ITIL and Economic Value

I just completed ITIL foundations training.  I’ll let you all know later, when I find out, if I passed the test.  [Update: I did.]

What caught my attention most during training is that the ITIL library writers, in my opinion, correctly identified economic value as a combination of both (marginal) utility and warranty (irreversibility).  Somewhere along the line, I/T practitioners discovered what few economists (save for some, like Hernando de Soto Polar) bothered to factor into so many economic formulations: utility is fine, but if the economic actor fails to perceive that their utility is theirs to keep, then the sense of economic value falls.  While property rights (de Soto) alone do not economic value make, they are necessary prerequisites for any functioning economy.  In information technology a service like Google provides great utility, but if it were perceived as an unreliable service its overall economic value would drop through the floor.

Of course, the ITIL “utility + warranty” model is itself a little simplistic.   Max Neef breaks up utility further:

• affection
• creation
• freedom
• identity
• leisure
• participation
• protection (security, warranty)
• subsistence
• understanding

Max Neef provides a nice balance of qualities, certainly, but I feel that protection/security/warranty/irreversibility plays a very specific role in economic transactions because of the way our brains are built.  I believe it remains useful to break out qualities associated with irreversibility (security, protection, warranty) into a separate, analyzable category of study.  For me, ITIL’s “utility + warranty” description of economic value is a great model to use.

It is Always a People Problem. Always.

There are no such things as technology problems, only people problems.

No technology can build itself, nor use itself, nor correct its own problems.  Even self-replicating machines, built using any technology in use (or even in conception) today, would merely execute the delayed choice of their builders.  Consider the case of a man, eager to protect his home against theft, who installs an anti-theft device which would kill any unwanted intruder, perhaps with a bullet to the head.  The homeowners’s device is commonly called a booby trap.  One day, while the home owner is away, an intruder enters the home and is killed.  Is the home owner responsible?  You betcha!  The home owner may claim they are not responsible because they did not pull the trigger directly, but in the end they made a choice to apply extreme prejudice to any intruder and they developed a device to execute that delayed choice.  The homeowner’s booby trap did not kill the intruder, the home owner did.  Every action of any technology, including any act of construction, any act of repair, or any act of use, is ultimately the extended action of human beings.

No technology is a perfect fit for any problem and all technologies come with trade-offs associated with their use.  Even survival comes with its own set of trade-offs.  It is the responsibility of human beings to understand their problems to the best of their abilities, to understand the trade-offs associated with the technology options before them, and to choose appropriate technologies wisely.  Trade-off balancing does not happen on its own.  Humans are the ultimate arbiters of which technology problems they choose to live with.

If all humans were to vanish from this Universe tomorrow, there would be no human problems of any kind.  Human technologies would instantly cease being human technologies and would merely exist as artifacts of matter like any other.  At the same instance of Universal human extinction, all “problems” would also similarly vanish.

This is not merely an academic exercise in ethics.  The implications of failing to understand this point can be tremendous.  If the home owner in my delayed choice example would have understood his culpability ahead of time, would he have been so eager to create his intruder-killing device?  The lack of understanding of the concept of delayed choice leads, in business, law and in politics, to a class of problem called moral hazards.  Failure to understand this critical point about technology, in particular computing technology, can cause some people to impart “magical” qualities to technologies which the technologies do not have, which can skew expectation, and can lead to project and business failure.

No, no, no.  The only kinds of problems which exist in this world are people problems, by definition.  If you doubt that, then find a way to kill all of humanity right now and watch all problems simply vanish away the moment before you and I cease to be.

Human Thermodynamics

Human thermodynamics is a fascinating topic, which might be “unifying” across not only physics but also across economics, history, politics, sociology and human psychology!  Consider “irreversibility” in economics not as a by-product of economic trade, agreement, contract, property rights and general rule of law, but a feature which reduces the cognitive load in the human brain.

What if it turns out we humans are built to seek “cognitive irreversibility”?  What if irreversibility in human affairs is not an epiphenomenon but part of our cognitive goal-seeking repertoire?

I am not certain of the utility of applying thermodynamic analysis to human behavior and economics, and I certainly to not wax ergosophic, but I can certainly see the utility of including “irreversibility-seeking” as a goal to be optimized in game theory.

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Update (25 June 2011): The actual work at the web site I consider bull.  The theorists, I believe, do not understand the degree to which they are merely borrowing an analogy.

Two Books, Two Audiences

For my two books, I have two audiences in mind:

• potential and current I/T architects, and
• those who would hire them

For the I/T architect I will provide them a way of integrating business, economics and law into computing system designs. I will teach them a little about legal theory, contract theory and transaction cost economics in a concrete way they can incorporate into their models.  In the end, the I/T architecture will be in a better position to predict business impact than they have traditionally been.

