The Technical Innovation Debt
The other day I noticed something which is pretty obvious in retrospect: there seems to be some kind of relationship between the degree of innovation and technical debt in products and services.
Technical debt is a term which was coined by Ward Cunningam, who explained it thus:
Shipping first time code is like going into debt. A little debt speeds development so long as it is paid back promptly with a rewrite… The danger occurs when the debt is not repaid. Every minute spent on not-quite-right code counts as interest on that debt. Entire engineering organizations can be brought to a stand-still under the debt load of an unconsolidated implementation, object-oriented or otherwise
My observation is that the more unprecedented something is the greater the technical debt that’s inherently taken on.
This has nothing to do with speed to market, technical incompetence, or all the other things that make technical debts occur in more traditional scenarios.
For innovators, technical debt is inherent because nobody has a detailed understanding of the problem space in the first place.
In other words, if you are an innovator, and you go after a first-mover advantage in the market, there’s this huge tax you’ll have to pay from then on.
I have personal experience of this.
At the turn of the century, I was involved in a start-up that made internet banking software. We deployed the first systems in the southern hemisphere, and rode pretty high for a while.
We had to build everything. And there was nobody we could hire who knew the space. So we just made stuff up as we went along.
The very definition of a startup in an innovative field, I suppose.
The thing is, other companies came along soon after who had learned from our experience. Their products had much less technical debt than ours as a result.
Two years later, and all our customers were eyeing these new entrants with some envy. Their operating costs, after all would be much less if they switched.
They all did, over the next few years after.
The lesson I learned then is one I am relearning every day since: the economics of doing something genuinely new are very challenging indeed.
Firstly, you have to pay to discover new stuff.
Then, you have to pay to commercialize it.
Then, you have to pay to support a technical debt forever.
Or, you have to pay to take out all the technical debt. And the longer you leave that, the worse the expense.
All very expensive, and probably only worth it if there’s something you can do to stop competitors coming along.
I’m increasingly of the view that genuine, breakthrough innovation is really not something that most companies should pursue strategically if they want to maximize shareholder returns.
This is a theme which I explore in detail in my new book Sidestep and Twist, which went to the publisher last week.