Action, Individual and Organization

I originally wrote this entry on October 9, 2004, and published it on blogs.sun.com.

Scottish Philosopher and Christian thinker, John MacMurray argued in his seminal work, The Self As Agent (1957), for the centrality of action to our existence. "Action," for MacMurray, "is choice."

Time, and indeed action, of which it is the form, cannot be object for a subject. It can only be experienced in action. In such experience of time, the characteristic structure is a dinstinction between past and future. When the agent moves, his action continues. At any point in this continuing movement he is aware of the distinction between past and future. The past is what has been done; the future what has not been done but remains to do. That part of the movement which is past is already actual, the part which is future is not actual but only possible. In general, therefore, the past is the field of actuality, the future the field of possibility. The present is simply the point of action . . .

In action, then, the Agent generates a past by actualizing a possibility. This 'generation', or 'bringing into existence', is pratical determination, and the actual is the determinate. To act, therefore, is to determine; and the Agent is the determiner . . . We may therefore define acting as determining the future. The past is then that which has been determined, and is, in consequence, completely determinate . ..

The Self As Agent (pp. 133-134)

What becomes to our propensity to act, i.e. to determine the future, when it comes to our activity within large, formal organizations?

Chester Barnard (The Functions of the Executive, 1938), writing at about the same period as MacMurray's philosophical musings sees "a need of action as a primary propensity and instinct" even when we are acting within organizations. The need for action extends beyond individuals to organizations (in which they have to organize themselves because of various limitations imposed on individuals in making choices through individual action).

. . . Correlative with this is the observation that enduring social contact, even when the object is exclusively social, seems generally impossible without activity. It will be generally noted that a purely passive or bovine kind of association among men is of short duration. They seem impelled to do something . . .

. . . Where the situation affects a number of persons simultaneously they are likely to do any sort of mad thing. The necessity for action where a group of persons is involved seems to be almost overwhelming. I think this necessity underlies such proverbs as 'Idle hands make mischief,' and I have no doubt that it may be the basis for a great deal of practice within armies.

The Functions of the Executive (pp. 117-118)

Organizations die if they cannot provide for purposeful and satisfying action of individuals, while guaranteeing a sense of choice-making which can only be authentic in local groupings.

In large organizations, the possibilities of participation increase with the greater possibilities offered for association and action. Returning to a concept of choice similar to MacMurray's, Barnard notes that this greater number of possibilities and also the conflict of obligtaions they accompany, "may induce a sort of paralysis of action through inability to make choice."

In short, we have a propensity to make a choice, to determine the future, through our actions, but in large organizations, such choice-making actions are often frustrated.

Situations that frustrate such choice-making and action-determintation, degrade our personalities and lead us to a state of being lost.

The activities of individuals necessarily take place within local immediate groups. The relation of a man to a large organization . . . is necessarily through those with whom he is in immediate contact. Social activities cannot be action at a distance . . . [This] justifies a statement made to me that comradeship is much more powerful than patriotism, etc., in the behavior of soldiers. The essential need of the individual is association, and that requires local activity or immediate interaction between individuals. Without it the man is lost. The willingness of men to endure onerous routine and dangerous tasks which they could avoid is explained by this necessity for action at all costs in order to maintain the sense of social integration.

The Functions of the Executive (119)

So, what is the upshot of all this philosophizing?

Action summarizes our being, and organization is often a necessity to take particular types of action. Local, (often informal) immediate groups within organizations function to limit and make more effective our action-choices whose frustration will put us in danger of becoming lost. We take on large, dangerous tasks not because of some large ideal but to ensure comradeship and local social cohesion.

How Many Nobel Laureates Does it Take?

I originally wrote this entry on October 9, 2004, and published it on blogs.sun.com.

Some say the answer lies here.

Simple vs. Complex Organizations

I originally wrote this entry on September 28, 2004, and published it on blogs.sun.com.

Simple facts are often quite difficult to recognize, remember or articulate. They just are true. So, for example, why do we work in teams? We don't really know. For many of us, it is just the way it is. Earlier, I wrote about how Chester Barnard, father of modern organizational theory, draws a distinction between effectiveness and efficiency. Here, I will add a short note on how he draws the distinction between "simple" and "complex" organizations. Barnard was very interested in how organizations actually formed. He gives examples of spontaneous organizations, where people get organized because of some accident. Any person in an urban area who has witnessed an open source conference, a disaster, a revolution, military action or occupation knows how spontaneous, simple organizations form to handle particular tasks unachievable as an individual. Such spontaneous organizations are usually of a small size.

