Techonomics at the Turn of the Twenty-First Century

The first three laws of twenty-first-century techonomics develop a philosophy of
progressing organizational efficiency that is broadly applicable and personally
observable. These three “laws” form the foundation of twenty-first-century
techonomics, because these emerging technology trends are the most powerful
economic drivers reshaping today’s organizations. The first three laws of techonomics
are:

First Law — Moore’s Law (Law of Ubiquitous Computing):
Named for Gordon Moore, a founder of Intel, this widely known and validated
observation describes the diminishing cost of electronics due to technological
advance. Loosely stated, Moore’s Law predicts that the cost of
electronic computation is cut in half every 18 months.

Ubiquitous computing
results as the cost for computing capability diminishes to the point
that computers are included in virtually every manufactured device.

Second Law — Metcalfe’s Law (Law of the Ubiquitous Global Network):
As the inventor of Ethernet, one of the first practical computer
networking systems, Bob Metcalfe observed the exponential growth of
connections between computers as the number of networked computers
increased.

This growth has moved from theory to practice with the rise
of the World Wide Web. Simply stated, as the number of computers on a
network increases, the number of interconnections increases exponentially.
The law of the ubiquitous network predicts that the global network
will rapidly expand, and its access will become universal.

Third Law — Coase-Downes-Mui Law (Law of Diminishing Organization Size):
As a twentieth-century economist and philosopher, Ronald
Coase developed the theory of transaction cost analysis, the “make-orbuy” decision.

Propelled by access to near perfect information provided
by the ubiquitous network, Coase’s transaction analysis tends to the “buy”
decision. Downes and Mui predict a significant rise in outsourcing as
firms seek the most effective production means through external suppliers.

A firm’s employee count continually diminishes as production shifts
to the most efficient suppliers, hence the Law of Diminishing Organization
Size. This law can also be termed the Law of Increasing Productivity.
Techonomics incorporates these laws into a method for analyzing significant
trends that affect organizations throughout business and society.
In this chapter, these key twenty-first-century techonomic laws are described,
examples of their validity are given, and their direct effects on organizations are
discussed. However, techonomics does not end with these three “laws,” it only begins
there. Your challenge and opportunity is to learn how to observe and extend these
analysis methods to your own organizations and endeavors.