Assuming markets change slower than tech can be fatal

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By: Larry Bridgesmith

The imponderable nature of exponential change

It is difficult to wrap our minds around the idea of exponential change. Ray Kurzweil, the Google mastermind, tries to explain the idea with the fable of the peasant and the emperor.

As the fable goes, a peasant in ancient India approached the emperor with a game the peasant had created. The peasant showed the emperor how to move various game pieces across a square board of 64 smaller squares. As pawns captured knights and rooks captured queens, chess was introduced to the emperor and the world.

Impressed with the power of chess to teach strategic thinking to military leaders and diplomats, the emperor offered the peasant anything he wished as a reward. The peasant, ever modest and mindful of his station in life, responded humbly: “Emperor, I am merely a peasant and cannot ask for much.”

The emperor expressed his extreme gratitude and insisted that the peasant name anything he wished for. After much deference, the peasant simply asked, “Oh emperor, all I ask for is a simple gift to help feed my family. If you would grant me a grain of rice for the first square on the chessboard to be doubled each day for each square on the board, I would be most grateful.” In disbelief, the emperor finally granted the peasant’s wish after repeatedly offering far more than he believed the peasant had requested.

However, on day 32, half the distance to the 64th square on the chessboard, something unexpected happened. Either the emperor lost his kingdom or the peasant lost his head. What the peasant knew, and what the emperor did not understand, was the power of exponential change. After only 32 days, one grain of rice had multiplied exponentially into a pile of rice equal to the size of the largest rice paddy in all of India. If exponential growth had continued to the 64th day, the pile of rice would have equaled the size of Mount Everest. The emperor’s vast wealth was no match for the exponential growth of his debt to the peasant.

See Erik Brynjolfsson and Andrew McAfee’s The Second Machine Age for more on exponential technology change in our digital age.

Failing to understand the exponential curve of technology advances

What does this have to do with law? Ask Motorola or Kodak. They each made fatal mistakes when they assumed that the market they served would not change as fast as the technology that served it.

In the late 1980s, Motorola started a new company called Iridium, which planned to build a network of 77 (iridium’s atomic number) low-orbit satellites to provide mobile phone access to global non-urbanized populations. $10 billion of investors’ capital was lost when the technology of mobile phone size and efficiency changed exponentially, serving the market in more cost effective ways than Motorola’s business plan assumed. This exacted a heavy toll on an established company unable to comprehend or adjust to exponential change.

Kodak fared no better after inventing digital photography technology, which was later abandoned by the company when it decided the market would change slowly, rather than than exponentially, in developing digital photography. Despite not yet having made a profit, Instagram was sold to Facebook for $1 billion in 2012. The high price tag reflected the fact that Instagram’s technology had outpaced market change; consumers, in turn, adopted the new photography platform by the millions, and Kodak was forced to file for bankruptcy.

Do lawyers believe that the market they serve will not adopt exponentially to changing technology?

Talk to the emperor.

Overcoming technophobia

How do lawyers create a more tech-friendly business? One way is to follow this helpful piece of advice: Begin where you are and grow as you go.

In technology and software development, there is a distinct difference between “waterfall” and “agile” methods. Waterfall software development requires a complete end-to-end forecasting of every twist, turn, and potential project deviation. Waterfall project plans are extremely detailed, and work cannot begin until every last detail is worked out.

In contrast, agile is a method of software development that begins where you are and grows as you go. It does not require end-to-end knowledge of the entire project before work begins.

Lawyers understand the concept of agility. That’s how they litigate, manage transactions, and represent clients in complex matters. Based on what they know when they begin, they start to work without a clear end in sight. Lawyers are more agile than waterfall by nature and experience.

As they consider technology adoption, lawyers can use an agile approach to begin with what they know and apply critical thinking and experiential learning to increase their tech savvy.

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