For those who would hire the I/T architect, this will be a book recap a little business theory and the role of computer systems in relation to transaction economics.  Nothing new here, but the twist will be to educate that employer on how to discuss these important business issues with the I/T architect in a way that is mutually understandable for the both of them.  I will also introduce “I/T thinking” to the employer who hasn’t a clue.  There is a great cultural divide between the “business” and “technology” worlds which I believe can be breached by thinking in terms of concepts every human can relate to, that is the ethics of architecture.

Reading “The Nature of the Firm” by Ronald Coase

I’ve had enough of second-hand analysis.  I have sprung the cash and have headed for the source.  I am now reading Ronald Coase’s 1937 article, The Nature of the Firm,

http://en.wikipedia.org/wiki/The_Nature_of_the_Firm

It’s amazing how much this activity this article still generates over 70 years later!

What is a “Technology”?

To Wikipedia, a decent definition of “technology” has been posted,

Technology is the making, usage and knowledge of tools, techniques, crafts, systems or methods of organization in order to solve a problem or serve some purpose.

Yes, the concept of “technology” is as general as that.  With patents in mind, can a “technology” be a pure product of the mind?  As an example, is an epistemological framework a technology?  What is a “tool”?

Regardless of the assumption or rejection of metaphysical dualism, is the mind itself not a tool?  Is the mind not a collection of matter and states which can be manipulated by human agency to achieve a goal of that agency?  If self-reference is where we draw the line at “abstract idea” versus technology, where does self-reference end and the “world” begin?  Are arms and legs tools, or merely “self”?

If I could take a pill which would transform one of my eyes into a Steve Austin, bionic “super eye”, is that eye merely “me” or is it a technology?  If I were to integrate nano-scale technology into my physiology, does that nano-scale technology cease to be a technology and become “me”?  What if the DNA of a future child were to be manipulated so that, once that child was born, their body would be impregnated with a technology produced by the programming of that child’s DNA?  Would the programming itself be a considered a technology?

I reject metaphysical dualism.  The biological “brain”, the epistemological mind and the non-nervous aspects of the human body are one.  No separation exists.  I am tempted to say that any goal-suiting change we might make to any state of matter, even the memories of our minds actively created, are technologies.  This line of reasoning points the way to a future state of absurdity with regard to United States patent law.  Either, one day, the prohibition against patenting “abstract ideas” will be lifted, or the entire patent regime will crumble.  I am not sure which.

Reification, Computers, Companies, Countries and Charters

To reify a concept is to reduce an abstraction to concrete, or objective form.  Reification always occurs within a context,

• In computer programming, to reify an object is to utilize programming abstractions (the “constructor”) to create a real object that contains real data and occupies real computer memory.
• http://en.wikipedia.org/wiki/Reification_%28computer_science%29
• The context is computer memory
• The “reduction to practice” in United States patent law describes the reification of an abstract idea into a design for an invention
• http://en.wikipedia.org/wiki/Reduction_to_practice
• The context is technology
• In corporate law, articles of association create legal entities known as companies.  In may countries a company is an “artificial person” which has legal rights and lifetimes beyond that of its founders.
• http://en.wikipedia.org/wiki/Articles_of_association
• The context is a governing body of laws in a mercantile society
• A constitution is a fundamental agreement which brings a country to life.
• http://en.wikipedia.org/wiki/Constitution
• The context is a society of people
• In logic, a reification fallacy is the error of treating an abstract concept as if it corresponded to an objective observable in space and time.
• http://en.wikipedia.org/wiki/Reification_%28fallacy%29
• The context is the epistemological milieu of the human mind

Constitutions and articles of association are specific examples of the more generic concept of a charter, which is a type of agreement (arguably, a type of contract) which is used to reify any collaborative system, from countries to corporate departments to professional organizations.

“Bilksi v. Kappos” Brings Us Closer to Patenting Abstract Ideas

A fascinating discussion with regard to Bilski v. Kappos, here:

http://www.fed-soc.org/publications/pubID.1919/pub_detail.asp

I have heard other opinion close to this: we seem to be getting closer to allowing the patenting of abstract ideas.  That is, the Supreme Court is hesitant about categorically ruling out any kind patent, including “pure” business methods, in fear that to do so would preclude future technologies which we haven’t even dreamed about yet.

The Bilski decision strengthened the patentability of software.

“The Legal Analyst” (Farnsworth)

Now reading, Ward Farnsworth’s “The Legal Analyst“,

http://www.amazon.com/Legal-Analyst-Toolkit-Thinking-about/dp/0226238350

If you want a good description of how software is and is not like law, read Chapter 17, “Rules and Standards”.

This is an excellent book for law students and normal folks alike.  Farnsworth’s introduces the reader to the conceptual trade-offs of the modern legal system (mostly U.S.), then discusses how these trade-offs affect judicial decision making.  These trade-offs include:

• ex ante versus ex post
• economic efficiencies
• rent-seeking
• trust (principle-agent problem, the Prisoner’s Dilemma, “chicken”)
• rules versus standards
• hindsight bias, slippery slope and other cognitive errors

The bibliography is awesome!