Lessons from a Very Mobile Industry

by Andrew McAfee on August 3, 2012

I have the good fortune to be back at the Aspen Institute this week, this time for the 21st annual Information Technology Roundtable. It’s a small gathering of people brought together by the Institute and Charlie Firestone to talk about the digital world’s big topics. The title for this year is “navigating the emerging economy;” we’re spending three days talking about how the economy is changing, technology’s role(s) in this shift, and what interventions, if any, are warranted.

We operate under the Chatham House rule so I can’t say who said what, but I want to relate one of my biggest ‘a-ha’ moments so far.

Yesterday afternoon one of us was documenting the great recent successes of the American mobile industry. The Apple iCosystem is the most obvious example, but not the only one. The large majority of the world’s smartphones now run on an operating system originating from an American company, and I bet that most of the most popular apps in the world are of American origin (especially if we exclude the very large walled garden behind the Great Firewall of China).

Think how improbable this would have seemed only five years ago. At the start of 2007 RIM and Nokia were ascendant (as the below clipping from the New York Times indicates), and mobile network speeds and technologies in the US lagged behind those in Korea, Japan, and much of Europe.

2007: Nokia is on top of the world

Our domestic market, while large, was split among large, slow, incumbent vendors backing incompatible standards, and it seemed like any move significant enough to change things would require regulatory review and permission. Finally, many smart observers were maintaining that the proliferation of software patents in the mobile industry was retarding innovation because players were using them primarily to sue each other (or threaten to do so).

In short, it seemed a dire situation, and I remember reading the familiar parade of articles and reports outlining how far behind we were in this critical industry and proposing various grand plans for addressing the situation.

And then the American version of capitalism did what it does when it’s at its best, which is to innovate, to create and seize large markets, to create high-stakes competition that benefits customers, and to create new things that people value a great deal.

And the American high-tech industry does what it’s recently learned to do so well, which is to create platforms (iOS, Android, Twitter, Facebook, etc.) that balance openness and control, develop and curate large ecosystems of innovation, and generate massive value for platform owners and members alike.

I bring this example up not to wrap myself in my flag and cheerlead for America (I do enough of that these days while watching the Olympics), but to make two points.

First, when capitalism is working well markets, even large ones, are dynamic places, and the speed and scale of creative destruction can be breathtaking. To paraphrase an old line about Boston weather, if you don’t like the state of a high-tech industry, wait a minute. And while you’re waiting, stop predicting doom and calling for heavy-handed interventions. Markets generally work, and we should generally let them.

Second, it is a serious mistake to underestimate the ability of American companies to respond and compete effectively. I’m not nearly smart enough to understand precisely what makes the American version of capitalism work so well, but we can grow small companies into big ones, come up with new stuff, and adopt to changing circumstances better than anyone. And lest that sound like jingoism coming from me, here’s a quote from Nicholas Bloom, Rebecca Homkes, Raffaella Sadun, and John Van Reenen:

After a decade of painstaking research, we have concluded that American firms are on average the best managed in the world. This is not what we — a group of European researchers — expected to find. But while Americans are bad at football (or soccer, as it’s known as locally), they are the Brazilians of Management.

My surest prediction about technology is that Moore’s Law, in all its variants, is going to continue for some time to come, and that the resulting digital cornucopia of more, better, and cheaper will continue. My second surest prediction is that much if not most of this cornucopia will come from America.

Anyone think differently?

  • http://twitter.com/RichardRashty Richard Rashty

    Great Post Andy.  As to the spirit of American firms being able to respond & compete, I think my late immigrant father said it best:
    “there is something about America & being an American that gives me absolute confidence that I can do anything.  America is another name for success.  Americans never quit, never have excuses, and when you get knocked down, you refuse to stay down.  I love this country

  • http://tedhowardnz.wordpress.com/ Ted Howard NZ

    Yes – I think differently.

    I agree that Moore’s Law and its variants will continue for at least another 15 years.

    Actually – if you look closely, most of the cornucopia is manufactured outside of the US.
    While in some senses many of the ideas come from America, in another sense, many of those in America having the ideas are recent immigrants, and many of them are likely to go back from whence they came if things get tight, and America continues the xenophobic trends that have been accelerating since 911.

    To me (not being American, but rather coming from a small Island nation in the South Pacific – New Zealand), it seems that American was founded on great philosophical traditions (I was moved to tears walking around Washington DC a few years ago, and reading all the inscriptions on the buildings and side-walks), and those traditions seem to me to have been prostituted to the pursuit of money, rather than the pursuit of happiness.

    Money seems to have been designated as a proxy for happiness by the governing ethos – which it most certainly is not.

    And I repeat most of something I wrote in one of your earlier blogs (http://andrewmcafee.org/2012/07/mcafee-singularity-progress-capitalism-democracy - but because I corrected a few typos it is still awaiting approval – and has been for several weeks):

    It seems clear to me that we will soon have machines that can make and repair other machines, completely automated.Google now have their self driving car, which is capable of replanning around unexpected obstacles in real time.It is not a huge step from there to automate the entire production and maintenance process for a set of machines, and then use those machines to build and maintain things like gardens and water supplies.I first published such ideas around 1983 – in the MENSA magazine Isolated M.Last year I was at the Foresight conference at Google’s Palo Alto headquarters and was very pleased to see the progress being made on the self driving car.  Earlier this year I took Sebastian Thrun’s programming course, just to make sure that I was familiar with all of the concepts involved.I have had a site – http://www.solnx.org – devoted to the idea of radical abundance for over a decade now.It seems to me that humanity has almost outgrown markets and their valuation system (money).The biggest problem with money is that it values scarcity.Money (market value) is essentially human value multiplied by scarcity.Markets are great tools for allocating scarce resources, and as such have performed (and do perform) many valuable functions in society.However, markets do not value things that are abundant.It is not possible to use market mechanisms to deliver true abundance (abundance of a similar order to that of oxygen in the atmosphere).Markets cannot sensibly handle things that are truly abundant.  They can only sensibly deal with things that are scarce in some real sense.If we are to deliver radical abundance to all of humanity, then it must be done by conscious choice, because it will never be done by markets (the incentive structure simply isn’t there).It seems to me that all human beings have the potential to be self actualising (in terms described by Abraham Maslow and others), and that those of us who have the knowledge and ability have a responsibility to empower others in their own developmental paths.  A society based on money and monetary concepts certainly does not (and cannot) do that.Once money moves beyond being a simple tool for the exchange of goods and services, and becomes an end unto itself, then the incentive structures in monetary systems invert, and favour money generation above delivery of human value.Our society seems to me to be at the point where either this reality becomes clear to most, or we are all in deep peril.And I am sufficiently optimistic that we are capable of transitioning to a post scarcity society, and it is by no means a certain thing.We need to move a few more in positions such as yours to thinking beyond the box of money.

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