a number of catalysts that may shorten this journey, but only if those on the journey believe in and are willing to incorporate such approaches.

Richard Turner and Barry Boehm describe an easy pitfall that solution providers can fall into within this environment:

Many software projects fail by succumbing to the "Field of Dreams" syndrome. This refers to the American movie in which a Midwestern farmer has a dream that if he builds a baseball field on his farm, the legendary plays of the past will appear and play on it ("If you build it, they will come")... [There is a] software analogy of the "Field of Dreams" syndrome: "Build the software and the benefits will come."

This syndrome is why Turner and Boehm caution against  premature investment, and instead argue for the importance of adopting an economic framework for decision-making. Such a framework should consider the impacts which would be realized across development, deployment, operations, and support. These considerations must take account of the assumptions and constraints which may affect the realization of goals and the uncertainty inherent in all such journeys.

Robert Rubin suggests exploring this inherent uncertainty with 3 challenges:

  • What if we are wrong in our estimation of the situation today - how will the world look to us in the future compared to now?
  • What if our assessment of the today's situation is correct, but the situation changes - how might the world look from that future perspective?
  • Under each of these scenarios, what should we have done today to prepare for dealing with that future situation?

As we try to absorb all this advice, we are challenged to try to understand which system and subsystem features will offer the greatest value under a range of alternative futures and critical business scenarios. These scenarios may realize this value through many different types of improvements, such as enhanced responsiveness, reliability, flexibility, or exploiting advantages offered by one solution over alternatives under consideration. Future solutions will likely be a mix of different combinations of these advantages. As solution providers, we must discover which combination is the best fit for a set of anticipated scenarios, and do this sooner, rather than later. 

As a solution's chosen design stabilizes, its definition and understanding by the development team should be stitched together to form the project's value proposition that can be realized within the 'sweet spot' depicted in the figure above. As a result, the fidelity and clarity of the performance envelope within this sweet spot provides an important leading indicator of an endeavor's potential for success.

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