You can have a long term strategy or agile delivery but you can’t have both

Roger on 05/07/2020

An organisation cannot have a long term strategy and have agile delivery.

A strategy, by definition, is “a plan of action designed to achieve a long-term or overall aim.” It is, because of the way it is typically approached, a long-term plan to achieve the long-term goal. And often this is for good reasons within an organisation, including the amount of time doing “strategic work” takes away from the actual delivery work and because it is often seen as a means providing clear and steady guidance, to signal certainty and reliability.

Agile delivery, is characterised as “iteratively delivering incremental value by responding to change quickly”. It’s mostly associated with software development but the principles and practices apply equally well in all kinds of disciplines and functions. An agile delivery approach requires shorter time spans, in fact the shorter the better, in order to plan the work, do it, and review what that work achieved.

An organisation can have a long term strategy with fixed delivery, or agile delivery with shorter planning cycles and faster feedback mechanisms. But it can’t have a long-term strategy that is delivered in an agile way.

Both can work towards achieving the same goals.

They are just different approaches. One approach says, ‘We know where we want to get to, and we think it’s going to take us this long to get there, so we’re going to walk in that direction for that length of time and then see whether we got there’. The other approach says, ‘We know where we want to to get to, but we don’t know how long it’s going to take, and we’re not even sure which direction to go in, so we’re going to take a few steps and then check whether we’re any closer to where we want to get to’.

Same goal, different approaches. Choosing one approach instead of the other doesn’t change the goal, although it arguable changes how likely the organisation is to achieve the goal.

Both approaches are about reducing risk, they just have different perceptions of risk.

The agile approach considers not responding to change and carrying on regardless as the biggest risk to achieving the goal. Being agile is about reducing risk by taking small steps and checking to see if they were the right steps, and changing direction if they weren’t.

The long-term strategy approach perceives the biggest risk to be not having a plan to follow and the perceived insecurity and uncertainty that comes from that. So, the best way to reduce risk is to get the best people to spend lots of time doing the strategic planning so that they get it right. They are expected to use their experience and expertise to predict the future, which is a stable world with a predictable economy and very little disruptive technology, they used to be able to do.

One doesn’t deliver faster than the other, or cost less. Being an organisation with a five year strategy provides certainty. Being an organisation that agile provides flexibility. But in fact, both certainty and flexibility take a great deal to achieve and are both as illusionary as each other.

Long term strategy and agile are on a continuum

Long term strategy and agile delivery, whilst not able to co-exist, are not opposites. They are on the same continuum of approaches to achieving a goal through planning to reduce the risk of not achieving the goal.

An organisation that plans its strategy every five years is at one end of the continuum, and an organisation that chooses what work to focus on on a daily basis is at the other end.

If the strategic planning cycle changes from once every five years to annual, the organisation is now five times as agile as they used to be. If they then go to quarterly planning they are now four times as agile and twenty times as agile as they originally were. If they go to weekly planning they are 260 times as agile as they were when they started.

Can you really not have both?

Some may argue that an organisation can have a long-term strategy that is delivered in an agile way because then the users are getting some value from the organisation earlier than they might otherwise, and yes, the organisation might get lucky and accidentally deliver something of value, or the users might have no choice and have to accept it regardless. But the key aspect of the agile delivery approach, in fact the reason for working in short cycles and collecting feedback, is that being able to respond to change. So even if the work is delivered incrementally, if it turns out to be wrong but has to continue to follow the long-term strategy then all an organisation gets from trying to have a long-term long and agile delivery is some awareness that it is going the wrong way but is unable to do anything about it until the next planning cycle.

Digital Economics

Roger on 05/07/2020

Digital technology is the representation of information in bits. This technology has reduced the cost of storage, computation, and transmission of data. Research on digital economics examines whether and how digital technology changes economic activity. In this review, we emphasize the reduction in five distinct economic costs associated with digital economic activity: search costs, replication costs, transportation costs, tracking costs, and verification costs.

Digital Goods and the New Economy

Roger on 05/07/2020

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow -Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.

