Living in the ruins of the past, rates of technological change and institutional failure
In which comparisons are drawn between Richard Rumelt's Good Strategy Bad Strategy and Azeen Azhar's Exponential on the decay of Western institutions
On Twitter a few days ago, there were some pictures of famous Canadian hotels:
And this comment:
dylan 🍁 @bappobebasedcanadian grand railway hotels > https://t.co/RpRtuscOJH
There is something compelling about the idea that we’re living off the efforts of our ancestors. Some of our largest and most famous buildings1 were part of a railway network that doesn’t really exist anymore. Part of this is that air travel replaced the need to travel in style of course. Via Rail still exists as well, but its not that great for travelling. If the railway era ended, why hasn’t it been replaced by other things?
This brings to mind early modern depictions of Rome. There are a number of paintings of people living their ordinary lives in the ruins of Ancient Rome. The paintings, like the one below, show Rome turned cow pasture:
It’s something of a metaphor of a fall from grace, that the dignity of the Romans being literally covered in cow shit, since the Forum became the campo vaccino (cow field). I can’t help but feel something of the same, thinking of the grand Canadian hotels. It fits with the narrative of decline as well. But how true is it?
How fast is technology changing?
GDP would certainly suggest continued growth:
In Good Strategy Bad Strategy, Richard Rumelt remarks on a phase transition that occurred in the early 20th century:
For example, compare the changes during your life to those that occurred during the fifty years between 1875 and 1925. During those fifty years, electricity first lit the night and revolutionized factories and homes. In 1880, the trip from Boston to Cambridge and back was a full day’s journey on horseback. Only five years later, the same trip was a twenty-minute ride on an electric streetcar. - Source, chapter 13
Then, from there, he argues that not that much has changed. Life today is pretty familiar to life in 1925, just with different stuff. We use cell phones and the internet instead of telegraphs, but the principles are pretty much the same. As kitchy as it is, I’ve recently been watching Stranger Things, depicting life in the 1980s. It’s cute seeing old technology (bunny ear TVs? walkie-talkies?) but it’s still a very familiar world to the world we’re living in today.
Rumelt is mostly interested in competition between firms. In an earlier chapter, he describes how it is obvious to executives and MBA students what makes a market-leading firm successful, usually some form of being “in the right place at the right time”. Then, when asked what they are doing to position their firms to be “in the right place at the right time”:
But when I asked about their own companies’ strategies, there was a very different kind of response. [..] They had each told me the formula for success in the 1990s electronics industry—take a good position quickly when a new window of opportunity opens—but none said that was their focus or even mentioned it as part of their strategy. - Rumelt, chapter 1
So its not that technology hasn’t been changing, it is that corporate entities struggle at executing strategy. They continue on the path that they are on, unable to change. More damning is that Rumelt argues that most corporations don’t even have a strategy, they instead set goals and don’t think about a realistic plan to get there.
What very piqued my interest though is that I had encountered Rumelt’s description earlier this year in Azeem Azhar’s Exponential:
As late as the 1880s, life in London resembled that of a much earlier era - horses plied the roads, leaving piles of manure in the streets; most domestic tasks were powered by hand; much of the population inhabited crowded, centuries-old slum buildings. But beginning in the 1890s, and in many cases completed by the 1920sw the key technologies of the twentieth century took hold. Pictures of central London streets in 1925 show them free of horses, replaced by cars and buses. A network of cables would have carried electricity from coal-fired power stations to offices and homes. Telephone lines ran into many houses and allowed people to talk to distant friends. - Source, p1
Azhar makes a different argument in his book, that the rate of change has not just been increasing but has been accelerating exponentially faster than our institutions can handle. He argues that while society has been changing in complex ways, our institutions have not. We now have genetics, the internet, nuclear weapons, etc being governed by systems designed in the 17th and 18th century. This is something that Cummings has written about as well:
The national institutions we have to deal with such crises are pretty similar to those that failed so spectacularly in summer 1914 yet they face crises moving at least ~10^3 times faster and involving ~10^6 times more destructive power able to kill ~10^10 people. - Source
These arguments can be reconciled. Azhar and Cummings write from an institutional perspective: our institutions (parliaments, regulators, corporations, etc) are not equipped to deal with complex, fast-moving problems. Rumelt writes from a business oriented perspective: Given our institutional failures how can strategic thinking be leveraged to give you an edge in the marketplace?
I don’t have any answers for this question. All three writers give forward looking advice: Rumelt has advice for strategic positioning for firms (first and foremost, have a strategy and not just a set of bullshit goals). Cummings believes that many of our institutions are not salvagable and has worked to destroy them. It’s hard though to imagine Canada building a hospital in a week as China did at the beginning of the pandemic.
As a last point, J Bradford Delong has a new book coming out in the next few weeks on the economic history of the “long twentieth century”, being the period from 1870 to 2010.2 I've been waiting for this book to be released for a few years now and I'm excited to see what it can add to this discussion.
The Chateau Frontenac features as one of the only Canadian landmarks in my childhood atlas.
There’s something I really like to the idea of “long” or “short” centuries. The one I’ve studied the most is the long 18th century, from the Glorious Revolution in 1688 to the end of the Napoleonic Wars in 1815. It’s almost cliche in history to be talking about these, but I find it helps orient your mind around some of the pivot points of history.