The Laws of Disruption: Harnessing the New Forces That Govern Life and Business in the Digital Age

Business strategist Larry Downes, author of Unleashing the Killer App, is much more specific than most authors about how digital technologies are changing the world - and why technology will advance even more and have more impact. While he addresses numerous issues that have received lots of attention already, Downes also looks beyond the headlines and the obvious implications of digital technology to examine the root causes of change. He pays informed attention to the law and legal structures. He also draws parallels between the digital revolution and the social changes wrought by other technologies, showing how such change ripples through the economy. He presents his findings as nine "laws of disruption," which, somewhat confusingly, are the change agents of the "Law of Disruption." This forward-looking book is fun, lively and useful. getAbstract recommends it to executives who are trying to plan for a shifting future and to those intrigued by digital technologies or social structures.

The Laws of Disruption is a fairly short book - only 280 pages of actual text. One would think that it would be a quick read, maybe a long coast-to-coast plane ride. That was my thought as I skimmed the introduction and made the decision to purchase it. Once I started reading I quickly realized, that at least for me, this was not going to be a "skim for the high points" read that I quite often do with many business and technology books. Mr. Downes piqued my interest with his very first example of how changes in technology (in his case, the stirrup) dramatically outpaced and drove changes into the economic and legal systems in place at the time (the birth of feudalism, landed nobles and serfdom in this case). From the first example forward, I was hooked, waiting for the next example of disruption. I wasn't disappointed. Mr. Downes provides a wealth of real-world examples, all of which we recognize, but may not have understood or given much thought to at the time - BetaMax versus VHS for example. The premise of Mr. Downes' book is fairly simple - technology, especially in the digital age, quickly and far out paces our antiquated economic systems' ability to support the "disruption" that results when the new technology (or social norm) takes hold and quickly spreads. To form the basis of his arguments, Mr. Downes uses three key concepts: Moore's Law, Metcalfe's Law, and the notion of "rivalrous" goods (those that can be possessed by only one person at a time and whose use is limited to that person or with whomever she may share it) and "non-rivalrous" goods (those that can be used by everyone at the same time - which results in limiting access to them to be difficult if not impossible). Obviously, Mr. Downes puts digital information into the latter category. To round out the equation Mr. Downes adds the concept "transaction costs", which in the digital age are quickly approaching zero. When you apply all the above factors (along with the principles of Renewability, Universality, Magnetism, Lack of Friction and Vulnerability as they relate to information) to any new technology or social norm in the digital age it is easy to see that our current economic and legal systems simply begin to crumble under the pressure exerted by the masses of consumers who are quickly gobbling up these new offerings. The key point that Mr. Downes makes in his book is that the majority of consumers essentially ignore and no longer respect the concepts of privacy and ownership. Thus, the systems we have in place which were built upon those principles no longer work to govern life in the digital age. The Laws of Disruption centers around nine key laws - Convergence, Personal Information, Human Rights, Infrastructure, Business, Crime, Copyright, Patent and Software. I won't go into detail on each of these other than to say that Mr. Downes does an excellent job of laying a firm groundwork for each of these "laws", explaining how they relate to the digital age and giving,

Larry Downes is the co-author with Chunka Mui of Unleashing the Killer App: Digital Strategies for Market Dominance 2000), in which they provide a brilliant analysis of how "a new good or service that establishes an entirely new category [can] by being first, dominate it, returning several hundred percent on the initial investment." As they explain, the primary forces at work in spawning today's "killer apps" are both technological and economic in nature. "The technology we are concerned with is the transformation of information into digital form, where it can be manipulated by computers and transmitted by networks." Digital strategies are needed to achieve market dominance. They suggest several, each worthy of careful consideration. For me, this book has two great values: It helps us to understand what a "killer app" is and can accomplish; also, for those lacking a "killer app" and without much chance of possessing one, it suggests how to increase and enhance the appeal of what one does have, such as it is. Given a choice, of course, anyone would prefer to have a "killer app" when proceeding into an uncertain future. Lacking one, there are still opportunities to recognize...and to pursue. Most companies will not dominate but can survive if committed to the appropriate strategies. For them and their leaders, this book could well be the difference between life and death. In The Laws of Disruption, Downes asserts that there are three laws of digital life. Together, they comprise "the laws of disruption." Moore's Law: In an article published in 1965, Gordon Moore (the founder of Intel) claimed that the number of transistors on his company's chips would double every year or two without increasing their cost to users. This law explains why computers continue to get faster, cheaper, and smaller. Metcalfe's Law: Formulated by networking pioneer Robert Metcalfe, this law explains what anyone with a telephone already knows. The more people you reach, the more reasons you find to reach them. Standardization enables this process to accelerate at an ever-increasing rate. The Law of Disruption: "As Moore's Law continues its relentless journey into the realm of smaller, cheaper, and faster, new applications arrive more quickly. As they do, Metcalfe's Law is there to spread them around." According to the Law of Disruption, "technology changes exponentially, but social, economic, and legal systems change incrementally...In some sense, the Law of Disruption codifies what we have already learned from a thousand years of killer apps. Their initial impact can be dramatic - even revolutionary. But the real change may come years later." Together with Moore's Law and Metcalfe's Law, the Law of Disruption is systematically rewriting the aging corpus of industrial-era law. "The result will be a new code, better suited to life in the digital age. In the midst of revolutionary change that is both fascinating and frightening, it's hard to look away. Confronted with

