5 ms·

The Collapse of Complex Business Models (2010)

122 points by aftabh 9y ago

thecolorblue 9y ago
"In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one." He should have lead with this.
- wlievens 9y ago
  Probably also true in code.
- pjbster 9y ago
  One fun experiment would be for a company to place all it's middle managers on gardening leave. For a year. Give them the same ability to influence as that of a very minority shareholder (i.e. none). Then see how the bottom line fares. I see three outcomes: 1. Profits are down. Those managers added value after all. 2. Profits about the same. Those managers added nothing. 3. Profits up!! Those managers were dragging them down the whole time. Who knew? Letting highly paid employees go is, of course, expensive. But in 2 out of those 3 scenarios the company can afford to simply keep them on gardening leave indefinitely.
  - brazzy 9y ago
    That there are three outcomes does not mean they are equally likely. Oh, and additional possible outcomes (IMO both more likely than yours): 4. the company disintegrates into complete chaos and goes bankrupt before the year is half over. 5. the remaining employees self-organize and the more ambitious among them end up doing exactly what the middle managers were doing before.
  - watwut 9y ago
    What will happen is massive ugly in-fighting among professionals over turfs, who is responsible for what, whose faults what is. Eventually, winners of that cut the throat and backstab fight will take the role of middle managers.
    - candiodari 9y ago
      And the difference with the current situation is ...
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bsanderson 9y ago
"The most watched minute of video made in the last five years shows baby Charlie biting his brother’s finger. (Twice!) That minute has been watched by more people than the viewership of American Idol, Dancing With The Stars, and the Superbowl combined. (174 million views and counting.)" Not sure why the two use cases are presented as directly competing. The popularity of long form scripted content on Netflix and shows like Walking Dead, Breaking Bad, etc., are huge and not going away even though the methods of distribution are changing from linear broadcast with commercials over cable/satellite to subscription on-demand OTT without ads. That's the transition taking place rather than hours spent viewing 1 minute viral videos taking away from hours spent watching high cost production long-form content otherwise the ratings would be crashing for those shows and Netflix wouldn't be spending billions on production. Seems like a false dichotomy. At least a few times per week I go through the YouTube and Vimeo apps on the Apple TV and apart from catching up on late night talk shows on YouTube, and some interesting short-form content on Vimeo, it doesn't at all replace watching high quality (expensive, complex) content from iTunes and Netflix. The article also doesn't cover live programming at all, which is increasing exponentially in complexity for things like sports (Olympics coverage, specifically) but also a ton of live event production that wasn't possible before complexity (new technology) increases. Again, user-generated live (Periscope, YouTube) is additional, and doesn't replace watching that content either. There's a ton of room for more complexity with new technology for things like the Super Bowl with tiny 4K cameras in each helmet and delivery over web streaming with viewers watching from whatever angle they want, etc., that user generate content has no means of replacing. The challenge is managing the shift from ad revenue to subscription revenue, and subsequent competition for the consumer's total monthly subscription budgets, rather than complex production being challenged by non-complex (user generated) content. Unlike the AT&T example listed, large companies are already aggressively moving towards acquiring content rights and shifting to building OTT/VOD platforms, which is a key motivator of the recent large acquisitions like AT&T (ironically) and Time Warner / Turner / HBO, and Disney and Fox... the pivot is underway and whether or not it is successful doesn't seem related to those companies not being able to simplify but rather if they can avoid a fall in revenue from loss in ad sales during the transition process.
- scott_s 9y ago
codinghorror 9y ago
Man I miss the hell out of Clay Shirky writing stuff on a blog. He barely even posts on Twitter. I guess he had the book about the Chinese smartphone company in 2015 https://www.amazon.com/Little-Rice-Smartphones-Xiaomi-Chinese-ebook/dp/B013AH5IUQ/ https://www.amazon.com/Little-Rice-Smartphones-Xiaomi-Chines... .. but nothing else of note? It's hard to tell what he's up to these days, but I sorely miss his blog writing.
- alextheparrot 9y ago
  Check YouTube, you’ll still find him around.
- gkanai 9y ago
  He left NYU Shanghai earlier this year to move back to NYU Manhattan.
gkanai 9y ago
Shirky cites Joseph Tainter. If you want to hear from Tainter directly, which is the podcast that has kept me up at night, listen to this: podcast (en) – omega tau science & engineering podcast 184 – Societal Complexity and Collapse https://overcast.fm/+HPTgN-4U https://overcast.fm/+HPTgN-4U Tainter's book on Amazon (no affiliate link): http://a.co/hDAtqpU http://a.co/hDAtqpU
yuhong 9y ago
My favorite is all the financial complexity in order to take advantage of the debt-based economy. I even did a blog post on Google and Mozilla that shows some of the other problems: http://yuhongbao.blogspot.com/2017/12/google-mozilla-and-debt-based-economy.html http://yuhongbao.blogspot.com/2017/12/google-mozilla-and-deb...
adampk 9y ago
To pick a couple of examples more or less at random, last year Barry Diller of IAC said, of content available on the web, “It is not free, and is not going to be,” Steve Brill of Journalism Online said that users “just need to get back into the habit of doing so [paying for content] online”, and Rupert Murdoch of News Corp said “Web users will have to pay for what they watch and use.” Was that dog whistling the repeal of net neutrality?
autokad 9y ago
I was actually thinking this about the movie/tv industry recently. in order to get better, it has to get cheaper / less quality / quicker turn around times.
paulajohnson 9y ago
But today we have people paying for high quality content streamed over the net. Its the business model of Netflix and Amazon.
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122 points by aftabh 9y ago

