Open vs. closed systems

Philip Morgan

It has something to do with open vs. closed systems. I think… Our theme music for today: “Drinking at the dam Holding back what it can But the power is so much” – (Smog), “Drinking at the Dam” As I’m continuing to struggle with how to incorporate the axis of time into an understanding of trust and specialization, I think considering the context of open vs. closed systems might help. Quick context reminder before I get into thinking-out-loud mode today:

  • Fact: as innovations diffuse through a system, some adopters adopt early and some hold out as long as possible.
  • Theory: these various styles of embracing (or resisting) innovation translate to preferences about marketing. Earlier adopters seek authorities that offer vision and inspiration, later adopters seek authorities that offer risk reduction and effective management.
  • A tension that worries me: small immature innovations make it easy to become an authority in that innovation, but as those innovations mature the market will start to want different kinds of authorities and I worry you will become less relevant as that happens.

As I was pacing the floor, muttering to myself after sending yesterday’s thinking out loud email, I realized that incorporating the idea of open vs. closed systems might help. We don’t need to get too nerdy with the definitions here because I’m using open vs. closed systems in a suggestive but not exacting way. We can think of a closed system as a system where one entity benefits a lot when the system thrives and that same entity suffers a lot when the system decays. Asymmetrical benefit/harm. If people stopped going to when they want to find something on the Internet, we’d see asymmetrical harm accruing to Google. An open system, by contrast, lacks the control and asymmetry we see in closed systems. When more people become interested in being better managers, the whole system benefits. Sure, there are losers here and there (the employee who has figured out how to manipulate a weak manager and loses that leverage as their manager gets better, for example), but the control and the benefit/harm isn’t all concentrated in the same place like it would be with a closed system. Platforms are generally closed-ish systems. Some examples of platforms:

  • A business process framework (ex: EOS, 3HAG, Six Sigma, Agile, Lean, TDD)
  • A programming language (ex: Python, Ruby, C#)
  • A software framework (ex: React, VueJS, Laravel)
  • An actual platform you can build stuff on (AWS, Linux, Windows, Salesforce)

It’s obvious within my list of platform examples that various degrees of open-ness and closed-ness exist, but for my purposes here, agreeing to think of platforms as closed systems helps us think about bigger more important issues, even if all platforms are not actually closed systems. Innovation within a small closed system is like a pebble being dropped in a small pond. The innovation ripples through the system, and companies within the system adopt or resist the innovation according to their “adopterness proclivities”, but at some point the ripples from the pebble have reached all the points of the pond they’re going to, and the energy that’s been put into the system is incorporated in the system and it has a new equilibrium. This might be the point where the idea of open/closed systems really helps. If your business identity is bonded 100% with the pebble (the innovation), then once it’s done making ripples, what more do you have to offer the pond? If you’re a Salesforce consultant of some kind, once every company in Salesforce’s total addressable market is a customer, what is left for you to do? Sure, there’s the possibility of running a hyper-efficient business offering maintenance services, but is that what you want to do? Is that even compatible with the indie consultant business model? If your business identity is bonded with the pond (a vertical market), then there will always be more pebbles making more ripples, and your work of helping the pond respond to the pebbles and ripples will never end. Pebble 1: Social media is big. Gary Vaynerchuk says we have to be there all the time. What do we do? Pebble 2: This guy at our industry’s main conference said we need to do omnichannel or we’re toast. What do we do? Pebble 3: OK, we did omnichannel. Now this other guy at our industry’s main conference said omnichannel is killing our retail channel and losing customer LTV in the process. What do we do? You get the idea. If your identity is fused with the pond, the pebbles keep on coming. If your identity is fused with a single pebble, then you start to think about the size, velocity, and duration of that pebble’s 1-shot relationship with the pond and how long before you and the pebble have made your ripple and now rest on the bottom of the pond. This is still all a bit messy at this point. I’m purposefully conflating platforms like Salesforce and the idea of an innovation, and oversimplifying the whole thing to try to fit it into my head. That takes us a ways down the road, but doesn’t get us all the way there. Platforms usually have owners and have that asymmetrical benefit/harm dynamic as a result, while some innovations are ownerless. Anyway… Open systems seem more like a river. Quick diversion: If you ever want to have a visceral feeling of overwhelming physical power – an experience I recommend every human seek out at least once – there are two things that you could do. I suppose these are both reasonably COVID-safe recommendations.

  1. Find a sizable hydroelectric dam and stand as close as you can to the wires that carry its generation output to wherever that goes (they’ll have barriers to prevent you from standing dangerously close). If you live or are passing through western Oregon, the John Day dam is one where you can stand pretty close to those wires – if I recall correctly they basically pass overhead above the east part of the visitor parking lot and so you can stand underneath them – and hear the ominous crackling of a couple thousand megawatts headed towards the Pacific DC Intertie. It literally crackles and you can’t help but get this visceral feeling of what 500 kV feels like.
  2. Find a bridge that goes pretty low over train tracks and stand on the bridge while a freight train goes under. It doesn’t matter how fast the train is traveling, in fact the slower the better to really soak up the feeling of 4 to 24 thousand diesel horsepower vibrating the air around you and seeping in and vibrating your very bones.

When I look at an open system in business, I feel that same visceral sense of power. There’s this complexity and chaos and flow and scale that makes open systems different than ponds or lakes. Open systems are broad topics. For example:

  • sales
  • marketing
  • inventory management
  • innovation
  • managing employees

It seems that if you are focused on an open system, the flow and dynamism of that system will ensure that you don’t face the problems seen in a closed system, particularly the platform manifestation of a closed system. I think at this point I realize the mistake I was making with Chapter 16. I think I was zoomed in too close on the Rogers curve stuff, and imagining a consultant whose focus is a single innovation and thinking about that innovation’s diffusion through a small-scale system and how that changes the trust-earning game for that consultant over the 10 or so years it might take for the innovation to permeate the system. As I zoom out and think through this from a broader perspective, I see several things: There are other contexts. There are open systems, and there are small scale systems where your focus and allegiance is with the system itself, not a single innovation that is diffusing through the system. Translated to positioning/specialization terminology: there are other contexts. There are horizontal foci, and there is the ability to focus on a vertical market where you are helping the market respond to the innovations that cause it to have to change. Of course I know the above very well, but when I am writing a book that is organized into chapters, I have to abandon myself and my thinking to the specificity of the chapter at hand and trust that the forethought of the outline to save me from getting lost in the weeds. In this case the outline was too embryonic to do that. Or alternately, sometimes the outline is as good as it’s gonna get, you start writing, and find that the sensible outline takes you someplace unexpected and then you have to backtrack, zoom out, or otherwise find your way to back to clarity and sense. This seems to me like a normal part of writing a book. And sometimes, drawings help:

Explore this drawing: Enough for now, I think. Thanks for the feedback on yesterday’s thinking out loud, and here’s a link to that place where I heard Seth Godin give some cornball advice once: -P