The largest simple organization, according to Barnard, are probably orchestras and speaking forums where the audience and the speaker form, at least, a temporary organization. These large simple organizations, according to Barnard, share a common theme. They all imply a mostly unidirectional communication from the leader (conductor, speaker) to the rest of the members. They all involve well-understood, specialized symbolism, sometimes even a specialized language (e.g. musical notes, the conductor's movements, etc.).

In his 1938 book, The Functions of the Executive (Harvard University Press), Barnard writes

The clue to the structural requirements of large complex organizations lies in the reason for the limitations of the size of simple organizations. The limitations are inherent in the necessities of intercommunication. . . . [Communication] between persons as an essential element of cooperative systems; it is also the limiting factor in the size of simple organizations and, therefore, a dominant factor in the structure of complex organizations.

The key here is that Barnard sees the large, complex oragnization as a byproduct of the smaller, simpler organizations through growth, divisions and mergers. He also sees "intercommunication" as the limiting constraint on the size of simple organizations, a limiting constraint that also plays the most significant role in determining the structure of the complex organizations such as a corporation.

I wonder what role blogs will play in complex organizations. Corporate blogs could be a centrifugal and gravitational force that help an organization to reconfigure and hold together spontaneously and continuously, but that view seems like an exaggerated one. I guess we will have to wait and see how it all unfolds.

Puzzling on the Value of Bundles

Measuring value of a product bundle, particularly when the bundle contains non-equal or potentially complementary lots, has puzzled economists and business strategists alike. I don't claim to have solved the puzzle but I have puzzled on some other aspects of the problem in a short three page briefing I wrote a few weekends ago.

Markets and Hierarchies, and Software

I originally wrote this entry on September 16, 2004, and published it on blogs.sun.com.

Some in the open source community, who may have had a chance to glance through The Cathedral and the Bazaar, will most probably miss that the contrast between "Markets" and "Hierarchies" is nothing new, at least to the institutional and transaction-cost economists. (To be fair, Eric Raymond does briefly mention some papers based on Ronald Coase's work, including some by Harold Demsetz.)

My own understanding of the topic is based on Oliver Williamson's works on Markets and Hierarchies. [I can only say that I was extremely lucky to have a chance to learn more about his ideas in the course of an independent study with Williamson while I was at Berkeley earlier this year. It was a very rewarding experience.]

In fact, I'd very much like to see more applications of Williamson's ideas to Open Source economics and to software economics in general.

In short, there's a place for hierachies and there's a place for markets. As the economy evolves, relations of exchange could be brought into the market or into hierarchies. What matters is transaction costs. Whichever exhange relationship (market, hybrid or hierarchy) reduces transaction costs will be taken up. These ideas are also echoed by Douglass C. North in his investigation of how economic structures evolve.

Only the Resourceful Survive

I originally wrote this entry on September 15, 2004, and published it on blogs.sun.com.

I drove my daughters back from El Camino Youth Symphony violin practice tonight and was wondering why we could not simply and conveniently ride a train home.

We were driving in my (still quite inefficient) compact European car, and with two additional passengers, I had the luxury of driving in the carpool lane. I don't often get to ride in the carpool lane. So, I was quite surprised when I kept passing the many, many SUVs in the non-carpool lanes, each with a single driver inside.

What an odd sight!

My immediate thought was whether we could claim to have an efficient economic organization in the Bay Area? I don't think so. (Given equal purchasing power, it still takes me less time and effort, per transaction, to buy a certain quantity of yogurt in Tehran, where I visit my grandmother, than it does in San Jose, where I live with my family.)

Note that I'm not criticizing SUV owners, drivers or buyers. People often own and use things that they believe they need. In fact, I constantly toy with the idea of owning an SUV. (It could make life much easier.) What I'm questioning is the organizational aspects that help drive and accentuate such needs at a larger level.

According to Chester Barnard, an organization has to be efficient or effective to survive. The more an organization lasts, the more efficient and effective it will have to be to continue surviving. Does Barnard's maxim hold about national or regional economies? It seems to me that it does to a very significant degree.