"In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one." He should have lead with this.

wlievens 9y ago
Probably also true in code.
pjbster 9y ago
One fun experiment would be for a company to place all it's middle managers on gardening leave. For a year. Give them the same ability to influence as that of a very minority shareholder (i.e. none). Then see how the bottom line fares. I see three outcomes: 1. Profits are down. Those managers added value after all. 2. Profits about the same. Those managers added nothing. 3. Profits up!! Those managers were dragging them down the whole time. Who knew? Letting highly paid employees go is, of course, expensive. But in 2 out of those 3 scenarios the company can afford to simply keep them on gardening leave indefinitely.
- brazzy 9y ago
  That there are three outcomes does not mean they are equally likely. Oh, and additional possible outcomes (IMO both more likely than yours): 4. the company disintegrates into complete chaos and goes bankrupt before the year is half over. 5. the remaining employees self-organize and the more ambitious among them end up doing exactly what the middle managers were doing before.
- watwut 9y ago
  What will happen is massive ugly in-fighting among professionals over turfs, who is responsible for what, whose faults what is. Eventually, winners of that cut the throat and backstab fight will take the role of middle managers.
  - candiodari 9y ago
    And the difference with the current situation is ...

deleted 9y ago

[deleted]

bsanderson 9y ago

"The most watched minute of video made in the last five years shows baby Charlie biting his brother’s finger. (Twice!) That minute has been watched by more people than the viewership of American Idol, Dancing With The Stars, and the Superbowl combined. (174 million views and counting.)" Not sure why the two use cases are presented as directly competing. The popularity of long form scripted content on Netflix and shows like Walking Dead, Breaking Bad, etc., are huge and not going away even though the methods of distribution are changing from linear broadcast with commercials over cable/satellite to subscription on-demand OTT without ads. That's the transition taking place rather than hours spent viewing 1 minute viral videos taking away from hours spent watching high cost production long-form content otherwise the ratings would be crashing for those shows and Netflix wouldn't be spending billions on production. Seems like a false dichotomy. At least a few times per week I go through the YouTube and Vimeo apps on the Apple TV and apart from catching up on late night talk shows on YouTube, and some interesting short-form content on Vimeo, it doesn't at all replace watching high quality (expensive, complex) content from iTunes and Netflix. The article also doesn't cover live programming at all, which is increasing exponentially in complexity for things like sports (Olympics coverage, specifically) but also a ton of live event production that wasn't possible before complexity (new technology) increases. Again, user-generated live (Periscope, YouTube) is additional, and doesn't replace watching that content either. There's a ton of room for more complexity with new technology for things like the Super Bowl with tiny 4K cameras in each helmet and delivery over web streaming with viewers watching from whatever angle they want, etc., that user generate content has no means of replacing. The challenge is managing the shift from ad revenue to subscription revenue, and subsequent competition for the consumer's total monthly subscription budgets, rather than complex production being challenged by non-complex (user generated) content. Unlike the AT&T example listed, large companies are already aggressively moving towards acquiring content rights and shifting to building OTT/VOD platforms, which is a key motivator of the recent large acquisitions like AT&T (ironically) and Time Warner / Turner / HBO, and Disney and Fox... the pivot is underway and whether or not it is successful doesn't seem related to those companies not being able to simplify but rather if they can avoid a fall in revenue from loss in ad sales during the transition process.

scott_s 9y ago

codinghorror 9y ago

Man I miss the hell out of Clay Shirky writing stuff on a blog. He barely even posts on Twitter. I guess he had the book about the Chinese smartphone company in 2015 https://www.amazon.com/Little-Rice-Smartphones-Xiaomi-Chinese-ebook/dp/B013AH5IUQ/ https://www.amazon.com/Little-Rice-Smartphones-Xiaomi-Chines... .. but nothing else of note? It's hard to tell what he's up to these days, but I sorely miss his blog writing.

alextheparrot 9y ago
Check YouTube, you’ll still find him around.
gkanai 9y ago
He left NYU Shanghai earlier this year to move back to NYU Manhattan.

gkanai 9y ago

Shirky cites Joseph Tainter. If you want to hear from Tainter directly, which is the podcast that has kept me up at night, listen to this: podcast (en) – omega tau science & engineering podcast 184 – Societal Complexity and Collapse https://overcast.fm/+HPTgN-4U https://overcast.fm/+HPTgN-4U Tainter's book on Amazon (no affiliate link): http://a.co/hDAtqpU http://a.co/hDAtqpU

yuhong 9y ago

My favorite is all the financial complexity in order to take advantage of the debt-based economy. I even did a blog post on Google and Mozilla that shows some of the other problems: http://yuhongbao.blogspot.com/2017/12/google-mozilla-and-debt-based-economy.html http://yuhongbao.blogspot.com/2017/12/google-mozilla-and-deb...

adampk 9y ago

To pick a couple of examples more or less at random, last year Barry Diller of IAC said, of content available on the web, “It is not free, and is not going to be,” Steve Brill of Journalism Online said that users “just need to get back into the habit of doing so [paying for content] online”, and Rupert Murdoch of News Corp said “Web users will have to pay for what they watch and use.” Was that dog whistling the repeal of net neutrality?

autokad 9y ago

I was actually thinking this about the movie/tv industry recently. in order to get better, it has to get cheaper / less quality / quicker turn around times.

paulajohnson 9y ago

But today we have people paying for high quality content streamed over the net. Its the business model of Netflix and Amazon.

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