As the Cost of Information Surges, Web 2.0 Techniques and Tools Emerge

In 1937, noted economist Ronald Coase penned a short essay titled “The Nature of the Firm.” Coase was trying to understand why companies had gotten very large as the industrial revolution first emerged and then began to displace our agrarian lifestyles.

For 10,000 years, mankind had lived in tribes. We survived as small groups of highly connected individuals. If we lived in the farming village of the 19th century, I’d help you build your barn, and you would help me build mine. Together, we would thrive or suffer based on our collective success without much involvement from external forces.

But by the beginning of the 20th century, that had all changed. Industrialization was driving the birth of the corporation, and then the mega-corporation. By the 1930s, energy, transportation, finance, and consumer goods companies were pulling millions of workers off the fields and into the factories. Why did these companies become so large?

It turns out that the observations Coase made in the 1930s can now be used to explain why enterprise architecture is struggling so much in its traditional role today.

What Coase discovered was that the size of the firm correlates to the cost of information. When we were all farmers, the amount of information we needed (small) and the cost of getting it (low) allowed our “enterprise” to be tiny. In the auto industry of the 1930s (not to mention energy of the 1970s or finance in the 1990s), the amount of information needed to succeed and the cost to obtain it was substantial.

It was this high cost of information that drove the emergence of large IT organizations in the 1980s, and it specifically led to the birth of the discipline of enterprise architecture as a more efficient process of obtaining, analyzing, and sharing highly valuable enterprise information.

Now another set of enterprise-ready social tools are coming to market that allow teams to discover, plan, manage and collaborate with enterprise class security and scalability.

What few of us expected back in the 1980s was the emergence of a force that would throw Coase’s law into reverse—and change the game in the necessary complexity and size of the firm. Moore’s Law, Metcalfe’s Law, and the power of the Internet are now driving down the cost of information to the point where almost everything you need to effectively compete in the marketplace can be obtained from your browser and procured at almost no cost.

As enterprise architects, many of us are stuck in systems that are tuned for expensive information. While we are dealing with complex processes, massive data sets, and painful authoritarian structures, the modern competition can be nimble, cheap, and open.

The Minimum Viable Product

Enterprise architecture has regularly gotten a bad rap for being an ivory tower. Many projects spend too much time documenting information about the architecture and not enough time developing and testing ideas and scenarios.

In the Web 2.0 startup community, a major focus is on developing lightweight solutions that are iterated rapidly based on customer feedback and needed enhancements. This technique can be applied to IT strategy by collecting only enough information necessary to answer key questions and lay the groundwork for further discovery and iteration.

As Eric Ries, a leading voice in the lean startup community, notes: the minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

Listening to the Crowd

There have never been more solutions available to understand and collaborate with your community than ever before. While the emergence of social networking tools such as LinkedIn, Facebook, and Twitter have been a boon for personal networking and knowledge discovery, many of these kinds of services are not available inside the firewall.

Now another set of enterprise-ready social tools are coming to market that allow teams to discover, plan, manage, and collaborate with enterprise class security and scalability.

One such tool is Yammer, which is Twitter for the enterprise. Unlike Twitter, whose central question is “What are you doing?” Yammer asks “What are you working on?” And each Yammer network is constrained to employees with a common e-mail domain at a corporation.

Another tool that enterprise architects should use for understanding their customers and the broader community is online idea submission and survey tools such as Uservoice and Get Satisfaction. User Voice (www.uservoice.com) allows anyone to launch a collaborative site where your community can submit ideas that will help you better understand where improvements need to be made and what they could be. From there, your community can vote the best ideas to the top of the list—no more guesswork on what your customers want.

For the enterprise architect and IT strategist, stealing a page out of the Web 2.0 playbook makes a great deal of sense. You can apply techniques that are on the cutting edge of product development to your architecture practice and, as a result, generate better answers, faster, with much more support from your customers.

by Jonas Lamis, the founding editor of Architecture & Governance Magazine and executive director of SciVestor