Digital Economy Dispatch #057 -- Too Big to Fail

Digital Economy Dispatch #05710th October 2021

Too Big to Fail

I remember the first time that I began to really understand the broad impact of the internet across all of our lives. Several years ago, I rang at the front door of a geeky friend of mine for a meeting we’d arranged. No answer. I kept trying with the same response. Eventually I called him to come down to answer the door.

“Oh, so sorry about that. My internet is down so my doorbell doesn’t work!”.

It was the early days of what we now call the Internet of Things (IoT) when more and more devices are wrapped in a digital layer of hardware and software to allow them to gather data, run algorithms to infer what’s happening, and communicate to other enabled devices to share their findings. In his enthusiasm for all things digital, he had begun connecting everyday services to create a network of shared data. As he did so, he was also learning that the digital world brings a host of new challenges and threats.

Having to wait for a friend to answer the door is one thing. But what happens when the “things” connected to the internet now include not only household appliances and entertainment devices, but also critical services that are essential to businesses, government, health, education and much more?

The technical advances and adoption of “smart devices” has been one of the cornerstones of the current digital revolution. By some estimates, the number of IoT devices deployed is currently between 25 and 40 billion. With estimates of more than 80 billion within the next 5 years. The data that they generate, store, and share is now vital to all aspects of how we work and live. To all intents and purposes, the collective technologies supporting our digital interactions has become part of our planet’s critical infrastructure. It is now as essential to us as the electricity that powers our homes, and the roads and rails that allow us to move around.

Consequently, ensuring it works consistently and effectively is also of great concern. Not only must it keep working, but it also must do so for the benefit of all of us. As it embeds into the fabric of our society, we are waking up to the significant questions raised by the digital technologies that form the backbone of our lives. And most importantly, deciding what happens when they don’t live up to our expectations and needs.

If the Face Fits

We gain insight into these challenges by considering the current situation with Facebook. From its original roots as a social media platform for individuals and groups to interact, it has become an essential part of many aspects of our lives: It is a core communication tool in business, it is used by key groups across our society to coordinate and share important information, it is a significant news channel, and much more. In addition, through its acquisition of 91 companies, it now is responsible for a critical instant messaging platform (WhatsApp), a widely used photo and video sharing platform (Instagram), and a set of virtual reality solutions (Oculus).

In many ways, Facebook is an example of a digital infrastructure that is now too big to fail. We rely on it too heavily for it to stop working. From a technical perspective it should not fail. But just as importantly, we must insist that it works in a way that is fair, effective, and appropriate. From a societal perspective, it must not fail us. But, in both areas there are growing concerns.

Down the Internet Rabbit Hole

The technical challenges in maintaining and managing critical digital infrastructure cannot be underestimated. The internet is an immense feat of engineering. It is impossible to read detailed accounts of the details of what is required to deliver the scale, speed, and effectiveness of this technology. But is does fail. The recent outage at Facebook caused severe disruption to many businesses, organizations, and individuals who rely on it for their activities.

It took several hours to correct and diagnosed as a simple error when upgrading a core address mapping table at the heart of the system. Eventually the error was corrected, and operation restored. Yet, the experience has brought into focus that despite the protections put in place, these critical infrastructure solutions are big, complex, and constantly evolving. They will fail.

Through the Looking Glass

For many people, the more concerning recent stories about Facebook are about the strategy and governance models that guide its direction. In a “60 Minutes” TV show on 4th October 2021, Frances Haugen, formerly part of Facebook’s “civic integrity team”, accused Facebook of disregarding the company’s own internal research that highlighted the problems caused by the platform in disregarding the spread of false information, bullying, and other harmful behaviours. She strongly suggested that Facebook executives were willing to place company profits and personal gains above these responsibilities.

As we see with other critical infrastructures such as energy supply, there are complex forces at play. Noone would deny the importance of profitability to maintain the sustainability of companies to ensure continued operation, pay employees and stakeholders, and invest into new products and services. But we now also recognize that when companies such as Facebook become too big to fail us, they must be prepared to submit themselves to the moral and ethical scrutiny required of all critical infrastructure.

There and Back Again

The struggles experienced at Facebook are not unique. Similar issues are being addressed at other BigTech companies, government agencies, and national institutions as they transform into digital organizations equipped for the digital world. They are engaged in creating complex technology infrastructure capable of delivering the digital products and services we require to address the key challenges of our age. But by placing themselves in this critical position, their responsibility is not just to advance the technology, it is also to ensure we build a fair and sustainable world for all.

At the same time, governments around the world are increasing looking to investment in skills, additional regulation, and new laws as ways to drive commerce, ensure a more equitable society, and protect their citizens. Their relationship with technology providers and their role in driving change is essential. How they will establish the right balance in this task remains to be seen.

Yet, perhaps the biggest lesson from the Facebook situation is that we now recognize that the digital transformation of our society is too big to fail.

Digital Economy Tidbits

TCS 2021 Global Leadership Study. Link.

In many Large Established Organizations (LEOs) a critical tension they face is the need simultaneously to “run the business” and “change the business”. This aspect of strategy was the focus of a recent TCS survey that is well worth a quick look.

TCS conducted a major research study to understand how large global companies have recalibrated their strategies through 2025. They asked more than 1,200 senior leaders of large global companies 15 key industries across 14 countries:

“How do you plan to balance innovation with optimization from now through the mid-2020s?”

Specifically, this TCS study focused on how they were planning across four arenas of their businesses:

This study’s results can be summarized in 4 key issues:

  1. Senior Leaders recognize that continued growth and profitability will likely come from new collaborators (even competitors), new digital offerings, and new industries and ecosystems Read more

  2. Senior Leaders predict innovation and a customer & employee centricity need to drive their culture more than shareholder value Read more

  3. In an increasingly digital business environment, Senior Leaders predict many areas of the organization will be subject to cyberattacks Read more

  4. Most Senior Leaders predict that optimization will be more important than innovation for organizational growth and profitability between now and 2025 Read more

Collaboration Overload is Sinking Productivity. Link.

This article addresses one of my (many) failings…not learning to say “no”. The conclusions of this article are both startling and obvious – organizations need to help to protect people from themselves! By reducing “collaboration overload” and managing interactions, companies can help you to “just say no”.

Many people have had the experience of being asked to do something and knowing with every fiber of their being that they should say no, but in a nano-second convince themselves why they need to do this thing after all. They jump in and then wonder six weeks later why they never have time for work that interests them. Collaborative work — time spent on email, IM, phone, and video calls — has risen 50% or more over the past decade to consume 85% or more of most people’s work weeks, and the Covid-19 pandemic caused this figure to take another sharp upward tick. These invisible demands are hurting organizations’ efforts to become more agile and innovative. And they can lead to individual career derailment, burnout, and declines in physical and mental well-being. But there’s a lot that organizations can do to equip their employees to work more efficiently in this context, ultimately improving employee well-being, productivity, and retention.