Feb 282010
 

“I don’t hire older CIOs. I like them young.”

So barked an experienced and grizzled CEO in a conversation we had a decade ago. Why? Because they don’t know any better, he said. They overestimate their abilities, underestimate the problem, but work hard enough and are smart enough to pull it off.

I hope I don’t work for him, I distinctly remember thinking.

While overconfidence continues to be a consistent problem in IT, so does too much experience. Those experienced IT folks who may sandbag their estimates (partially out of painful memories from prior battles, partially out of CYA self-protection) constantly run into technology neophytes and amateurs who are deeply convinced that they can move better and faster than old fogeys so long as they have the latest IT toys. These days the experienced naysayers are more often than not moved to the back of the bus or off the bus so that aggressive newcomers get a shot at driving the bus.

On a related matter, Andrew McAfee, writing on Forbes’ blog site, discusses how IT may be changing the nature of competitiveness. According to research by MIT Ph.D. candidate Adam Saunders, IT investments are changing the nature of competition. Industries with more IT investments are behaving very differently than industries that rely on more ordinary capital investments. When an industry increases in IT intensity, the barriers to entry for new competitors decrease, thus inviting a host of new players.

But IT intensive industries are behaving differently in another dimension. Industries richer in ordinary capital investments tend to have more competitors at at the top end of the size distribution than IT intensive industries.  IT intensive industries tend to have fewer large players locked in battle with each other. IT intensive industries have higher levels of consolidation. From my perspective, it looks like IT investments are serving as an accelerant. IT lowers barriers for new players, but it also allows larger players to quickly club each other to death until a few remain.

Saunders opines that perhaps small entrants enter the market in order to get bought out by larger players. Most likely this is contributing to why smaller players are entering. I have noted for some time that the acquisition strategy for companies like Cisco, Oracle and IBM has been focused on purchasing niche startups. In a way, firms like these have outsourced their research and development to the market. Since IT lowers competitive barriers but is more brutal on the remaining players, large firms are happy to let a thousand flowers bloom (new entrants) and then pluck the most promising flowers so they can focus on the hypercompetition with the one or two other firms. Savvy startups are acutely aware of the acquisition orientation for larger players and design themselves for acquisition, Facebook notwithstanding.

On the other hand, I also suspect that something as simple as overconfidence may be at play. The leaders of startups are often typically unaware of what can and can’t be done and some of them work harder and are smart enough to find success. IT tends to encourage all sorts of amateurs and dabblers who believe anything is possible.

Welcome to the accelerating world of information technology – part American Idol and part Clash of the Titans.

Discussion

  3 Responses to “Is overconfidence a necessary part of IT?”

  1. […] Pro Tweets New blog post: Is overconfidence a necessary part of IT? http://blog.cutter.com/2010/02/28/is-overconfidence-a-necessary-part-of-it/ cuttertweets – Sun 28 Feb 23:03 All Things […]

  2. I’m always confident about the technology part, and it’s almost always justified. What I’ve learned as I’ve gone from wide-eyed youngster to fogeyhood is that CHANGE is hard. It’s the people side of a project that’s the hardest, longest, and most challenging part and the likeliest source of failure.

  3. Vince-

    Great post and analysis. You touched on some similar points in our podcast.

    I have seen first-hand how “old guard” IT people “don’t get” new technologies. Needless to say, many people scoffed at my “anything is possible” approach, particularly when I started out.

    Good stuff.

    Phil

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