In the long run, only the resourceful organizations will survive. The wasteful ones are most likely to disappear, and disappear they will quite quickly.

Effectiveness vs. Efficiency--Why Organizations Persist?

I originally wrote this entry on September 13, 2004, and published it on blogs.sun.com.

I've written about Chester Barnard before. His 1938 book, The Functions of the Executive (Harvard University Press), remains one of the most important business and institutional economics classics. It has been reprinted some 30 times since its initial publication.

Here's what Barnard says about the persistence of organizations.

The persistence of cooperation depends upon two conditions: (a) its effectiveness; and (b) its efficiency. Effectiveness relates to the accomplishment of the cooperative purpose, which is social and non-personal in character. Efficiency relates to the satisfaction of individual motives, and is personal in character. The test of effectiveness is the accomplishment of a common purpose or purposes; effectiveness can be measured. The test of efficiency is the eliciting of sufficient individual wills to cooperate.

As Barnard seems to imply, efficiency is harder to measure than effectiveness. Let's give an exmaple.

Say, 10 people get together to push a large spherical rock up a hill. Effectiveness of their organized activity can be determined by seeing whether the rock makes it to the top. The efficiency of their activity will depend on their optimal expenditure of energy for pushing the rock up the hill. How do we know who's pushing more, or less, optimally? A measurement of effort which does not poison cooperative relatioships is quite hard. The only way people are motivated to do what they are doing is if they are satisfied with the results as it relates to them personally. As Barnard has noted, the survival of an organization not only depends on the environment or context of its activity but also on factors "which relate to the creation or distribution of satisfactions among individuals" since such satisfactions will determine motivation and efficiency of the cooperative activity.

When Industries Explode into Revolutions

I have always wondered how technical (not scientific) revolutions come about and join with market forces to create a bonanza of activity in a particular industry.

We have seen it happen with Java in the Software and Internet industries.

Now, we are witnessing similar processes in other industries.

Take the case of flat panel displays. This is a case where consumer demand, technology, globalization and bold planning are meeting to create fantastic industrial giants.

Here are some interesting facts from a recent Wall Street Journal article by Evan Ramstad.

• 
  AU Optronics Corp. is the third largest producer of flat-panel, LCD screens after Samsung Electronics Co. and LG Philips LCD of South Korea. AU is pouring $2.3 billion in a factory to be built in Taiwan. To shorten the construction time for the factory by 40 days, they paid $500,000 to have a 210-ton machine delivered from its manufacturer in a Soviet-built, six-engine Antonov 225 plane. It was the only plane large enough to carry the machine to its destination. The machine was built in Germany by Applied Films Corp., a U.S. firm that specializes in glass and metal coatings.
  
• 
  Revenues in flat-panels is going to increase to $60 billion this year, 40% above last year.
  
• 
  Ordinary TVs cost manufacturers less than $5 / sq. inch of screen size. LCD's cost $20 to $30 / sq. inch of screen size. Plasma screens cost around $20 / sq. inch.
  
• 
  Most of the research and development for flat panel screens is now being done in the Asian countries where the manufacturers are based: Korea, Taiwan, China and Japan.
  
• 
  Here's a couple of very interesting paragraphs from the WSJ story:
  

The company [AU] has built each of its five latest plants faster than the previous one. It's now pushing its contractors to the limit: AU's new factory has 2.4 million square feet of clean room, where manufacturing takes place, compared with 500,000 square feet at Intel Corp.'s largest chip-manufacturing plant. Handed a deadline of just seven months, general contractor Fu Tsu Construction Co. began construction late last year even before the plant's architects were done. "When we are still working on the first floor, they are still designing the second floor," says Lin Chih-sheng, a Fu Tsu director.

Fu Tsu lined up three sources of steel because the project consumed 140,000 tons of it. That's nearly twice as much of it as Taipei 101, the world's tallest skyscraper that opened last year in the capital city. The plant and other flat-screen facilities being built in Taiwan began consuming so much concrete that a sand shortage arose.

Now, there's an industry exploding into a revolution ! ! !

To Share or Not to Share (II)

I originally wrote this entry on August 27, 2004, and published it on blogs.sun.com.