"The Laws of Disruption" is the closest thing you will find to a genuine cyber-libertarian manifesto these days. But Downes isn't a rigid ideologue; his skepticism of government regulation of the high-tech economy is based more on practical considerations and the fundamental law of disruption: "technology changes exponentially, but social, economic, and legal systems change incrementally." Downes says this law is "a simple but unavoidable principle of modern life" and that it will have profound implications for the way businesses, government, and culture evolve going forward. "As the gap between the old world and the new gets wider," he argues, "conflicts between social, economic, political, and legal systems" will intensify and "nothing can stop the chaos that will follow." In this sense, "The Laws of Disruption" reads like an addendum to one of Alvin Toffler's old books on technology and futurism in that Downes is essentially walking us through the practical consequences of life in a "post-industrial society." In terms of what it all means for public policy, Downes doesn't so much fear legal and regulatory over-reach the way many cyber-libertarians do. Rather, he thinks most regulatory schemes just won't work. In essence, he is a technological fatalist or consequentialist: Progress happens whether we like it or not, so get used to it! Thus, the "laws of disruption" he articulates serve primarily as "Just-Don't-Bother" warnings to over-eager government meddlers. "The best way to regulate innovation is to leave it alone," he counsels. In terms of structure, The Laws of Disruption resembles "Blown to Bits: Your Life, Liberty, and Happiness After the Digital Explosion" by Abelson, Ledeen, and Lewis. Both books survey a vast swath of territory -- privacy, copyright, security, etc -- and each chapter offers unique perspectives on each debate. In that sense, the book is useful to readers if for no other reason than you get a taste for how a wide variety of issues are playing out. Downes also owes much to Clayton M. Christensen and his seminal 1997 book "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail." Like that book, "The Laws of Disruption" is a business book with a strong policy hook. That is, both books focus on advice-dishing for companies and innovators looking to "stay ahead of the curve" in the midst of relentless, gut-wrenching technological change, but the books also include important lessons regarding the public policies that should govern high-tech sectors. I highly recommended "The Laws of Disruption" and named it the 2nd most important Internet policy book of 2009 over at the Technology Liberation Front blog.

Downes provides a number of insights on the disruptions to law and regulation due to the mismatch between the rapid pace of technical change and the (relatively) glacial progress of the legal system. The book considers nine "laws" of the information revolution, and discusses details of how these phenomena relate to existing and emerging laws. Several highly relevant areas include the handling of personal information; regulation of IT/ Internet/ communications providers; internet crime; and patent/copyright law. I believe that Downes gives well-reasoned comments and perspectives on these areas. In most of the chapters, he offers predictions or recommendations; in others, the conflicts and concerns are discussed with no clear path for resolution. To be sure, the problems are large! In general I think Downes' work is well thought through and presented at a level that is accessible to the non-lawyer. This would be a critical title for those in IT businesses, including those traditional businesses heavily influenced by IT (such as financial institutions). One bit of irony - in the chapter on copyright, Downes states "Intellectual property is a fiction, if not an oxymoron" (p. 217). He argues for considerable expansion of "fair use" and other relaxations, if not elimination, of copyright protection. Nonetheless he copyrighted the book itself, rather than offering it into the public domain!