Why is Digital Technology still so Disruptive?
Why do some companies and even whole industries fail so miserably to recognize the opportunities and threats of digital technology? Why, for instance, didn’t Borders or Tower Records create Amazon.com? Why didn’t the UK’s Exchange & Mart, a print-based marketplace for people to sell their used stuff to each other since 1868, create eBay instead of being buried by it? Why did Smith Corona give up on its fledgling PC unit after only a year and dissolve into nothingness less than 5 years later? Why is Blockbuster losing out to Netflix and Redbox? And why are the textbook publishers still in the infancy of digital content development?
This is not a new question of course. According to one school of thought, the answer is inertia; it’s just really difficult to stop doing the things that have made you successful in the past. According to another, it’s management incompetence that’s to blame. And I understand both points of view but have a sense that something else is playing a part, something that, for now at least, I’m calling equivalence.
When senior decision makers within the corporate world think about digital technology, they’re mostly frustrated by the cost of IT in their organization, or by the loss of their children to the world of texting, social networks and first person shooters, or by their own inability to get their laptop to find a connection. What they’re assuredly not thinking about is two of the most fundamental aspects of computation and communication; the digitization of the analog stream and the quantization of the digital stream. And why should they? Well, I think there are two reasons why:
Firstly, Digitization gives us equivalence in production and consumption. Digitization makes every single piece and type of content equivalent to every other piece and type. All content in a digital world is a combination of 1s and 0s. A printed book that used to look and feel very different to a song, or a movie, or an X-ray, or a financial transaction, is now, in its digital form, essentially identical to them. They are equivalent. And the same goes for meta-content, or content about content. Even those pieces of the world, like cars or chairs or computers themselves, that remain obstinately analog and resist digitization can still be described digitally and therefore manipulated and traded the same as any natively digital entity.
Digitization, therefore, means that any piece of content can, in most regards at least, be produced and/or consumed by the exact same types of device, including PCs, smart phones, tablets, game consoles etc., running the same or similar applications. And when the means of production for different types of content become the same it means that anyone who produces one can produce the other. Book publishing, for instance, is no longer confined to book publishers.
Secondly, quantization gives us equivalence in distribution. Quantization is a process of chunking up content into discrete, standard units and is responsible for the effective and low cost worldwide distribution of both digital content (via packets on the internet) and physical content ( e.g. via envelopes on mail networks and containers on shipping networks). Quantization of the digital enables all these different yet equivalent pieces of content to be advertised, distributed, bought and sold over the exact same distribution infrastructure, namely the internet. This means that any business that exists as a middleperson between producer and consumer, including retailers, dealerships, distributors, sales representatives, agents and so on, is increasingly interchangeable with any other.
So, digitization creates equivalences across the entire transactional domain of production, exchange and consumption. But it is important to note that digitization is only the most recent form of equivalence. Many of the world’s greatest innovations have been the introduction and development of systems of equivalence, including spoken language, writing, numbers, money, and quantized networks including mail, package and container systems. And we still have many to come, including the digitization (or equivalent!) of taste, smell and touch experiences, as well as of our genetic code and of molecules, and the quantization of energy.
I propose then three laws of equivalence:
First, any product or service that can be digitized, or made equivalent to another product or service, will be. And if not by you, then by someone else;
Second, any product or service that can be quantized for effective distribution will be. And if not by you, then by someone else;
Third, any product or service that cannot be made equivalent will most likely be made redundant by another that is, through the forces of scientific and technologic advance and/or modularization.
And if not by you…