The Pebble and the Avalanche: How Taking Things Apart Creates Revolutions

The Pebble and the Avalanche: How Taking Things Apart Creates Revolutions

by Moshe Yudkowsky

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The Pebble and the Avalanche shows how the Internet, the auto industry, music downloading, and other rapidly evolving industries are all connected by the same dynamic -- disaggregation. Moshe Yudkowsky shows why this dynamic is crucial to survival in the 21st century marketplace, and how you can use it to bring about change in your industry.



The Pebble and the Avalanche shows how the Internet, the auto industry, music downloading, and other rapidly evolving industries are all connected by the same dynamic -- disaggregation. Moshe Yudkowsky shows why this dynamic is crucial to survival in the 21st century marketplace, and how you can use it to bring about change in your industry.

Disaggregation means taking things apart -- for example, the break-up of AT&T, which greatly improved phone service. But there are more subtle examples. Separating information from the storage medium -- digital music doesn't rely on records, tapes, or CDs; digital photographs don't require paper; and digital movies don't need film -- has enabled millions of people to create and share their work (and others') far more easily than ever before, with enormous implications.

Think of this process as an avalanche: at the top of a mountain, rocks are jammed together in a solid mass. Pry some of these rocks loose and you will unleash a tremendous outpouring of energy that sweeps everything from its path. The same thing happens in technology: with the right innovation, you can pry the pieces of technology apart and unleash an outpouring of powerful ideas that shake apart whole industries.

Yudkowsky details exactly how disaggregation works, describing five different ways of taking things apart, and the many ways it can be used to generate new innovations. The Pebble and the Avalanche provides strategies for successfully adapting to a disaggregation revolution, and points towards the future, identifying several industries that are about to be completely transformed by disaggregation.

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The Pebble and the Avalanche

How Taking Things Apart Creates Revolutions
By Moshe Yudkowsky

Berrett-Koehler Publishers, Inc.

Copyright © 2005 Moshe Yudkowsky
All right reserved.

ISBN: 978-1-57675-961-5

Chapter One

Disaggregation: The Driving Force of Revolution

One of the first safety rules I learned while hiking in the mountains was to never toss pebbles or stones down the side of a mountain. There's the danger of hitting someone—a pebble that falls a thousand feet can do an impressive amount of damage. The other danger is starting an avalanche. It's a tiny little pebble, true; a pebble that size can dislodge only another few pebbles, true; but if enough pebbles start to tumble, soon the large rocks start to move, and your one little pebble triggers a landslide.

An avalanche releases energy—a really impressive amount of energy. Shift a few pebbles, take apart the structure that's holding the rock formations together, and suddenly you release an incredible, unstoppable force that transforms the landscape. Avalanches snap trees in half, shove boulders out of the way, and cut a huge swath out of forests. However, despite their massive power, when avalanches stop, you've still got the most of the pieces you started out with. All the pebbles that started off at the top of the mountain fall to the bottom—the pebbles aren't gone, they're just arranged differently—and now you have a nice collection of interesting pebbles, conveniently located here at the bottom of the mountain. They can be cut, polished, and made into jewelry; they can be used to build walls and pave garden paths. They're still useful in many ways, and so is all the other debris that's been brought down by the avalanche.

This book is about how this same idea applies to everyday life—technology and the business of technology in particular. Technology and the business of technology have structure; if you take apart that structure you can unleash an avalanche that has tremendous energy, one that can change the entire landscape. Avalanches smash old businesses into smithereens; sometimes the businesses vanish entirely, and sometimes a few pieces survive. Old, comfortable business and technical relationships snap under the stress of the avalanche. New opportunities appear in the empty spaces left behind.

Not only that, but when the avalanche is over, you've still got, for the most part, the pieces of technology you started with in the first place. And just like the pebbles in an avalanche, these pieces of technology can be improved, used over again, and made infinitely better than before. These pebbles are no longer jammed together in some lump that's impossible to use, and they're not hidden under larger rocks where it's impossible to get at them. They're accessible, lying around waiting to be picked up. A small pebble is much easier to handle than a large rock. Pebbles are easier to polish, cut, decorate, and fit into a beautiful mosaic.

What are the pebbles that make up the structure of technology? They include the usual things we think of: nuts and bolts, electronics, manufacturing plants, and chemicals to name a few. Software, processes, and work flows are just as important to technology, even though they're not tangible. Other equally important pebbles—ones that can also be taken apart to start an avalanche—are the social pieces of the technological landscape. These pieces include government regulations, business ideas, intellectual property law, patent rules, and dozens of other social structures that govern the business of technology, how the pebbles can be used, and what structures can be built in the first place.

