Tom Graves

Several people asked me to cross-post to other ‘economics’ sites the previous post on ‘Whuffie’ and currencies‘. I wasn’t comfortable doing so without editing-out the comments about the ‘Ready? Fire! Aim…’ syndrome, which were specific to the conversations to which that post referred: hence the re-work in this post here. I’ve also taken the opportunity to extend some parts, to link it more strongly to my ‘day-job’ of enterprise-architecture.

So: what can we learn if we tackle economics as enterprise-architecture? In other words, as if it was just another exercise in whole-of-enterprise architecture, the same as we would do for any large organisation (such as described in my book ‘Doing Enterprise-Architecture‘)? After all, ‘the economy’ is just another enterprise – it happens to be at a very large scale, but the exact same principles should apply.

(This’ll be another long one, hence I’ll place a ‘Read more…’ link here.)

Read more…

Spent much of the past couple of days getting overly-involved in two great threads on Venessa Miemis‘ ‘Emergent by Design‘ blog:

• Social Capital is not the same as Whuffie
• What could the future of money look like?

The first thread started with a very necessary attempt to distinguish between social-capital and reputation-based ‘currencies’ such as Cory Doctorow’s imaginary ‘Whuffie‘ (as described in his sci-fi novel “Down and Out in the Magic Kingdom” – the ‘magic kingdom’ being Disneyland, of course ). The key distinction that Venessa drew – and I think she’s right – is that social-capital is collective, a ‘network effect’ of the social context, whereas reputation is an attribute within the frame of that social-network, typically attached or attributed to the individual: in other words, they’re not the same, and should definitely not be treated as being the same.

This lead to the second thread, about ‘the future of money’, because much of the discussion in the ‘Whuffie’ thread was about the supposed need for some kind of ‘alternative currency’. (Clearly some people in the thread had hoped that ‘Whuffie’ would be it, but despite the efforts of well-meant initiatives such as The Whuffie Bank, it became evident quite quickly that it wouldn’t and couldn’t work in a ‘currency-like’ way.) There was – and at present, still is – a lot of discussion about various ‘currency-like’ proposals, such as TimeBanks, ITEX cashless payment, ‘Quids’ alternate-currency, and so on.

But what I found immensely frustrating was that almost none of them were thinking in true economic terms – and I wasn’t very popular for pointing out this unfortunate fact. Instead of enquiring what an economy is, what it needs to do, what purpose it serves, and so on – what would seem to be essential first-principles concerns about the context – they’d all assumed automatically, without question, that some kind of currency was ‘the answer’, and hence rushed off to create it. In other words, exactly the same mistake as far too many IT-folks: “here’s the solution – how can we force your problem to fit it?”

Ready? Fire!!! … aim…?

oops…

Yeah… really frustrating…

No-one with any sense would doubt that there are serious problems with the present ‘money-economy’ – not so much ’serious problems’ as ‘close to catastrophic failure’, in fact. Everyone in that conversation recognised this – which is why they were pushing so hard for alternatives. But the catch was that none of the alternatives actually resolved the core reasons why a money-economy won’t work; most of the proposed ’solutions’ not only replicated those problems, but actually made some of them worse. What was so frustrating was that in each case it took no more than a couple of minutes’ analysis not only to show that it wouldn’t work, but why it wouldn’t work. Yet no-one, it seemed, wanted to hear this: instead, off they want, charging off down their respective blind-alleys in the blind certainty that they’d found ‘the solution’.

What’s wrong with money, then? Short answer is: a lot. To give just a few examples:

