Information Scaling - Part 1

*Note: This is a three part series discussing Information Scaling, how to understand it and how to prepare your business for it.

Every ten years or so we get to be a part of history where technology fundamentally changes how we interact with information. This process is called Information Scaling and though at the time each new technology can feel unprecedented, we’ve been experiencing these events for over 500 years since the invention of the printing press. 

In the 28 years that I’ve been in tech and a consultant, I’ve seen my share of impactful information scaling events. 

• Early Web (1995–1997): Information becomes public and removes the gatekeepers.

• Dot-com Bubble (1998–2001): Information becomes speculative and overvalued.

• Web 2.0 (2004–2010): Information becomes participatory and flips the power to customers.

• Mobile (2010–2014): Information becomes ambient, hyper-accessible and everpresent.

• SaaS (2012–2018): Information becomes instrumented and metrics become over-optimized.

• Algorithms (2014–2020): Information becomes amplified with low-value and high-output.

• Remote Work (2020–2021): Information becomes distributed exposing high-communication and operational inefficiencies.

• AI (2022–Present): Information becomes generative switching from humans to machines.

What’s unique about Information Scaling events is that every disruption creates a power shift. It actually doesn’t have anything to do with technology, it’s about control. It has a name and they are called Authority Structures. (This is just a fancy phrase for having systems and processes in place.) They exist in every organization from families to companies to governments. Simply put, those structures control the information, interpret the information, decides what’s true and who has the right to act. 

Non-Reactive to Information Scaling

What often happens during an information scaling event is that many of these structures don’t react fast enough and get left behind. In modern companies we see it play out in this way, 

• The founder is involved in all decisions.

• Data is hoarded in departments.

• Reporting is vague.

• Decisions are personality driven instead of using a decision structure or process.

The result of the non-reaction to Information Scaling events leads to,

• Bottlenecks

• Confusion

• Delay

• Emotional escalation due to perceived urgency

Many CEO’s and Business Owners think fewer processes equals increased productivity, more control and easier adaptability. That may work for a while, but when an Information Scaling event occurs, information multiplies and without structure, you create uncertainty, increased friction and reduced clarity, contributing to the eventual demise of an organization.

Reactive to Information Scaling

Succeeding in an Information Scaling event requires structural changes. Your systems and processes have to change. The good thing is that if your business is already managed by systems and processes, you just switch it out for the new ones. Simply said, I know, but moving an organization towards better structures, when they never had structures in place to begin with, during an Information Scaling event, is like trying to run in the mud. You’ll eventually get there, but it will be difficult and take a long time.

How to successfully respond to an information scaling event,

• Prioritize what metric information matters. Paralysis by analysis is very true here. This would change between a service and product company, but the metrics you select here are the group that would impact the business the most.

  • Example:

  • A gross margin drop of 3% for two consecutive weeks would trigger an executive review, while a single dip in social media engagement does not.

• Create a communication plan. Many companies use email, chat, meetings and documents to share information, but often don’t define when to use which tool to best communicate with their teams. This can easily create confusion and information fragmentation.

  • Example:

  • Short messages or updates in chat, emails for longer thoughts, documents for formal processes or brainstorming and meetings for review, collaboration and decisions.

• Organize your decision tree. When people or processes aren’t in place who are authorized to make decisions, then the founder is inundated with requests for approval all day long. By creating financial, process and system thresholds, business runs faster and only requires executive involvement in extreme cases.

  • Example:

  • Marketing can adjust campaigns within a 10% budget without approval. Any spend above that requires CFO sign-off. 

• Throttle information overload. More information is not always better. Accurate decision making is effective with the quality of the information, not the quantity. Breaking down the information that you share with leadership into manageable chunks and when to share it, provides the space for your team to think strategically, instead of reactively.

  • Example:

  • Having a weekly KPI meeting to adjust and align strategy is a better use of time than monitoring five dashboards packed full of metrics daily.

• Build in If/Then actions. Under stress business can become reactive. We see this happen all the time when too many things happen at once or an unexpected big event comes out of left field. It’s not enough to have a decision tree, you need to have specific rules and actions that go into effect when specific situations occur. This will ensure tough decisions are made even when emotions are high.

  • Example:

  • “We do not pursue projects under 30% margin.” Or “We do not expand product lines when cashflow is low.”

*Revisit next month where we will continue Information Scaling - Part 2.