Taking Things Apart: Recent Revolutions

Here's a list of some revolutionary changes that happened over the past thirty years. Each one unleashed an avalanche and completely changed both technology and the business of technology.

* The Internet, which provided obscure services that later became quite popular, such as e-mail and Web browsing.

* AT&T's divesture into separate long-distance and local phone companies, which ultimately drove the price of long-distance service to near zero.

* Personal computers brought the benefits of computing to everyone, not just the lucky few.

* The World Wide Web transformed how we share information.

* Open source software provides excellent—and often free—software and challenges the entire software industry to compete and improve.

* Telephone calls over the Internet are about to make classical telephone systems utterly obsolete.

The items on this list don't seem to have much in common, do they? In fact, every single one of these important revolutions started by taking something apart:

1. The Internet? Before the widespread use of the Internet, each manufacturer had its own idea of how to transfer data between computers. This made it difficult, or sometimes practically impossible, to create networks or send interesting information—e-mail, music files—between computers from different manufacturers. The Internet describes a common set of methods to transfer data between computers, which broke an entire piece of technology out from under the manufacturers' control and made it possible to send data between any two computers on the Internet. 2. AT&T? Well, that's easy: the company broke apart into separate entities, a change in the business of technology that had profound implications for the technology itself. Competition has since driven the price of long-distance calls to be next to nothing, and new services are everywhere. 3. Personal computers? The parts that go into computers stopped being custom-made for each different model; instead, the relationship between computer model and, say, the disk drive was broken and all disk drives became commodity parts. Computers now run standard operating systems—the operating system is no longer part and parcel of the hardware, as it was in the old days. 4. World Wide Web? Prior to the development of the Web, you couldn't just send someone an electronic document and expect them to be able to read it. When a supplier sent me a catalog on a disk, I had to install a special "viewer" program to read the catalog—and each and every supplier had its own program! There was a strong connection between the document and the viewer program. With the Web, electronic documents can be viewed using any Web browser because the Web breaks the connection between a document and some particular brand of viewer software. 5. Open source software? The functions of writing, documenting, selling, maintaining, and improving software can be performed by separate groups instead of by the more traditional single company. 6. Telephone calls over the Internet? Instead of paying the phone company to route your call and provide you with the bandwidth to carry your voice, Internet telephony lets you separate the two—you can use any Internet connection to carry the call.

There are more examples, from the past thirty years, the past two hundred years, and the past two thousand years; we'll cover some of them later in this book. The basic idea remains: many important revolutions in technology started by taking things apart. These revolutions act as avalanches, as tremendous forces that sweep aside the old, clear the way for the new, and leave interesting and important pieces behind.

Disaggregation: The Science of Taking Things Apart

"Taking things apart" is a nice expression, but it doesn't really give the exact flavor of the process, so I use the term disaggregation to explain the idea. Here's the explanation.

Often a particular technology, or a business of technology, seems to be made up of one solid piece; but if we inspect it carefully we can see that it's really made out of individual pieces—pieces we can take apart if we're careful. The business of telephone service is an excellent example. In the United States until 1984, and aside from a few small competitors, AT&T did everything: it provided long-distance service and local service, installed and owned the wires on the city streets, installed the wires in homes and businesses, and even installed and owned the telephones in people's homes. There was no technical reason why it had to be that way—the electric company didn't insist on owning and installing everyone's electrical appliances!—but through social and legal conventions, all these functions were aggregated, that is, stuck together, into one entity.

How do I describe taking AT&T apart? I don't want to use words like destroyed or smashed because it was a very careful processes. Nothing was destroyed; all the equipment remained in place—in some buildings, the workers painted white lines on the floor to show that AT&T's equipment was "here" while the local telephone company's equipment was "there." Telephone service wasn't disrupted—calls continued without any interruption. The best way to describe taking apart AT&T is to look at the results. The various pieces of phone service are no longer aggregated into one solid mass—they are disaggregated into separate entities. The pieces are no longer bound together with the social glue. Disaggregate is the word I'll use throughout this book to describe this process of taking things apart, of breaking connections, and of dismantling the infrastructure of technology and its businesses.

Did disaggregating AT&T make phone service better? Absolutely: top to bottom, left, right, and sideways. The first advances came in long-distance service: the quality of connections improved at the same time prices dropped. Then came new services that AT&T would never have offered, like prepaid phone cards. And look at the different styles of telephones! In the old days at AT&T, all telephones were black; today they come in every conceivable shape and color, and a few that are outright ridiculous. These benefits are typical of disaggregation, and I'll outline the general case in the next chapter.