The vastly prolific Judge Richard Posner's musings regarding a recent court decision on file-sharing ("In the Wake of Grokster") has led to a torrent of great commentary by his readers.

In their commentary, Luka, Ernest Miller and Matthew Saroff have made interesting technical points to demonstrate the serious challenges police crackdown faces as a prevention tool, and I certainly agree with Luka's critique of the ideal-world equilibrium analysis offered by James McDonnell.

McDonnell claims that if file-sharing could be stamped out, the no-file-sharing world would be possible to maintain through minimal enforcement because such a world would be one of the equilibrium worlds (that he postulates). Luka notes how the diversity and growth of file-sharing alternatives make such ideal-world analysis less than satisfactory. He gives Orkut as one of the non-trivial examples.

Referring to unsuccessful prohibition attempts in history, Raoul and Doug Munger focus on the limits of enforcement in general. ("The RIAA has only sued 4000 people out of 60,000,000," writes Raoul. "It's a joke.")

In his original blog, Judge Posner has used the "expected utility" approach of the economists to analyze the ancillary effects of a recent DoJ crackdown on a file-sharing network. (I'm coining the phrase "expected utility" for explanatory purposes.) The "expected utility" approach says, basically, that economically rational agents will look at the probabilities of outcomes (will I get punished or not if I file share) and multiply these probabilities with the value of each outcome (the pain of getting arrested vs. the gain of thousands of more free songs) and determine the "expected" utility of some action.

On the limits of such "expected utility" analysis, see Richard Thaler's The Winner's Curse: Paradoxes and Anomalies of Economic Life, Chapter 6 (Princeton University Press, 1992). The point Thaler makes is that people do not always see decisions according to the "expected utility" approach. (I will say more on this in a separate log.)

. . . Thanks to honorable Judge Richard Posner for having started the dialog on Grokster. As a bystander, I thoroughly enjoyed the conversation as it unfolded.

Note:
Earlier, I'd given a quick review of reports on the Grokster case and pointed to the DoJ crackdown on a file-sharing network that followed, almost immediately.

Housing Market, Interest and Exchange Rates

I originally wrote this entry on August 26, 2004, and published it on blogs.sun.com.

Shreedhar has written regarding his surprise at the unfathomable Bay Area housing market. He has noted wages and population moving in a direction that will lead to lower prices. Things are a bit more complicated, as research has shown.

Housing prices are determined by a number of factors, including wages, population growth (as Shreedhar has noted implicitly), interest rates, inventory, "production" (new houses), etc. When interest rates are low, housing market will move faster; when production or inventory is high, prices will be lower.

Historic prices, however, need to rise somewhat to provide an incentive for buying the house and also to help avoid defaults. If prices fall too sharply and too much, borrowers will go into default. This is not good for the borrowers. It's also not good for the banks or other creditors. At the moment, loans on houses form the largest volume of "fixed-income" debt paper (i.e. bonds) out there. So, on its own, any illiquidity in housing debt (bond) markets may have more influence on interest rates in the U.S. than government treasuries.

If bonds on loans become cheap, i.e. once default rises, interest rates will rise, too. However, high interest rates are not good for a sputtering economy because they make money too "slow" to come by. The only saving grace, I've read, is for the U.S. dollar to devalue even further against other currencies.

This could be good for companies such as Sun because of its large revenue footprint abroad, but it also may mean inflation if the U.S. becomes increasing more dependent on imports of basic goods. Any devaluation steps need to be taken very gradually.

Dying Culture

I originally wrote this entry on August 23, 2004, and published it on blogs.sun.com.

Richard Posner, the honorable guest at Lessig Blog, has written a short piece about the Eldred decision. He is correct that Lawrence Lessig has "from time to time" self-flagellated about losing the Eldred decision at the Supreme Court. (See chapter 13 and 14 of Lessig's Free Culture.)

Frankly, I don't see anything dishonorable in feeling shame. Particularly when something happens on your watch, and Eldred did happen on Lessig's watch, shame is a noble feeling. It may have been better not to argue the case at all, as Lessig notes himself in his most recent book. So, I applaud Lessig for flagellating himself on this, at least for a while. In any case, he has now recorded his feelings in his book and can move on to more interesting stuff.

