Organizing politically for the value of new technologies

One of the fundamental problems in ICT-policy is actually an intra-governmental problem. While everyone agrees on the importance of new technologies, it seems equally obvious that our way of measuring the information economy, well, sucks. That means that any serious ICT-policy works needs to start out with an internal discussion in government about what this new technology actually is and how much it is worth. I would argue (and have argued in this column, for example), that we can observe a very destructive pattern in the development of ICT-policies everywhere, and that is this:

(i) Everyone agrees on the importance but not the value of information and communication technology.

In fact, many of the measures we have used vastly underrepresent the new technologies and what they mean, and there are few if any ways to represent the increase in possible innovation capability brought about by these technologies. So while all politicians will agree that ICTs are very important to the future of the municipality/nation/region, the follow-up question of how important, i.e. what the value we are discussing actually is. That leads to a secondary effect that is equally worrying:

(ii) We consistently overvalue the damage disruptive technologies do to incumbents and undervalue the new opportunities these technologies open up.

This is well-known in behavioural economics and simply a version of loss-aversion, but on a societal level. One effect of these two observations is a purely organizational observation:

(iii) ICT-policy work rarely results in a political and executive organization that accurately represents the value of the phaseshift in economics the new technologies enable.

This slows development, and leads to a number of baffling inefficiencies. It also leads to situations where a good and strong policy programme never gets executed on. In the column above I argued that the ICT-policy departement (in Sweden it is the Ministry of Enterprise and Industry) should be given a veto over proposals in government that will hurt developing the new technologies. That is a kind of thought experiment that is admittedly provocative, but the alternative, frankly, is that ICT-policies get dereailed by incumbent interests, budgetary concerns and other short-term more effectively organized interests in government.

Interestingly this is not only a governmental problem. It is also observable in industry. One of the largest photo-film makers knew that photography would become digital, but the way it “knew” this organizationally was through a “future commission” that was actually set up twice, and the results of which were dismissed as economically irresponsible and risky. Loss aversion in this case led to a massive loss of momentum as well as the near bankruptcy of the company. One of the people in Kodak was quoted to say:

Kodak’s executive staff were simply not prepared to take the necessary risks required in the form of a DRP, “the difference between [Kodak’s] traditional business and digital was so great. The tempo is different. The kind of skills you need are different. Kay [Whitmore, President] and Colby [Chandler] would tell you that they wanted change, but they didn’t want to force pain on the organisation.”

That is exactly what is happening in ICT-policy. And the signals are there, just as they were with Kodak, but the pain of reorganization are doubly difficult to implement in a political organization, where requiring that the electorate feel and share this pain is simply near-impossible. Until the executive/political commitment exists, that is. And yet, this is just a case of (iii) above. The organization does not respond to assertions of “importance” it asserts to assertions of value, and that also allows rational trade-offs.

It will be interesting to see how this plays out. One theory would be that state capitalists systems may be more resilient and adaptable, because they can make the changes quickly. On the other hand these economies may be even more vested in the old ways of measuring economic impact, and so completely fail to take account of the consumer surplus-values and enabling aspects of new technologies. We will see.

The information revolution will reward those that follow the advice of Clausewitz, the relentless military genius, who remarked acidly: “Amateurs discuss strategy, professionals discuss organization“.