I consult, write, and speak on running better technology businesses (tech firms and IT captives) and the things that make it possible: good governance behaviors (activist investing in IT), what matters most (results, not effort), how we organize (restructure from the technologically abstract to the business concrete), how we execute and manage (replacing industrial with professional), how we plan (debunking the myth of control), and how we pay the bills (capital-intensive financing and budgeting in an agile world). I am increasingly interested in robustness over optimization.

I work for ThoughtWorks, the global leader in software delivery and consulting.

Saturday, April 30, 2016

The Times, They're Still A-Changin', Part II

I ended the previous post by stating that the stage is set for more radical change. Why?

Consider the changing attitude toward land, property and shelter.

For the pre-1965 generation, land meant a lot of things. It was wilderness to be fought with, to be made into a suitable place to live. It was where you built your shelter. It was how you earned or supplemented your living, by farming, mining, logging, or guiding. It was sweat: always one more addition, improvement, or repair to be made. It was the story of America as taught to schoolchildren: land was the reason why the Pilgrims came, and "taming the land" was said to bring out the best in the early settlers who were themselves held out as American heroes and role models. It was very personal history, too: settlers intertwined family stories - and legends - with the land itself.

Land was freedom, and property ownership was independence.

Property was extraordinarily important to the American psyche. A great deal of desirable land remained remote and undeveloped until well after the Second World War (the Interstate network wasn't begun until the Eisenhower administration). Familial bonds with land were strong, particularly where property passed from generation to generation. Schools taught the history of European settlement, including battles with indigenous peoples and noteworthy settlers. A lot of the materials, tools and trade were similar to those employed by generations past, so people could relate to how their grandparents had lived. Activities like camping and hunting gave young people first hand experience of how the European settlers and indigenous people lived, reinforcing the perception of land as well as the myths about it. Land was a great investment ("they're not making more of it" as the saying went), appreciating in value virtually everywhere and almost without interruption. In part, this built up a perception of value in land. And in part, it was a reminder that you weren't too far removed from the rough-and-tumble of the wilderness.

Land no longer captures the American imagination quite so much. More people live in dense urban areas, a large number of them rent, and those who do own expect to move - either upsizing or downsizing - long before their mortgage matures. People who bought property from 2002 through 2008 suffered financially and emotionally with the housing collapse. High crop yields create less demand for farm acreage and farming families. Land has been repurposed: farms near urban areas were more valuable as residential subdivisions, and previously remote rustic areas have been developed into recreation communities or suburbs. Building and zoning regulations restrict what property owners can and cannot do with their land. Early to mid 20th century industrial manufacturers favored rural or suburban owners with the space for industrial products; 21st century providers of services and digital products - that is, where the American economy has been shifting toward for the last 40 years - favor densely populated urban centers. History classes emphasize the high cost - war, disease, resettlement - borne by indigenous peoples at the hands of European settlers. Activities like camping are now either cheap vacation choices (ever notice how many private campgrounds there are near floating casinos?), or some combination of tests of strengths balanced with stewardship.

Land is no longer freedom. Renting is freedom: renting allows you to have many different living experiences and gives you the freedom to change your living accommodation based on your lifestyle, rather than having your lifestyle dictated by the land. Land is red tape and well rehearsed ceremonies to purchase plots or pull permits; it ties you down to a mortgage and a location.

The changing perception of land also reflects the fact that shelter and sustenance - things directly related to land ownership and management - are problems long ago solved on a mass scale. There is little value in rehashing them again and again on an individual basis, when we could use our life's energy to solve the next wave of challenges, from sustainability to space exploration.

There's been a similar change in attitude toward another symbol of independence, the automobile. Because it was a way to get away ("freedom of the open road") or quite literally a means of getaway (think John Dillinger, or Bonnie and Clyde), the automobile captured the American imagination. But the automobile has changed from a symbol of freedom and possibility to one of captivity (monthly payments) and inescapable utility (suburban communities aren't designed with walking in mind, and suburban mass transit is inefficient). The car that sits idle in the garage nearly 99% of the time isn't untapped potential, it's a tax of modern living.

The things which were the physical incarnation of freedom for prior generations have become symbols of economic entrapment to newer ones. Per the previous post, technology enabling things like the "sharing economy" aren't leading change as much as they're riding the changing wave of sentiment.

This wave has a long way to go before it crests. The shift in attitudes toward land and transportation portends a change in asset ownership and associated activities like lending and insurance that we've long taken for granted. That doesn't mean a concentration of assets in the hands of a few owners: technologies like blockchain make it easier to fractionalize ownership. This will allow people to invest in small fractions of many residential properties bundled into a single instrument, and do so incrementally over a long period of time. In essence, they would live in a rented house, but own small fractions of many others. Just as people have shown a preference for passive over active investing, future generations may find it appealing to be able to invest in residential real estate without the need to mortgage future cash flows for a specific spot of dirt in an asset appreciation lottery.

Of course, that's all "some day". But change is afoot, and the stage is set for more still more that goes beyond assets, to the nature of labor itself. We'll look at that in the next post.