Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?

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Latest Comments

  • Anonymous said More
    Well written. Well constructed. Tuesday, 13 August 2019
  • Ron Giuntini said More
    As always a good read.
    I have always... Thursday, 25 January 2018

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…

— Charles Dickens (1859), A Tale of Two Cities

What Charles Dickens wrote 150 years ago before and during the French Revolution rings eerily familiar today. The upper classes in the US today have never had it better: health, comfort, and convenience like no other time in history. Yet, at the other end of society lies a rising tide of homelessness, addiction, and mental illness.

What contributes to peoples’ health and well-being, and why are we simultaneously experiencing such highs and lows in society today?

Technology

Technology has enabled people to amass wealth like never before. Advances in communication and transportation technologies in particular have given us access to whole new markets that have rained untold wealth on those who have been able to master them.

Yet, technological avenues to amassing wealth require access to resources, information, and expertise that are not accessible to many people in today’s society.

There’s more. Technology is a tool. It can be used either to the benefit or to the detriment of select individuals and, more broadly, of society as a whole. Plenty of technologies have been developed and used to increase social well-being overall. These are positive-sum uses of technology, and they should be applauded. Unfortunately, plenty of other technologies have been developed and used to promote the well-being of some, but at the greater expense of others, leading to losses in social well-being overall. There are zero-sum or negative-sum uses of technology.

Intangibles

Throughout history, the vast majority of society has struggled to earn enough money to meet the basic needs for food, clothing, and shelter. Most people in pre-industrial and industrial societies thus focused almost exclusively on tangibles, namely, producing and consuming food, clothing, and shelter. During these times, growth in social well-being was effectively measured by growth in the value of tangibles: outputs, costs, and profits.

Only in the post-industrial world have most people been able to surpass the basics, to the point of being able to shift their focus away from lives of survival and focus instead on a lives of fulfillment. As post-industrial society as a whole has become wealthier, however, tangibles no longer provide good approximations for measures of well-being. Rather, well-being is increasingly determined by intangibles: our sense of belonging, esteem, and fulfillment in society. Yet, instead of adapting to the shift towards intangibles, society has continued to focus on what’s been traditionally – not to mention easily – measured, tangibles. Yet, measuring and managing tangibles has provided a false sense of prosperity – great monetary wealth by many members of society – when we what we should have been measuring and managing are intangibles – which would have captured increasing marginalization and disconnection by other members of society.

A serious consequence of our misplaced focus on tangibles is our focus on monetary wealth and consumerism as a measure of success, rather than on belonging, esteem, and fulfillment. “He who dies with the most toys wins” has become the mantra in today’s society, as opposed to, say, “he who dies with the greatest sense of happiness wins.”

Policy

People achieve well-being by being supported and empowered to fulfill their dreams and desires. The 2019 World Happiness Report (WHR) found that the most important determinants of peoples’ well-being, in decreasing order of importance, are:

  1. Social support: “If you were in trouble, do you have relatives or friends you can count on to help you whenever you need them, or not?”
  2. Freedom to make life choices: “Are you satisfied or dissatisfied with your freedom to choose what you do with your life?”
  3. Generosity: “Have you donated money to a charity in the past month?”
  4. Perceptions of corruption: “Is corruption widespread throughout the government or not?” and “Is corruption widespread within businesses or not?”
  5. GDP per capita
  6. Healthy life expectancy at birth

In a democratic society, federal, state, and local government policies should be used to increase citizens’ well-being. According to the WHR, this means government should, first and foremost, be enabling peoples’ social support networks and freedom to make life choices. Ironically enough, government programs have achieved just the opposite: making people slaves to the State. For example, federal, state, and local government policies provide disincentives for:

  • Unemployed people to work (social support laws)
  • Unwed mothers to marry (social support laws)
  • Unemployed people to relocate (social support laws, state licensing laws)
  • Couples to marry (tax laws)
  • Businesses to hire employees (tax laws)
  • Real estate investors to construct new housing (zoning laws)

The Role of Technology in Increasing Social Well-Being

I’ve been on a long journey, studying individual well-being throughout history, and in particular, the role technology has played in increasing peoples’ well-being. The thesis I’ve developed is this.

People are social beings, and they form societies to meet their wants and needs. Human wants and needs – generally well-captured by Maslow’s Hierarchy of Needs – have remained largely unchanged over the millennia. What has changed, though, is the actions people take to fulfill their wants and needs.

Societies comprise four sets of forces that shape peoples’ actions:

  • Community (What’s Accepted): culture, friends/family, social institutions
  • Technology (What’s Possible): know-how, skills, and tools
  • Markets (What’s Cost-effective): resources, production, transactions
  • Government (What’s Allowed): laws and regulations, government institutions, and infrastructure

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These four sets of forces jointly determine the actions people take at any point in time to meet their wants and needs. Taken as a whole, the collective actions taken by all people in society create outcomes at the social level, namely, the magnitude and growth of social well-being. Noteworthy is the multiplicative, not additive, strength of the combined forces. That is, a society with a “poor” culture can lead to social malaise, even with superb Technology, Markets, and Government. At the same time, a society with “strong” Culture, Technology, Markets, and Government will generate high levels and rates of growth in social well-being.

In future posts, I will characterize the nature of Culture, Technology, Markets, and Government that promote social well-being. For now, suffice it to say that it turns out that the size of the middle class in society reflects the level of social well-being. In other words, the same forces that promote a large middle class are precisely those same forces that promote social well-being.

 

Next post in series: The Four Social Forces That Shape Our Actions

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