This was a book I saw someone blog about that seemed very topical to work, so I figured I would pick it up.
I thought this book was an absolute train wreck. I can’t even link to it because it does not deserve what little link juice I have. How can a book about centralization versus decentralization not discuss Coase or transaction costs or say the word “friction”? And I should love a book like this. Cogmap is a poster-child for the power of decentralization and open source data communities.
Before I bash this book, let me start with the Amazon reviews. First review is from Auren Hoffman (a man regularly savaged in Valleywag!). He says, “The book discusses the management techniques of wikipedia, craigslist, al Qaeda, the blogosphere, and more. Though these are first time authors, I found the book mimics the unique observations of someone like Malcolm Gladwell.” Of course, he neglects to mention that he is a case study in the book and is insanely biased.
The other “Spotlight review” is a Top 50 amazon reviewer who somehow decides to use his review as a forum to break down his political theories and bash the CIA, his former employer. The pro-decentralization theme of the book offered the perfect chance to bash the government in a review despite the fact that government was never discussed in the book. Fortunately, I loved the comments on the spotlight review. Here was my favorite, which I must quote in it’s entirety:
“Blah, Blah, Blah! This was the worst review I have ever read in the 9 years I have been reading them on Amazon! My favorite part is he blather on Mr. junk science (Al Gore). At his peak Hitler used to have crowds of 100,000 interupting him with applause over and over again. Like that means anything.
Read the Halo Effect by Rosenzweig, to see why books like this are such oversimplifications for the masses. Just like the Global Warming movement. Real scientists don’t make sweeping generalizations of complicated cause and effect relationships and then ask people to go out and make decisions based upon weak evidence. That’s what politicians do! This guy should be dropped from the top 50 reviewers list. I will certainly never read his reviews again!!!”
It terrifies me to think how many other suckers bought the book after reading the spotlight reviews. I was tricked, I swear. Anyway, on to my book bashing:
The authors were so lacking in analytical capabilities that the book had no prescriptive value. They offer up some models, but caveat the models with comments such as “A decentralized organization stands on five legs. As with the starfish, it can lose a leg or two and still survive.” They then offer up strategies which their earliest examples of successful decentralization do not rely on. Was there a pre-existing network for P2P music theft? Was there a catalyst/champion advocating eMule? Does stealing music involve a sense of community? I know the music I procured using Napster did not involve building community.
Another great line: “Decentralized user ratings proved to be eBay’s biggest competitive advantage.” Ironically, they explain network effects in relation to eBay, but they emphasize it in the context of user ratings (“But so far, no one’s been able to come up with a better technology than eBay’s user rating system. Buyers and sellers therefore stay at eBay – it’s where the action is, and it’s where they can find a network of trusted buyers and sellers.”)
First, a statement like this completely misinterprets network effects, which is strange because they seem to understand it in other parts of the book. Network effects would imply that because they have user ratings, they tend to get more user ratings. I don’t think that this is true.
Second, eBay’s user rating system is not their advantage. Their advantage lies in the strength of their marketplace. If they did not have the most buyers, sellers would go elsewhere. If they did not have the most sellers, buyers would go elsewhere. Because they have both, all new sellers and buyers go there for the strongest and most competitive pricing. Even if Yahoo! rolled out a better user rating system tomorrow, or even one that allowed people to import eBay’s ratings, I don’t the odds are good that they would overcome eBay’s powerful network effect.
How is this for analytical: “The decentralized sweet spot is the point along the centralized-decentralized continuum that yields the best competitive position. In a way, finding the sweet spot is like Goldilocks eating the various bowls of porridge: this one is too hot, this one is too cold, this one is just right.” Helpful advice?
Another comment on eBay: “The company would lose market share if it moved further toward either centralization or decentralization.” Yet how do we know this to be so? No analysis was done or model offered that demonstrated that this is the most precise and sweetest spot. They compound this challenge with an assertion in the context of their Toyota versus GM case study: “Toyota occupied the decentralized sweet spot in the automotive industry.” Yet we have know way of knowing if it was the sweet spot or just a spot that was sweeter than everyone else’s spot.
If you have enough time on your hands to read this book, go read The Innovator’s Dilemma again or something. This book is not nearly rigorous enough to satisfy anyone.