Uber, disruption and Clayton Christensen

This morning’s Observer column:

Over the decades, “disruptive innovation” evolved into Silicon Valley’s highest aspiration. (It also fitted nicely with the valley’s attachment to Joseph Schumpeter’s idea about capitalism renewing itself in waves of “creative destruction”.) And, as often happens with soi-disant Big Ideas, Christensen’s insight has been debased by overuse. This, of course, does not please the Master, who is offended by ignorant jerks miming profundity by plagiarising his ideas.

Which brings us to an interesting article by Christensen and two of his academic colleagues in the current issue of the Harvard Business Review. It’s entitled “What Is Disruptive Innovation?” and in it the authors explain, in the soothing tones used by great minds when dealing with those of inferior intelligence, the essence of Christensen’s original concept. The article is eminently readable and cogent, but contains nothing new, so one begins to wonder what could be the peg for going over this particular piece of ground. And why now?

And then comes the answer: Uber. Christensen & co are obviously irritated by the valley’s conviction that the car-hailing service is a paradigm of disruptive innovation and so they devote a chunk of their article to arguing that while Uber might be disruptive – in the sense of being intensely annoying to the incumbents of the traditional taxi-cab industry – it is not a disruptive innovation in the Christensen sense…

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Let’s turn the TalkTalk hacking scandal into a crisis

Yesterday’s Observer column:

The political theorist David Runciman draws a useful distinction between scandals and crises. Scandals happen all the time in society; they create a good deal of noise and heat, but in the end nothing much happens. Things go back to normal. Crises, on the other hand, do eventually lead to structural change, and in that sense play an important role in democracies.

So a good question to ask whenever something bad happens is whether it heralds a scandal or a crisis. When the phone-hacking story eventually broke, for example, many people (me included) thought that it represented a crisis. Now, several years – and a judicial enquiry – later, nothing much seems to have changed. Sure, there was a lot of sound and fury, but it signified little. The tabloids are still doing their disgraceful thing, and Rebekah Brooks is back in the saddle. So it was just a scandal, after all.

When the TalkTalk hacking story broke and I heard the company’s chief executive say in a live radio interview that she couldn’t say whether the customer data that had allegedly been stolen had been stored in encrypted form, the Runciman question sprang immediately to mind. That the boss of a communications firm should be so ignorant about something so central to her business certainly sounded like a scandal…

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LATER Interesting blog post by Bruce Schneier. He opens with an account of how the CIA’s Director and the software developer Grant Blakeman had their email accounts hacked. Then,

Neither of them should have been put through this. None of us should have to worry about this.

The problem is a system that makes this possible, and companies that don’t care because they don’t suffer the losses. It’s a classic market failure, and government intervention is how we have to fix the problem.

It’s only when the costs of insecurity exceed the costs of doing it right that companies will invest properly in our security. Companies need to be responsible for the personal information they store about us. They need to secure it better, and they need to suffer penalties if they improperly release it. This means regulatory security standards.

The government should not mandate how a company secures our data; that will move the responsibility to the government and stifle innovation. Instead, government should establish minimum standards for results, and let the market figure out how to do it most effectively. It should allow individuals whose information has been exposed sue for damages. This is a model that has worked in all other aspects of public safety, and it needs to be applied here as well.

He’s right. Only when the costs of insecurity exceed the costs of doing it right will companies invest properly in it. And governments can fix that, quickly, by changing the law. For once, this is something that’s not difficult to do, even in a democracy.

The end of private reading is nigh

This morning’s Observer column about the Investigatory Powers bill:

The draft bill proposes that henceforth everyone’s clickstream – the URLs of every website one visits – is to be collected and stored for 12 months and may be inspected by agents of the state under certain arrangements. But collecting the stream will be done without any warrant. To civil libertarians who are upset by this new power, the government’s response boils down to this: “Don’t worry, because we’re just collecting the part of the URL that specifies the web server and that’s just ‘communications data’ (aka metadata); we’re not reading the content of the pages you visit, except under due authorisation.”