Now, let's stick to the actual issue Posner has mentioned.

First, I don't think anyone would argue with Posner when it comes to the importance of propertization as an incentive to the owner to conserve and nurture his or her property. In fact, it has been argued by many economists, including Nobel Economics Laureate Douglass North that secure propertization is essential to economic progress. (See here.) This has been well established by him and other economists who have written since the Second World War. (North has also made some other interesting, general points about the role of technology in economic development.)

Second, Posner is right when it comes to a relativistic interpretation of the "for limited Times" term in the Progress Clause of the Constitution. However, Lessig has also realized that fact. In his book, he has noted that insisting on a reasonable interpretation of "for Limited Times" in his arguments was not a winning strategy before the Court. Lessig says that he should have argued from the "Free Culture" point of view. In other words, he should have said that extending limited terms is harmful to basic freedoms in our culture. However, I think even that argument has some flaws in it. First of all, no culture is truly free. We all live with and are rooted in our pasts. If any institution in the U.S. government knows that fact well, it should be the Supreme Court. So, emphasis on "free," instead of on "roots" might not always work with the Court.

Last but not least, copyright term extension beyond a certain point, as Lessig has analyzed so skillfully, promotes the death of culture much more efficiently than it stifles free culture. (That is why I think Lessig should have chosen a different title for his book but it could have become too dramatic. I don't know?)

Death of culture through repeated copyright extensions going well beyond three or four generations happens in several essential ways.

• Only "cultural" products for which current economic value can be extracted are protected and nurtured into prosperity.
  
  
• With continuing copyright term extension, many pieces of potentially valuable cultural works that are not currently and commercially active remain silent and could be lost to history because it costs more to clarify their copyright status than can be earned by making them available to public, either directly or through "mixing" in other cultural products.
  
  
• Continuing copyright term extensions also prevent active mixing of the past into the future. If copyrights are allowed to be extended beyond a certain point, going for more than three or four generations as the case may be, it becomes increasingly more problematic to do such cross-generational mixing of cultures beyond what is made available through commercially active culture. That's the true loss.
  
  

Oil prices at the pump (in Iran)

I originally wrote this entry on August 17, 2004 and published it on blogs.sun.com.

The price, listed on this gasoline pump, is in Iranian Rials. In July 2004, when this picture was taken on the road from Isfahan to Saveh, 8600 Rials could be exchanged for about $1. The total price, seen in this picture, is for 5.07 liters. That's about 1 + 1/4 of gals for less than 50 cents.

As you can see, in Iran gasoline is priced sharply under the world markets. The social and economic reasons are subtle. In very brief terms, this is primarily a way for the government to subsidize the national economy. Other oil derivatives which require higher-level processing are traded at world market prices and are normally produced by companies listed on the Tehran Stock Exchange.

Why we cooperate and adopt group purposes?

I originally wrote this entry on August 11, 2004 and published it on blogs.sun.com.

Chester Barnard provides the following summary answer to this question:

Among the most important limiting factors in the situation of each individual are his own biological limitations. The most effective method of overcoming these limitations has been that of cooperation. This requires the adoption of a group, or non-personal, purpose. The situation with reference to such a purpose is composed of innumerable factors, which must be discriminated as limiting and non-limiting factors. The Functions of the Executive

Individuals in Organizations

I originally wrote this entry on August 10, 2004 and published it on blogs.sun.com.

Chester Barnard provides the following account of the "individual" in organizations:

The individual human being possesses a limited power of choice. At the same time he is a resultant of, and is narrowly limited by, the factors of the total situation. He has motives, arrives at purposes, and wills to accomplish them. His method is to select a particular factor or set of factors in the total situation and to change the situation by operations on these factors. These are, from the viewpoint of purpose, the limiting factors; and are the strategic points of attack. The Functions of the Executive (1938)

Barnard starts by noting our limited power of choice. Earlier in his book he amplifies on this theme connecting choice to context (i.e. "factors of the total situation") one is acting in. The structure of action is then decomposed into motives, purposes and will. In terms of actual practice of acting, he notes that individuals usually select a factor or a set of factors in the "total situation" to affect. For example, say you don't like your career path. It could be because of where you are, what you're doing, who you're reporting to, the goals or the team. One can change one or a set of these factors. Which actual factor is selected depends on one's total situation. Next Barnard discusses purpose. Purpose determines one's goal. From the point of view of one's goals, some factors may be limiting. Those factors are exactly the ones that will be selected for change.

