11 September 2006

Net Neutrality and Valence Theory

Last week David Weinberger was on a panel with several representatives of the telecom world debating aspects of net neutrality. For me (oversimplifying, of course) the argument comes down to one of economics vs. hypothetics/ethics/moral suasion. The telecoms make the argument that they can offer valuable services in exchange for valuable money if the net is not "neutral" (let's not get too semantic about the meaning of neutral - that's not my point right now). The folks in favour of net neutrality (closely related to the world of ends) argue that differential service for differential price in access to basic infrastructure results in the ability for incumbants (not to mention service providers) to control the market and eliminate all but the most well-heeled potential competitors. (Note that I am not talking about differential pricing based on usage or consumption; rather the ability to effectively slow down a competitor if you pay enough.)

The telecoms' position makes perfect sense. As a matter of fact, according to almost every established business principle, it makes sense. There is no argument in favour of network neutrality that would stand the scrutiny of a class of MBAs (unless some social scientists happened to sneak into the lecture). And that's the problem.

Our current theories of organization - the ones that are being taught in countless business schools around the world - are inadequate to completely account for the net neutrality arguement. On the other hand, for organizations that are framed and theorized according to my valence theory, the net neutrality debate takes on a number of useful perspectives and nuances.

Along the economic valence the argument (and exchange of value) is clear, but only among the boundary set of organizations - the telecom companies and their customers. Extend the economic valence to include potential start-ups in the cluster and we see the breakdown (loss of value) in overall economic valence.

Socio-psychological valence is negative for a non-neutral net; positive otherwise (pre-emptive, anti-competitive behaviour may make the individual feel good, but in secondary or tertiary connection with others, is a negative).

Knowledge valence is reduced, since a non-neutral net arguably stifles innovation (preventing those who are not already in the game from gaining critical mass with innovative offerings before larger competitors can react - a non-neutral net will always give the advantage to the organization with deeper pockets); likewise identity valence, both for the innovators, and those who construct identity via social networks enabled by a neutral net.

Valence theory of organization allows us to understand specific effects that are likely to occur among the many constituencies with whom organizations interact, and anticipate a wide variety of environmental effects of the changed environment. As much of the dysfunction in the world brought about by corporations has been excused as "unintended consequences" it behooves us to ask, if they were unintended, why weren't they anticipated? The answer, I think, has much to do with our collectively limited understanding of organizations, and our inadequate frames of thinking about relationships and effects.

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