As promised in a previous post, this is a review of “The Laws of Disruption – Harnessing the New Forces That Govern Life and Business in the Digital Age“, by Larry Downes. Many of you may know Mr. Downes from his previous bestseller “Unleashing the Killer App“. The Laws of Disruption is a fairly short book – only 280 pages of actual text. One would think that it would be a quick read, maybe a long coast-to-coast plane ride. That was my thought as I skimmed the book while in Borders one day (yes, I still go to bookstores…). Once I started reading I quickly realized, that at least for myself, this was not going to be a “skim for the high points” read that I quite often do with many books. Mr. Downes piqued my interest with his very first example of how changes in technology (in his case, the stirrup) dramatically outpaced and drove changes into the economic and legal systems in place at the time (the birth of feudalism, landed nobles and serfdom in this case). From the first example forward, I was hooked, waiting for the next example of disruption. I wasn’t disappointed. Mr. Downes provides a wealth of real-world examples, all of which we recognize, but may not have understood or given much thought to at the time – BetaMax versus VHS for example.
Confronted with the weird economics of information, the core principles of public law, private law, and information law are being turned upside down. Policymakers from the physical realm have increasingly less influence in digital life, while consumers, both individually and in virtual groups, have correspondingly more. The balance of power will rest with business leaders, who must learn to align themselves with the latter group and less with the former. That, at first, will feel unnatural. But they will get used to it. Larry Downes, The Laws of Disruption.
The premise of Mr. Downes’ book is fairly simple – technology, especially in the digital age, quickly and far out paces our antiquated economic systems’ ability to support the “disruption” that results when the new technology (or social norm) takes hold and quickly spreads. To form the basis of his arguments, Mr. Downes uses three key concepts: Moore’s Law, Metcalfe’s Law, and the notion of “rivalrous” goods (those that can be possessed by only one person at a time and whose use is limited to that person or with whomever she may share it) and “non-rivalrous” goods (those that can be used by everyone at the same time – which results in limiting access to them to be difficult if not impossible). Obviously, Mr. Downes puts digital information into the latter category. To round out the equation Mr. Downes adds the concept “transaction costs”, which in the digital age are quickly approaching zero. When you apply all the above factors to any new technology or social norm in the digital age it is easy to see that our current economic and legal systems simply begin to crumble under the pressure exerted by the masses of consumers who are quickly gobbling up these new offerings. The key point that Mr. Downes makes in his book is that the majority of consumers essentially ignore and no longer respect the concepts of privacy and ownership. Thus, the systems we have in place which were built upon those principles no longer work to govern life in the digital age.
The Laws of Disruption centers around nine key laws – Convergence, Personal Information, Human Rights, Infrastructure, Business, Crime, Copyright, Patent and Software. I won’t go into detail on each of these other than to say that Mr. Downes does an excellent job of laying a firm groundwork for each of these “laws”, explaining how they relate to the digital age and giving, as I said before, lots of good examples of how digital age disruptions have tested and often overpowered our legal and judicial systems. I really liked how Mr. Downes demonstrated how various laws, acts and policies relate to each area and how the various government agencies play a role in trying to regulate life in the digital age. The recurring theme that resurfaces in each section is that our current laws and systems are inadequate and our legislative and judicial systems are not equipped to create new laws that effectively govern the new age. The result is that the laws that are enacted end up severely limiting or diminishing the value of life in the digital age – and that in the end, the people will write their own laws (which according to Mr. Downes will be much more effective).
Executives in high-tech and low-tech companies alike must demonstrate both leadership and restraint: leadership in shaping the rules of digital life where governments cannot or will not do so, and restraint in not exploiting old rules that may still be enforced but no longer make economic sense. Larry Downes, The Laws of Disruption.
For me the key take-away from the book is that most corporations are ill-equipped to deal with life in the digital age. As Mr. Downes points out, we hire lots of high-priced lawyers to craft mind-numbingly complex license agreements and terms of service, which ultimately only end up protecting us at the “very edges”. So why waste the time, effort and money in the first place? A radical new shift is required which calls for the inclusion of the community of players in the digital world to come together and write a new set of laws that work for everybody. As Mr. Downes points out several times in his book, “open is good, closed is bad”. My recommendation is that this book should be required reading for all managers in your corporation who have the power or authority to make decisions or commit resources which place your company at risk in the digital age.
As I mentioned, there are lots of concepts, examples, laws, agencies, etc., in this book. As I continued reading I decided to map them out to categorize and keep track of them all. I have attached a copy of the results for your viewing pleasure. Unfortunately, I couldn’t/didn’t capture them all, which gives you a sense of the richness of content Mr. Downes provides.
Ultimately it’s your choice to agree or disagree with Mr. Downes’ position that government should get out of the way and let the global community define the laws of the digital age. But one thing you can’t argue with is that without significant change in our antiquated systems, we are headed for a wild ride in the digital age. Pick up his book and give it a read – it will be well worth your time.