This is the purest cant, for two reasons…

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Amazon’s Cloud Nine

This morning’s Observer column:

In 1999, Andy Grove, then the CEO of Intel, was widely ridiculed for declaring that “in five years’ time there won’t be any internet companies. All companies will be internet companies or they will be dead.” What he meant was that anybody who aspired to be in business in 2004 would have to deal with the internet in one way or another, just as they relied on electricity. And he was right; that’s what a GPT is like: it’s pervasive.

But digital technology differs in four significant ways from earlier GPTs. First of all, it is characterised by zero – or near-zero – marginal costs: once you’ve made the investment needed to create a digital good, it costs next to nothing to roll out and distribute a million (or indeed a billion) copies. Second, digital technology can exploit network effects at much greater speeds than the GPTs of the past. Third, almost everything that goes on in digital networks is governed by so-called power law distributions, in which a small number of actors (sites, companies, publishers…) get most of the action, while everyone else languishes in a “long tail”. Finally, digital technology sometimes gives rise to technological “lock-in”, where the proprietary standards of one company become the de facto standards for an entire industry. Thus, Microsoft once had that kind of lock-in on the desktop computer market: if you wanted to be in business you could have any kind of computer you wanted – so long as it ran Windows…

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LATER Just came on this — which makes the same point about Amazon’s AWS, only more forcefully.

Just a pin-prick? Or a big deal?

This morning’s Observer column:

If you have ever been a hospital patient, then you will know the drill: before anything else happens, you have to have your “bloods done”. You roll up your sleeve, a phlebotomist searches your lower arm for a suitable vein, inserts a sterilised needle and extracts a blood sample that is then labelled and sent off to a lab for analysis.

Depending on your condition, this can happen a lot. If you are a cancer sufferer on chemotherapy, for example, you may come to think of your arms as pincushions and you sometimes have to watch in dismay as the phlebotomist hunts up and down for a suitable vein. Although the analysis of blood samples is now highly automated and efficient, at the sample-collection end it’s very time consuming and resource intensive.

The mind boggles at the amount the National Health Service must spend on it every year. And yet it is an absolutely central part of modern healthcare: blood tests are on the critical path of a very large number of diagnostic and treatment regimes.

Enter Theranos, a California startup that has (or claims to have) developed novel approaches to laboratory-based diagnostic blood tests using the science of microfluidics, which concerns the manipulation of tiny amounts of fluids (think ink-jet printers, for example)…

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The new Holy War — and its collateral damage

This morning’s Observer column:

The novelist Umberto Eco wrote a deliciously insightful essay in 1994, in which he argued that the Apple Mac was a Catholic machine, in contrast to the PC, which, he argued, was clearly a Protestant device. How so? Simply this: the Mac freed its users/believers from the need to make decisions. All they had to do to find salvation was to follow the Apple Way. When the Mac was launched, for example, a vigorous debate broke out among user-interface geeks about whether a computer mouse should have one or two buttons. Some were critical of the fact that the Macintosh mouse had only one button. But when queried about this, Steve Jobs – then, as later, the supreme pontiff of the Church of Apple – was adamant and unrepentant. Two buttons would undermine the rationale of the Mac user interface. He spoke – as his Vatican counterpart still does – ex cathedra, and that was that.

In contrast, Eco pointed out, the poor wretches who used a PC had, like the Calvinists of yore – to make their own salvation. For them, there was no One True Way. Instead they had to choose and install their own expansion cards and anti-virus software, wrestle with incompatible peripherals and so on. They were condemned to an endless round of decisions about matters that were incomprehensible to them but on which their computational happiness depended.

Spool forward 21 years to today and nothing much has changed, other than that the chasm between computational Catholics and Protestants now applies to handheld computers called smartphones, rather than to the desktop machines of yore…

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The European Court of Justice’s bombshell

This morning’s Observer column:

On Tuesday, the European court of justice, Europe’s supreme court, lobbed a grenade into the cosy, quasi-monopolistic world of the giant American internet companies.