• It only deals with point-to-point transactions, not network-effects – especially at a societal level.
• It’s designed to work with ‘alienable’ physical objects, but now no longer has any actual anchor in the real world – instead, we have literally trillions of supposed ‘money’ in imaginary ‘derivatives’ sloshing around the globe.
• It’s very easy to ‘game’ via artificially-constructed price/value mismatches.
• The implied ‘gravitation’ structure of money-based capital means that it tends to create ‘winner-takes-all’ accumulations – exacerbating social imbalances, often in the extreme, requiring separate action to try to redress the balance.
• Attempts to link ‘intellectual property’ into the money-system have resulted in a system which purports to match finite ‘alienable’ entities (physical ‘things’) with potentially-infinite ‘non-alienable’ entities (information) – which by definition cannot balance.
• Many organisations – particularly banks – are legally ‘entitled’ to invent money from nowhere, in effect assigning themselves an ever-increasing share of the society’s resources.
• A currency, by definition, relies on trust in the institutions that manage that currency, which in this case is the banks – yet much of that trust has been lost, and at present remains at an all-time low (hence the strong societal interest in options for ‘alternative currencies’).
• There are no built-in mechanisms to manage assignment of resources to those ‘outside’ of the monetary exchange-system (particularly children, parents, elderly, disabled and their carers, but also artists, scientists, thinkers, futurists, ‘creatives’ of any kind) – these stakeholders can only be served by ‘external’ mechanisms such as taxation (which are clunky and kludge-ridden at best), or by forcing them to do work within the money-economy (which means that their actual needed work can no longer be done).
• There is a very strong tendency towards short-termism.
• There is a very strong tendency to try to force everything into a crude, ludicrously-simplistic ‘double-entry life-keeping’.
• There is a very strong tendency to assume that ‘value’ exists only in monetary terms, as ‘valuations’ of ‘resources’ – hence, for example, a forest supposedly has no value until it is cut down, a mountain has no value until mined for its minerals, and so on.
• There is a very strong tendency to assume that anything which cannot be counted and ‘valued’ in monetary terms either does not matter or does not exist.

The societal impacts of these problems are rapidly approaching catastrophic levels. Yet none of the proposed ‘alternative currencies’ tackle more than a minute fraction of that list: most offer at best a localised kludge that might address a couple of issues whilst creating several more.

Let’s be blunt about this: the present system does not work. It actually never has – and that’s not surprising, because it was only ever intended to deal with point-to-point ‘trade’-transactions between fairly large groups (tribes, communities etc), hence it’s bit unfair to expect it to be able to run the entirety of an economy. But to create something that does work, we do need to go right back up to the level of the entire economy, and work our way back down from there. Which, yes, might – might – include some kind of ‘currency’ to tackle specific types of transactions: but not as the core of the economy itself.

This is actually no different from any other whole-of-enterprise architecture. (The only distinction is that it’s an ‘enterprise’ at the scale of an entire society, but that’s all.) So we would use the same overall approach:

• Who (and/or what) are the stakeholders in this enterprise?
• What are the core values? What is ‘value’ in this context? What is valued, and by whom? In other words, what determines ‘appropriate’ in this enterprise?
• What are the assets, functions, locations, events, capabilities and decisions within this enterprise? – in other words, the resources of the enterprise that need to be managed, distributed, shared and used in the most appropriate manner.
• What are the value-propositions that this enterprise needs to offer to and with its stakeholders?
• What mechanisms and responsibilities would be needed to create, deliver and monitor those value-propositions?
• What governance would be needed to ensure that all activities within the enterprise are optimised to be ‘on purpose’?
• …and so on.

To me, every attempt at a currency will inherently fail because it cannot take network-effects into account: by its nature, a currency is a mechanism for governance of point-to-point transactions, without any direct means to link to whole-of-system impacts. So I honestly believe that all of these attempts at ‘alternative currencies’ are a waste of time: we should be far better served by putting the same effort into understanding how an economy actually works.

And the key to that, to my mind, comes down to perhaps the scariest fact of all: there are no rights. ‘Rights’ are a social fiction; but the mutual, interlocking responsibilities that underpin those purported ‘rights’ are a social reality. If we want those purported ‘rights’, where we need to start is with creating a better understanding the ways in which those real responsibilities need to interlock: a focus on ‘rights’, like a focus on ‘currency’, is at best an unhelpful distraction from this requirement.

