Tuesday, December 29, 2009

Protocols enable innovation

David Brooks recently had an op-ed in which he expounded on something he called "The Protocol Society", a term he used to capture what authors Arnold Kling and Nick Schultz call the 'software layer' in their idea of 'Economics 2.0, as expressed in their 2009 book "From Poverty to Prosperity: Intangile assets, hidden liabilities, and the lasting triumph over scarcity"

Here's the idea: protocols, something every program and project manager lives by, are the rules of the game: some written, and some only existing as understandings by experience and practice. Protocols give us the law, and particularly contract law, copyright law, trademarks, and others that set up predicable pay-and-receive-value obligations and liabilities, supply chains, contractor opportunities, and protection of invention and intellectual property.

Kling and Schultz call protocols the 'software layer' of the modern economies, and the enabler behind the innovation and productivity revolution of the last 100 years.

Brooks makes this interesting observation: the classical laws of supply and demand that regulate and balance the tangible economy because of the scarcity of real goods, and the fact that real goods can't be in the hands of more than one person at a time, don't apply to the protocol world.

There are no supply-demand forces working on ideas, and certainly there is no scarcity of intangibles--there can be uncounted users logged on to all manner of cloud services at one time. There is no practical supply and demand regulation of the protocol society. Indeed, Brooks makes the point that protocol-centric cultures tend toward inequalities: those that are cultually attuned to adapation and adoption of new ideas, as different from new physical stuff, will prosper. In fact, culture is perhaps the most important ingredient in the mix of what makes protocols successful.

And so in the project domain, we see many of these forces at work. Projects are in many ways enabled by the presence of effective protocols. Think of virtual teams as essentially enabled by protocols but reliant on cultural commonality for success.

Project managers are not constrained by conventional supply and demand allocations for any number of project services, although perhaps the most important resource, people, are balanced by supply and demand.

And what about innovation and governance? Where does the protocols of goverance fit in? We in the program and project world certainly have experience with governance systems.

Again, Kling and Schultz cite the Chicago school and Harvard school as sources of opposing thoughts: the former being market oriented-small government and the later being governance oriented-market regulation. In the Kling-Schultz formulation, its an idea from both camps, to wit: market-market. That is, the greatest source of innovation is freedom to try and fail in the market, but the most effective regulator of failure is failure itself.

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Photo credit, David Brooks:

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