How Moore’s Law Is Ending Management As We Know It

by Rod Collins

 

As they struggle to find their footing in the unfamiliar landscape of a rapidly changing world, many managers are seeking refuge in change-management initiatives to navigate the new terrain. Unfortunately, anecdotal evidence suggests that more than 75 percent of these initiatives fail. Perhaps that’s because the very notion of change management is probably an oxymoron. To think that you can manage change is to imply that you could somehow control change. Change is going to happen whether we approve of it or not. Quite simply, change is impervious to our attempts to manage it. When it comes to change, the central challenge is not about managing change. It’s about managing at the pace of change, and that is an entirely different proposition because the only way you can manage at the pace of change is to change how you manage. To understand why this is so, we need to understand a phenomenon that has come to be known as Moore’s law.

In the mid-1960s, Intel cofounder Gordon Moore observed that the number of transistors that could be placed on a computer chip was doubling every twenty-four months. Said another way, our capacity to store and process information doubles every two years. Moore’s law explains why today’s average teenager has more computing power in her iPhone than the typical Fortune 500 company of the 1960s had in its multimillion-dollar computer center. It also explains why a nineteenth-century management model is unsustainable in a twenty-first century world.

If we were to graph Moore’s law for the period 1984 through 2014, we would find that the graph would start out linear until around 2004 when it would make an exponential turn. We suggest beginning with 1984 because that is the year Apple introduced the first Mac and transformed the computer from a piece of high-priced institutional equipment into an affordable household appliance available to the masses. If we define our computing capacity in 1984 as one unit and then double that amount every two years, we would find that our capacity to store and process information today is more than 32,000 times what it was in 1984. To highlight how rapidly the technological revolution is reshaping the business landscape, in 2016 that capacity will grow to more than 64,000 times when compared to 1984.

Moore’s Law captures the dynamics of our journey between two very different worlds and serves as an analogy to explain where we have been, where we are going, and why what worked yesterday won’t necessarily work tomorrow.

Between 1984 and 2004, Moore’s Law would be essentially a flat, linear line. Thus, if you were a manager in 1995 and were responsible for planning and delivering specific business results for 1998, you would analyze all the available data at your disposal for the period 1990 through 1995. You would thoroughly study all the dynamics and the relationships among the key factors that would guide your decisions in planning for what you would need to do to meet your 1998 goals. With this knowledge, you would do what other successful managers had done for decades. You would forecast the future based on your thorough analysis of the past, and chances are highly likely that you would indeed deliver on the results because1998 would be a linear extrapolation of the period that precedes it.

For the past century, the way we’ve managed our businesses has been based upon two fundamental assumptions that have been rock solid for all that time. The first assumption is that the past is a proxy for the future. This explains why the professional practice of management has been so data driven. In a linear world, when management’s job is to create the future, the secret sauce is to understand and then extrapolate from the past. The second assumption holds that the smartest organizations are those that leverage the intelligence of their smartest individuals. Accordingly, the dominant and near universal structure for both private and public sector organizations has been the top-down hierarchy, where the few at the top direct the activities of the many, based on the belief that the whole organization becomes smarter than it would otherwise be if the workers were allowed to follow their own judgments.

However, If you were a manager in 2005, accountable for meeting specific business goals in 2008, and you built your business plans on the extrapolation of your analysis of the period 2000–2005, chances are highly likely that you would miss the mark because 2008 is not a linear extension of the period 2000–2005. That’s because, after 2004, Moore’s Law becomes exponential.

The significance of Moore’s law is that it demonstrates that we have been rapidly and suddenly thrust into an exponential world in which the rules are very different. In our exponential world, many managers are painfully discovering that the past is no longer a proxy for the future, and they are reluctantly learning from the remarkable successes of innovative businesses—such as Google, Linux, and Wikipedia—that the smartest organizations are now the ones that know how to aggregate and leverage their collective intelligence by designing organizations not as top-down hierarchies but as powerful collaborative networks.

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).