Wednesday, September 2, 2009

the innovator's dilemma, and how rich countries die

The innovator's dilemma describes how very successful companies are brought down by new firms with new technology that at first only satisfy the "low-end" of the market, i.e. consumers with minimal expectations. Since this section of the market is usually the least profitable, the successful company sees the new firm as innocuous. But as the new technology improves and is capable of satisfying more and more users, the old company is displaced. (There was a good TED video about this from rkumar, but I had lost the link. Best alternative I've found is this)

This reminds of a similar article I came across a few months ago, right here. It talks about something a little bit different, about how special interest groups takes a long time to form, but once formed they make the economy less efficient. Thus, older countries are in generally less efficient than newer ones recently recovered from a war.

Two strikingly different theories, about two different groups, causing the same result: the failure of what was once a rich and powerful group.

What I can't help but notice is how silly the notion of a "company" or a "state" really is. A company or a state is really but a group of people with a certain idea, mandate, or a set of laws. The most important aspect of a company/state, though, should not be the idea/mandate/laws, but its people. So does it really matter that a few company has died, but a few others are thriving, if the same people from the former companies are now helping the new companies succeed?

What if the company itself had noticed the trend, and decided way ahead of the game that its business will no longer be profitable, and that its people should choose to invest their time in something better? Same goes with a state - is there any way for a state to notice its own inefficiencies, and without the destruction of a war, decide to start anew? In the end, the basic unit that we are interested in is the people. So long as people are happy and healthy, does it really matter whether they belong to old company/country A or new company/country B?

The problem is that we are change-averse. The reason we want the old company to exist, and we want to keep living in country A is because it's something we're familiar with. Change implies uncertainty, and uncertainty means that things could potentially turn out worse than before. It's also very likely that at least one person or group would be hurt by the change (older employees, unions, etc). Is there any way to compensate? I don't know - and yes, this can be a problem.

Yet if change is imminent, then wouldn't it be smarter to embrace it instead of avoid it? Wouldn't it be better to have a company/country die peacefully in the hand of its founders when everyone is ready, than to have the crap kicked out of it when you're least prepared?

I guess the other more open-ended question is... is it possible for us to live and thrive as individuals, without the fictitious idea of a company or a state?

End of Entry


  1. I agree with your points about embracing change as opposed to avoiding, esp since change is inevitable.

    But I must disagree with the idea that a state, and to a lesser extent (due to my lack of exposure) a company, is fictitious. I guess the argument for the state can be adjusted for a company, but I wont deal with that, so I'll just talk about the state.

    People cannot thrive as individuals without some underlining support system, which I believe, in a psychological sense, lies in identifying with one's state. The state represents all overarching values and ideas shared by the people one interacts with everyday (as well as land, the food =P, etc)... it's a setting from which one can write his/her own script. But the setting must be respected. For some it is an intense sense of belonging, like displaced people who long to go back to their country or stateless people who wish to belong not to another country, but to have a place of their own in the world. It is a sense of home, perhaps different from how you would define it. Yes, it's about comfort, but it does not necessarily reject change. It's just that many people would prefer to change their already-existent state for the better, together, rather than to abandon it for another. Except when that's impossible... hence there's emigration/immigration. Maybe the state is just an idea, maybe it's the people/ancestors, maybe it's the land, or mixes of all of the above... the thing is that the people's ties to their states cannot be ignored.

    A company would be slightly different I'd imagine, although there is a similar sort of loyalty sometimes.

    I think it's... an attractive idea to think that people can move on and decide their own individual happiness, but part of reality is that people's happiness are derived from many things, one of which is often the health of the surroundings to which one identifies.

    Hence all the caring about politics and economics. I mean, I personally don't feel that intensely about it, but I do feel it and see it around me.

  2. btw I luv ur about me thing =P

    young (errr...) + idealistic (oh ya) + female (hahaha pushing back women's progress by 50 years) = bullshit waiting to happen =P

    nice. XD

  3. I guess "fictitious" wasn't exactly the best word to use. And you're right, the notion of a state is a "setting", one that nurtures a sense of belonging. Happiness can be gleaned from the sense of belonging in a place that is relatively well off.