That's a brief summary of Barnard's views on "individual" actors in an orgniazation.

In the next post, I'll summarize his views on what moves individuals in an organization to adopt group purposes.

The Functions of the Executive: Chester Barnard and the Theory of Organization

I originally wrote this entry on August 10, 2004 and published it on blogs.sun.com.

In my last semester at the Haas School of Business, I had the good fortunate of studying transaction cost economics (TCE) with the master: Oliver Williamson. He was a wonderful advisor, and although I had already read many of his essays, he guided my more extended readings and helped me gain a better understanding of the fundamental concepts of TCE. I started several ideas with him and finally settled on writing a paper that gave a transaction cost economics account of the bullwhip effect in supply chains. It was a fascinating exercise and learning experience. (Earlier on this weblog, I have written a brief account of the bullwhip effect, investigating it as a consequence of technological specialization and within the context of North's theories on the structual evolution of economic institutions.)

There was one book whose reading Williamson highly recommended to me: The Functions of the Executive by Chester Barnard. That book was first published in December of 1938. I have a copy of its 2002, 39th printing in my hands.

I've written about Chester Barnard and Oliver Williamson earlier, including a brief mention in a piece on Douglass North.

Today and possibly tomorrow, I'm going to extract a short summary of the first part of Barnard's book on The Functions of the Executive.

I think the material is important to anyone who works within a cooperative system, a business organization or any other kind of association.

Technology and Transaction Costs Economics

I originally wrote this entry on August 9, 2004 and published it on blogs.sun.com.

Douglass C. North, the Nobel Economics Laureate (1993), has applied transaction cost economics, an economic theory originally founded by Ronald H. Coase (the 1991 Nobel Economics Laureate) to develop a new theory of institutional economics.

In the last chapter of Structure and Change In Economic History, one of his earlier books on the economic history of institutions, North gives the following assessment of technology in economic history (pp. 206-207):

. . . the stock of technology determines the gains from specialization (via scale economies) and the costs of alternative forms of organization. The greater the gains from specialization, the more steps in the production process and the higher the transaction costs.

The jump from "the more steps in the production process" to "higher transaction costs" may be surprising for some but a review of the bullwhip effect in supply chain management should clarify the connection.

The bullwhip effect, i.e. demand and inventory uncertainty amplifications upstream of a supply chain was analyzed theoretically by Jay Forrester in his famous 1961 book, Industrial Dynamics. The bullwhip effect has also been studied by more recent investigators, such as Professor Hau Lee of Stanford University.

The expenditure necessary to handle increasing fluctuations upstream of a supply chain (either on larger inventories or on better supply chain coordination) represents transaction costs. Roughly speaking, transaction costs comprise the costs of remaining in business, the cost of making a deal or a transaction go through, the cost of holding a production organization together.

As Oliver Williamson, the noted transaction cost economics scholar, has shown, transactions can be characterized by the associated uncertainties, their frequency and the specific assets devoted to them. Each one of these characteristics determine some aspect of transaction costs. For example, transaction maintenance costs increase as specific assets increase. Human know-how specific to a particular contractual relatioship is an example of specific assets.

So, what is North saying again about technology?

He is saying that the stock of technology can lead to greater specialization, i.e. to more steps in the production process and hence to greater transaction costs.

The big question is then the degree to which these production steps will be organized by the market or within a hierarchy. This is the big strategy question that each economic entity needs to consider--for example, the question: "Shall I produce my own software or shall I buy it?"

Let's end with another quote from North's book:

The degree to which these various steps will be organized by market versus hierarchical organization will depend upon the alternative costs of measurement and enforcement. Since vertical integration into hierarchical organization means the substitution of factor markets for product markets, a key determinant will be the cost of the organizing factor, and in particular, labor markets.

Tehran Stock Exchange

I wrote this entry, originally, on July 11, 2004.

According to Iranian financial news reports I have read in the last few days, real estate grew by only 19% across Iran while stocks grew by more than 130% in 2003. It may be possible to confirm this by a look at the Tehran Stock Exchange although I have not tried it myself in any depth. Volume of exchange has grown by more than %250. More and more companies are being listed. CEO of the TSE recently called for listing of news media companies to give them greater vitality.