Where this gets gets scarier still is that our entire present economic model is based on a concept of ‘right of possession’ – hence a ‘right to personal property’. But there are no rights: only responsibilities are real. And in a network, there is no ‘personal’: only the network is real. Right at the fundamentals of economics, ‘personal property’ is just another fiction – and a very dangerous fiction at that. Yet personal responsibilities for societal resources – the appropriate management, maintenance and use of those resources – are real. And as with ‘rights’, those interlocking responsibilities result in something that looks almost exactly the same as ‘personal property’ – but we now know how we get there, via those responsibilities.

If we turn it this way round, we end up with something that looks very similar to what we have at present: but it resolves all of the structural flaws of a ‘money-type’ economy, and we also know exactly how we get there.

Once we know that that’s what we need to aim for, then we can start talking about ‘intermediate currencies’ and the rest, as part of a transitional ‘roadmap’ towards that more workable model. But those ‘alternative currencies’ are only an intermediate step, and we don’t start from there.

That’s what would change these sad attempts at ‘Ready? Fire! Aim…’ into a more viable ‘Ready? Aim? Fire!’ – and rekindle the fire in our social economy.

Another week, another month, and it’s back to the usual collection of Tweets and links. Usual layout, after the usual ‘Read more…’ link.

Read more…

(This series of posts explores a concept of ‘problem-space’ versus ’solution-space’ which in part demonstrates alternative uses and interpretations of the Simple / Complicated / Complex / Chaotic categorisation originally described in the Cynefin diagram. It must be emphasised that this is not about the Cynefin Framework; for details on Cynefin, please contact Cognitive Edge.)

This post represents yet another attempt to describe certain fundamental differences in approach from twf (aka ‘That Welsh Framework‘ – so-called because we’re no longer allowed to use its official name at all) and to find an alternative term that might reduce the ongoing friction in that quarter.

To do this, we need to go right back to first-principles: the core concept of context-space, which eventually leads us to context-space mapping.

(Another long-ish post: more after the ‘Read more…’ link.)

Read more…

It’s another week. Which means another exciting (or somesuch) collection of Tweets and links. Which – yes, as you’d no doubt expect – means the usual categories preceded by the usual ‘Read more…’ link.

Over to you if you’re interested, anyway.

Read more…

It’s another week of Tweets and links – somewhat late due to overload elsewhere. Usual categories, usual ‘Read more…’ link.

Read more…

And it’s back with another collection of Tweets and links, usual categories, usual mixtures, usual ‘Read more…’ link:

Read more…

Another week, another collection of Tweets and links…

A handful of extended conversations, and a special section on the TOGAF conference in Seattle. Beyond that it’s the usual categories that I hope you find useful, preceded by the usual ‘Read more…’ link:

Read more…

Yup. But they don’t like the results of simplistic, which is what we’ve got at the moment.

Note first that transaction-taxes are a _method_ to tackle a _symptom_. If we go straight to impose taxes without exploring the underlying issues, we’re likely to fall into the classic IT-industry trap of pre-packaged ’solutions’ looking for a suitable problem – the cart-before-horse’ syndrome. (For US folks especially, there are also some serious concomitant questions about where that money will go once it passes into government hands. )

This is not trivial: an unexpressed, unreleased value will keep on building until it eventually explodes, destroying not merely the business-model but at lot else whilst it’s at it. A colleague, for example, was once at a creditors’ meeting which very nearly became a lynch-mob: traders, you have been warned!

Since the previous post on ‘Values-architecture 101‘, the discussion on LinkedIn on values-architecture and values in business continues happily unabated. Still seems worthwhile, and also seems useful to re-post some of it here to make it more generally available.

I know I tend to write long, so perhaps unsurprisingly one person commented:

@Tom You asked for suggestions.

Keep it simple. Keep it brief. That is what business people want.

Yes, true. But business-folks also don’t like the results of simplistic, which is mostly what we get at the moment.

Condensing the simple out of the complex is darned hard work, which is perhaps why most people prefer simplistic. Even though it doesn’t work.

The path from complex to simple necessarily goes through something called ‘work-in-progress’ – which invariably and inevitably is going to be somewhat messy, tangled, confusing and the rest. And long-winded, too. Hence, my apologies, ‘cos this is indeed a work-in-progress…

Anyway, for those who don’t mind things that only halfway towards simple, more after the ‘Read more…’ link.