AT&T exemplifies another important lesson about disaggregation and revolutions. As AT&T disaggregated into smaller companies and the technology fell into separate hands, the bonds—interfaces—between the various pieces were carefully preserved. Local telephone companies still routed calls through the long-distance network; telephones that people purchased and installed in their own homes still were able to get dial tone from the local telephone companies. This didn't happen by accident—it was carefully planned. Successful disaggregations in technology, and the business of technology, repeat this pattern over and again: you must provide at least the basic pre-disaggregation functions of the technology (e.g., the ability to make phone calls), and to do this requires that you pay careful attention to interfaces between the pieces left behind after disaggregation (e.g., telephones still plug into the phone network).


The goal of this book is to help you understand, create, and apply revolutionary technology. In the remainder of Part I, I'll discuss the details of disaggregation: how to understand what disaggregation does; what benefits to expect from disaggregation; and, given a problem, how to generate solutions based on disaggregation.

Chapter Two

Starting Revolutions: What to Take Apart

Disaggregation goes beyond simply taking things apart, and this chapter explains the details—how disaggregation works, what it does, and how to decide whether a particular innovation is important.

This chapter follows the same general outline I'd use to write up an analysis of an innovation. It's modified, of course—instead of discussing just one innovation, I've included some examples, and I've added all sorts of explanations. Still, if you want to analyze an innovation, write your own version of this chapter and you'll cover all the important points. (You'll need to read the next chapter, too.)

Here are the steps to analyze an innovation:

Step 1: Sort the Innovation

What is it, exactly, that the innovation disaggregates?

Step 2: Answer the Basic Questions

How does the innovation work?

Step 3: Assess the Revolutionary Potential

Based on the information from Steps 1 and 2, is this a revolutionary innovation?

In the next few sections, we'll discuss the details of how to analyze an innovation.

Step 1. Sort the Innovation

Someone hands you an innovation, and you think it works by disaggregation. Here's a question you need to answer: what is it—exactly—that's being disaggregated?

The what of disaggregation falls into five general categories. Innovations can disaggregate:

* Authority

* Ownership

* Mechanics

* Space/Time

* Concepts

Categories help suggest improvements. If we're trying to improve an innovation and make it more useful, we can ask questions like, "This innovation only disaggregates in category X. Can it disaggregate in category Y, too?"


Authority refers to the ability to determine what happens. If I manage something, if I control how it's made or what it does, if I decide how much it costs, if I control when something happens or if it happens at all, then I have authority. Authority can belong to a single person or to a group: a company, an industry, or a government, to name a few.

One important reason to disaggregate authority is to increase trust. A typical case is when manufacturers agree to follow some set of rules or an industry standard; they break off a piece of their authority and hand it over to third party, and in return they gain their customers' trust.

Another way to increase trust is to disaggregate authority and disperse it widely—to give authority to all participants. Sometimes disaggregation of authority is not about trust; authority becomes widely dispersed or simply evaporates, and the result is that people have more autonomy and freedom.

Table 2.1 shows an example of an innovation that disaggregates authority and increases trust.


Ownership has two meanings. The first meaning is the legal definition that refers to all the kinds of ownership that range from owning a shirt to owning stock market shares of a shirt factory. The other meaning of ownership is the one from the colloquial expression, where we say that some entity or some persons "own" something because they have a monopoly over it or possess it informally. For example, "Acme Corporation owns the market for computer memory chips."

An innovation that disaggregates ownership breaks the link between people and what they own. Usually the innovation will transfer ownership and it goes from one party to a different party. But there are times when disaggregation will make ownership just plain disappear—either whatever was owned disappears (for example, the market share vanishes), or it's still around but no one owns it. In more unusual cases, disaggregation forces a change in the meaning of ownership by changing the actual legal definition.

When disaggregation of ownership gives many people a stake in what's been shared, we often see a powerful result: more sharing. The more widely something is shared, the more people contribute. No one—or better yet, everyone—owns the World Wide Web, and millions of people spend time and money to put up informative Web pages just for the sheer joy of sharing.

Table 2.2 shows an example of disaggregation of ownership.


Disaggregations in this category modify a mechanical relationship. What do I mean by the terms mechanical and relationship?

Let's say we're trying to build a better mousetrap. Mechanical refers to the physical properties of the mousetrap: the material that the mousetrap is made of, how it's put together, and any electrical characteristics. Mechanical also includes software, which is just as real as the nuts and bolts that hold the mousetrap together.


Excerpted from The Pebble and the Avalanche by Moshe Yudkowsky Copyright © 2005 by Moshe Yudkowsky. Excerpted by permission of Berrett-Koehler Publishers, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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