The Economics of Electronic Commerce – Chapter Two: Characteristics of Digital Products

Roger on 05/07/2020

As the Internet progresses beyond merely being an efficient communications medium and truly expands the opportunity for trading goods, the very definition and basic characteristics of products will change in this electronic marketplace. Information is commonly thought of as the new commodity for electronic commerce. Information, which is often loosely defined to include software and so-called ‘edutainment’ products as well as other knowledge-based products that can be digitized and delivered via networks, has received the most attention in the public press. However, information even in its broadest sense is far from the only product that can be digitized. Many physical products can be made “smart” by adding an electronic interface to monitor and control their functions—for example, smart cars and smart appliances, which become hybrid digital products. Other examples are electronic currencies and various forms of financial instruments and securities. Even market processes are being digitized. For example, instead of driving to stores, consumers visit Web stores. Messages containing price quotes and orders sent over the Internet can indeed be considered to be digital products which perform the same functions as advertising and ordering in physical markets.

Understanding the Challenges of the Digital Economy: The Nature of Digital Goods

Roger on 05/07/2020

This article investigates the economic nature and characteristics of digital goods. Such goods are, due to their replicability, shown to be public goods (albeit in an evolutionary way) and durable goods. Furthermore, the content of such goods, combined with their durability, makes them experience goods. While only one of these characteristics would be sufficient to create difficulties for producers and lead to market failure, this article demonstrates that each of the characteristics reinforces the other. The framework presented in the article is then applied to two important issues: The new trend of massive consumer piracy and the overall problem of value of digital goods.

Thierry RAYNA, Imperial College London

“the development of the digital economy, based on the digitalisation of previously existing goods and on the development of new purely digital goods. This technology has not only permitted the creation of many new goods or services, but has also dramatically changed the way an entire category of goods in the economy are created, produced, distributed, exchanged and consumed. Digital technology has caused a drastic decrease in reproduction costs and distribution costs (and even, sometimes, in initial production costs), thereby leading to important structural changes in the economy and potentially a global rise of social welfare, due to the increase in quantity, quality and variety of goods and services available in the economy. “

“the benefits created by digital technology, in terms of distribution and reproduction costs, have been brought to the economy as a whole, thereby allowing the consumers to reproduce, distribute and exchange digital goods (virtually) without incurring any cost. The overall effect on the economy of digital technology is, thus, ambiguous.”

“because of their digital nature, digital goods are fully replicable (can be copied without loss of quality or information). This results in the following fundamental economic characteristics: digital goods are public and durable. These two characteristics are important, since they are known, in the literature, for the loss of market power they induce for the firms that produce such goods and for the market failure they may entail.” Which drives business models that don’t rely on the inherent value of the goods themselves.

“The content of a digital good may be such that its actual value can only be fully realised once the good has been consumed. Thus, in addition to being public and durable, some digital goods are also experience goods”

“A good is non-rival in consumption if the consumption activity of each consumer does not decrease the quantity of good available in the economy. A good is non-excludable if no one can be prevented from consuming it.”

“It is important to note that digital goods may seem, at first, rival in consumption: if a CD is used by a consumer, this particular CD is no longer available for the consumption of other consumers and the consumption activity of one consumer, indeed, reduces the number of units available for other consumers. However, there is rivalness only as far as the medium used to distribute the digital good (floppy disc, CD, DVD, etc.) is concerned, and not the digital good itself. The medium is indeed unique: if a consumer is using it, then the plastic component referred to as “CD” cannot be used at the same time by another consumer. The digital good itself (i.e. the binary code of the software, music file, etc.) can be replicated on another medium for a small (often negligible, cost). While rivalness exists if a consumer borrows a CD from another consumer, it is not resent if the digital good is copied instead, as both consumers can enjoy the same unit of good at the same time. Since digital goods can be copied without any loss of quality or information and are, in general, independent from the medium used to distribute them (the good matters, not the medium), they can be considered as non-rival.”

“The main difference between digital goods and the other traditional public goods is that the producers of digital goods always retain the ability to directly exclude consumers.”

“…since digital goods can be replicated, anybody owning a digital good is a potential supplier of this good. Thus, once the first unit of the good has been sold, the producer starts losing control over the production of the good and part of its power to exclude consumers. As the producer does not have the ability to exclude consumers indirectly, the more the good spreads among consumers, the less it is possible for the producer to actually exclude anybody from the consumption of the good.”

“only the first unit of a digital good produced is actually excludable”