Chester Barnard

I wrote this entry, originally, on July 10, 2004.

I have started reading Chester Barnard's The Functions of the Executive.

It has been recommended by professor Oliver Williamson (Economics, Law School and School of Business at UC Berkeley) as an important work. Professor Williamson has reviewed Bernard's influence in Mechanisms of Governance.

The volume I have in my hand is published by the Harvard University Press, Cambridge, Massachusetts. It is the thirty-ninth printing (2002) of the book, originally published in 1938.

What sort of book is it that gets to have so many printings?

Apparently, Barnard never completed Harvard, but he wrote one of the most influential books there is when it comes to management, executive functions and organizational theory.

Is J2EE Disruptive

The answer to this question depends on the context, i.e. the market with respect to which we are asking it.

In his 1997 national best seller, The Innovator's Dilemma, the Harvard Business School professor Clayton M. Christensen coined the terms disruptive and sustaining technologies.

According to Christensen, most new technologies improve product performance. He calls such technologies sustaining technologies. In contrast, he identifies disruptive technologies to be those innovations that lead to worse product performance, at least in the near-term. He goes on to say that such initially less-performant technologies end up precipitating the leading firms' failure.

Christensen also notes that there are three reasons established companies do not invest in disruptive technologies. First, because disruptive technologies are simpler and cheaper, their use only provides low margins to begin with. Second, disruptive technologies are usually first commercialized in markets which the established firms consider to be insignificant. Third, established firms' most profitable customers cannot initially use such technologies. According to Christensen, a practiced discipline of "listening to customers and identifying new products that promise greater profitability and growth are rarely able to build a case for investing in disruptive technologies until it is too late."

Frankly, I am not sure I agree with this last point Christensen is making. I think listening to customers does not just mean listening to what it is they want. Often customers don't really know or think they know but are not sure if what they want jives with what's "there." The most important thing companies should listen for are "requirements" in a deep sense of that word, i.e. not what a customer wants from us but what their goals are, how they go about achieving it now and how they can go about achieving it in the future. This approach is quite different from just seeing what they want.

So, is J2EE an example of a disruptive technology in the Christensen sense of the word?

Well, in the enterprise market, J2EE has been proven to be the de facto platform because one can easily develop, deploy and maintain scalable applications in production environments. So, one may argue that in the enterprise market, J2EE may not be as disruptive as it once was. This may not be completely true. While some real innovations (such as JAX-RPC and Connectors) have emerged that are not just about "performance" in speed, some may still argue that these new innovations are simply about "performance" in integration. They may have a point.

However, that is not what I wanted to talk about. What I want to say is that Christensen's notions of disruptive and sustaining technologies really need to be applied and scoped with respect to particular markets.

So, let's ask the question again and scope it to the telecommunications market.

Is J2EE a disruptive technology in the telecommunications market?

Applying the Christensen analysis, we have no choice but to say that it is.

There are three classes of telecommunications applications where J2EE has a good fit as the emerging and disruptive middleware platform: OSS/BSS applications, service applications, service control function applications.

Who will take advantage of this opportunity will be offering the next-generation platform for convergence applications.

Once again for Lessig ! ! !

Institutional economists, such as Douglas North (Structure and Change in Economic History) have long argued that the protection of intellectual property was a necessary ingredient for the technology-driven economic growth of the post-industrial world.

North and others have been focusing on the importance of protecting private and intellectual property. Less attention has been given to the regulatory limits of such protection.

Over the years, copyright laws have expanded to include derivative work. It is not clear whether such expansion (to derivative work) is actually good for economic growth.

Once again, Stanford University Law professor Lawrence Lessig has written a wonderful book, this time on how new technologies affect our economic environment and our culture.

In this new book, Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity, Lessig examines the changes made to the copyright law and how those changes can stifle creativity and an open culture.

His writing is meant to be accessible to all, including those who do not have any training in law and its methods. He takes care to bring out some of the legal subtleties involved in a very lucid and accessible prose.

Lessig is one of the few legal scholars who have really thought hard about how new communications technologies are changing our world. Reading his works would be useful for all who play a role in the creation of such technologies.