Read more…

There’s been a fairly lengthy argument on the LinkedIn business-architecture list about the role and meaning of ‘value’ in business-architecture. As usual, most of the US contingent leapt off onto the red-herring of ’shareholder-value’, which to me is almost completely irrelevant to the actual design and structure of a business-architecture – it’s an outcome, not an input as such.

After much back-and-forth – and a constant struggle to detach the discussion from the US obsession with ’shareholder-value’ – I finally managed to get at least some of the contributors to understand that values are some of the key inputs to an architecture. At this point, one of contributors tossed in what I can only describe as a lame attempt at a justification for architectural incompetence:

In my work I usually don’t create the many-layered value model that you do. I go right to the heart and relate tactical decisions to tangible value.

I’d have to say that I was shocked but not surprised. Three instant comments:

• it’s talking about price, not value;
• it’s going to the head (analysis), not to the heart (value); and
• it’s describing business-strategy and/or business-tactics, not business-architecture.

What’s still needed is a solid focus on the actual topic, namely value in business-architecture - in other words, the values-architecture that underpins the business-architecture itself.

To illustrate this, consider that statement “I usually don’t create the many-layered value model that you do”. A simple question: would you trust a purported architect who said “I’m going to use metal and glass in your building”, without any explanation or analysis as to why those materials would be used? Or what calculations underpin the choice of properties for the metal, or solar and other characteristics of the glass? Would you be concerned that there’s no ‘many-layered model’ behind the design, for example no apparent awareness of the need for resilience against earthquake or severe-storm, because though those are relatively rare in the short-term, they are highly likely in the medium to longer term? Would you trust an architect who regarded a many-layered, multi-faceted model of the building as irrelevant to the architecture-development and subsequent design and implementation? Would you trust an ‘architect’ whose only concern was price? I would hope that the answer would be ‘No’…

Which is why, like any real architect, I do insist on models that demonstrably assess all of the key factors in play in an architecture design.

So: some suggestions towards a Values Architecture 101:

#1. Values are subjective, not objective; they are feelings, not things.

#2. Values are the literal drivers for a business-architecture: they are the winds that blow across it, the rivers that flow through it, the forces that shake the ground beneath it. Values are the actual links in any value-chain or value-web. As with a physical building, the business-architecture cannot ignore those forces – it must be designed around them.

#3. Values are primarily qualitative, not quantitative. Where it is necessary to describe values in quantitative terms, it is usually best to use simple 1-5 scales or the like; anything else is likely to introduce ’spurious precision’, which is both misleading and dangerous.

#4. Any attempt to ‘objectivise’ values – such as by ‘valuation’ into a price – will always be based on hidden assumptions. Because of those hidden-assumptions, transforms to price etc are non-reversible, making it impracticable or impossible to derive the underlying value-factors by reverse-engineering from the valuation itself. Hence in architecture it is always best to model the values as values, in order to surface those hidden-assumptions.

#5. An enterprise (or extended-enterprise, reaching far beyond the ‘enterprise’ of the business itself) coalesces around a core value (the ‘vision’) and a cluster of related values and derived principles. These values represent the choices – conscious and unconscious – of the stakeholders in the enterprise, and are context-dependent. These enterprise-choices describe and define the ecosystem within which the business will operate. Amongst many other possible stakeholder-roles, a business will typically place itself in a ’supplier’ role within that enterprise.

#6. The core of the business’s relationship with other stakeholders is its set of ‘value-propositions’ – which, by definition, incorporate key concepts of value to and with the respective stakeholders. The business-model, operating-model, organisation-model etc are artefacts that are derived architecturally from the value-propositions and their underlying values.

#7. A business has a value-relationship with every stakeholder in the enterprise, whether or not this is made explicit via a value-proposition. It is extremely dangerous – especially in the longer-term – to ignore the implied relationships with enterprise-stakeholders not explicitly referenced in value-propositions.

#8. Pseudo-values such as ’shareholder-value’ may be derived from the architecture, but usually play no direct part in the architecture.

Enough to start with, I hope?