It did so by declaring invalid a decision made by the European commission in 2000 that US companies complying with its “safe harbour privacy principles” would be allowed to transfer personal data from the EU to the US.

This judgment may not strike you as a big deal. You may also think that it has nothing to do with you.

Wrong on both counts, but to see why, some background might be useful….

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LATER This is a truly extraordinary moment. Lots of interesting and informative stuff about it on the Web, including this piece by Julia Powles and this NYT piece by Robert Levine.

And this from Edward Snowden:


So what happens next? My colleague Nóra ní Loideain has passed me this reassuring note:

Christopher Graham, UK Information Commissioner, said on 8 October at a meeting at Dentons [a law firm]: “Don’t panic. Safe Harbor is not the only route for international transfers. We are coordinating our thinking with other DPAs across the European Union.” The 28 DPAs which form the EU Art. 29 Data Protection Working Party met in their International Transfers sub-group on 8 October, and this group’s plenary will discuss the issue on Thursday this week, on 15 October.

Which means … what, exactly??

Why some software can’t be a black box

This morning’s Observer column:

For anyone interested in what is laughingly known as “corporate responsibility”, the Volkswagen emissions-fraud scandal is a gift that keeps on giving. Apart from the company’s Nazi past, its high status in German life, its hitherto exalted reputation for technical excellence and quality control, and its peculiarly dysfunctional governance, there is also the shock to consumers of discovering that while its vehicles are made from steel and composite materials, they are actually controlled by software. We are already close to the point where that software may be more valuable than all the physical materials that make up the vehicle, and, if Apple and Google have their way, that imbalance is set to grow.

Volkswagen’s chicanery was discovered by good, old-fashioned analogue detective work…

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Ad-blocking and the future of the Web

This morning’s Observer column:

There is, alas, no such thing as a free lunch. What’s even more depressing is that there is no such thing as a free internet service. Most people nowadays probably understand that in relation to, say, social networking services, if the service is “free” then the users (or, more precisely, their personal data) are the product. But this also applies to stuff that you haven’t signed up for – websites that you browse, for example. The site may be free to view, but there’s often a hidden cost.

One part of that cost comes from surreptitious tracking of your browsing habits by outfits that sell that information to advertisers. (If this is news to you just install the Ghostery browser extension to see who’s monitoring your browsing.) The other cost comes from ads that are placed on a webpage either directly by the site owner or as the outcome of a real-time auction that goes on in the depths of the internet.

And as the web has evolved, and more of our lives conducted online, internet advertising has steadily increased. It’s now at the stage where it’s really annoying…

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Algorithmic-driven markets and the future

This morning’s Observer column:

‘When a true genius appears,” wrote Jonathan Swift, “you can know him by this sign: that all the dunces are in a confederacy against him.” We need to update this for our age: whenever a really new technology arrives, you can tell it by the fact that most right-thinking people think it’s a scam.

Thus, to the average person the idea of a “cryptocurrency” like Bitcoin seems daft. I mean to say: a “currency” that was invented by a geek; is not backed by any bank or government; has no central authority; and operates on the basis of a public ledger that is secured by arcane cryptography. It has to be a scam, doesn’t it? Well, actually it doesn’t – but it would take more space than is available here to explain why. The point is that most people can’t see the point of cryptocurrencies, which, paradoxically, is why they are interesting.

On the other hand, most people – non-geeks as well as geeks – can see the point of Uber, the cab-hailing service that is causing such turmoil on the other side of the Channel (and occasionally over here too). You download an app to your smartphone. When you need a cab you launch the app and it shows you on a map where the nearest available cars are, and you hail the nearest one. Within three to five minutes it shows up. And when you arrive at your destination, you don’t pay the driver: the fare is charged to your credit card. QED.

Compared with currencies, therefore, Uber seems pretty comprehensible…

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