    I don't mean to say that taking away the "setting" is a good idea. When I talk about the "state" I mean the decision making powers, the laws and the regulations and the dictators and the party-politics. Thus what I'm really saying is that the /place/ or /culture/ is what people can belong to. For example, people from Calgary think of themselves to be different from people from Edmonton, even though they're from the same country. Our school had a "south asian" club, where people from different countries in southeastern asia felt they belonged. Then there's good old quebec... in short, belonging isn't something attributed to the state. It is normally attributed to a group of people, a place, a city, or an idea.

    Of course, changing the way a state is governed does change its culture, directly or indirectly. That might be hard to give up, but even then that's precisely what we would want people to forgo for something better... (that is, if there is something better that we can put into action...)

    I hope I didn't miss your point >_>'.

  4. "is it possible for us to live and thrive as individuals, without the fictitious idea of a company or a state?"


  5. Yupyup that's clarified a bit more =]

    Anything for the pursuit of happiness, whatever that may entail.

    I just believe an individual's connection to its state (generalized I suppose, it could mean different things, Canada, or Edmonton in your example) is very intangible. One may not know why one would feel such a deep connection, but it's often there. But I agree that it's probably not determined by politics or type of leadership. (except maybe China... but that's twisted yo).

    Anyyyways, for once, I'm not hungry =D yay going up Maslow's XD

  6. okay random comment, just to make sure, before my boss unceremoniously decides to mail the eval to loo:

    I would take the original completed evaluation back to the uni personally right? XDDD

  7. both should be fine, just make sure you have a copy.

  8. ohhh okay. Yawr I will get myself a copy... XD we like making copies >.> too many, I'd say. We already made like 2 copies of a "rough draft" -.-

  9. lol, a plan that will... sorry to say this... fail =P

    It is amazing how we tend to believe in what we read and watch first, which this article has obviously been influenced by. Furthermore, the majority appears to be more of a recap than reflection. The former has influenced my ideas to be almost opposite to what you said in the first 2 paragraphs. Oh the irony of "satisfying more and more users" by adding more features implied by new technology...

    The bottom half of the article appears to be somewhat archaic, because there are groups that have changed to reflect market needs and foreseen the dying market. The idea has been propagated enough to be called a cliché.

    If we are disband all companies and states, individuals would reform them, because people have different priorities and some want to naturally exploit other people. Because people are not selfless so they create companies to protect their ideas; they are the result of company cannibalism of other companies or... co-operation if, fundamentally, we view ideas by a person as a company or state where the ideas eat more and more people (sorry, was influenced by the recent Andromeda's cannibalism XD) and some kind of hierarchical system forms. This brings back the old question of whether organized civilization is required and whatever... I can go on and on...

  10. "If we are disband all companies and states, individuals would reform them" - I agree with you 100%, and I don't think that forcefully disbanding all companies are a good idea when we have no good plans as to how to make things better.

    "People are not selfless so they create companies to protect their ideas" - once again, I agree. Companies are created that way. What if, instead, people realized that protecting an idea that are after its time would hurt them instead of help them? What if they understood that they can be selfish about not only that one idea they had and that was once successful, but all other ideas that they could produce?

    But yes, I agree with you: by our current standard of thinking, what we have in this world is a sort of "equilibrium" that we will fall back to so long as we think the same way. And what will happen if we change the way we think about certain things?

  11. /quoting mayur:
    "is it possible for us to live and thrive as individuals, without the fictitious idea of a company or a state?"


    It is interesting to note that John Lennon also thought the same way...and he got shot in the end. =)

    Kidding aside, I agree with William in his cynicism. Although my line of logic diverges from his ramblings a bit. Maybe I'll elaborate more later on.

  12. @ lisa:

    About these ideas... there have been several realistic case studies and examples of such: eg Information Revolution

    Those can be great reads that appear to attempt in answering your questions. How do companies rise, fall, or adjust to the introduction of something revolutionary?