Speaking
I speak on topics related to business, strategy and technology. From conceiving and implementing FAST strategies to pragmatic technology approaches, I seek to challenge traditional assumptions and help uncover simple, yet profitable solutions best suited to your company's situation. Get details >>

Papers
- Moving from Push to Pull - Emerging Models for Mobilizing Resources (PDF)
John Hagel and John Seely Brown

- Capturing the Real Value from Offshoring in Asia (PDF)
John Hagel

- The Agile Dance of Architectures – Reframing IT Enabled Business Opportunities (PDF)
John Hagel and John Seely Brown

- Overview of Working Paper Series (PDF)
John Hagel and John Seely Brown

- Break On Through to the Other Side: A Missing Link in Redefining the Enterprise (PDF)
John Hagel and John Seely Brown

- The Secret to Creating Value from Web Services Today: Start Simply (PDF)
John Hagel, John Seely Brown and Dennis Layton-Rodin

- Service Grids: The Missing Link in Web Services (PDF)
John Hagel and John Seely Brown

- Some Security Considerations for Service Grids (PDF)
Martin Milani and John Seely Brown

- Control versus Trust: Mastering a Different Management Approach (PDF)
John Hagel and John Seely Brown

- Orchestrating Business Processes - Harnessing the Value of Web Services Technology (PDF)
John Hagel and John Seely Brown

- Orchestrating Loosely Coupled Business Processes: The Secret to Successful Collaboration (PDF)
John Hagel, John Seely Brown and Scott Durchslag

Viewpoint
October 9, 2002

Loosely Coupled: A Term Worth Understanding

Loosely coupled - if you’re a technology person, chances are pretty good that you are familiar with the term.  If you’re a business manager, you’re probably at a loss when confronted with this term. Yet, this is a term that will reshape the business world in profound ways over the next several decades.

Even technology people, when asked for a definition of “loosely coupled”, seem to have a hard time offering a concise and rigorous definition, even though the term is widely used in discussions of computing and software architectures.  Perhaps it is appropriate that the term has a relatively loose versus hard-wired definition.

A good working definition:  loosely coupled is an attribute of systems, referring to an approach to designing interfaces across modules to reduce the interdependencies across modules or components – in particular, reducing the risk that changes within one module will create unanticipated changes within other modules.  This approach specifically seeks to increase flexibility in adding modules, replacing modules and changing operations within individual modules. (Note: if any of you have come across a better definition of loosely coupled, please let me know – I’d like to follow up on this in a future blog.)

Three things stand out from this definition.  First, it assumes a modular approach to design.  Second, it values flexibility. Third, it seeks to increase flexibility by focusing on design of interfaces.

This concept is widely practiced in computing architectures.  It is the foundation for the design of massively parallel computing systems.  It is also a key element in the overwhelming success of the Intel driven PC architecture.  A great new book – Platform Leadership: How Intel, Microsoft and Cisco Drive Industry Innovation by Annabelle Gawer and Michael A. Cusumano – does an excellent job of describing how Intel created enormous economic value for itself by championing standardized interfaces for loose coupling of components within the PC architecture.

This concept is widely talked about, but far less widely practiced, in the software world. In some respects, the movement to three tier software architectures was a small step in the direction of loose coupling, at least at the level of standardizing interfaces across databases, application logic and presentation layers. In general, though, software has remained tightly coupled because of the inability of major vendors to agree on a universal set of standards to define interfaces across software modules.

This appears to be in the process of changing.  Web services technology is built upon a loosely coupled design philosophy.  At least so far, vendors appear to be converging around a uniform set of standards to make this loose coupling a reality.

This is big news for business managers.  Business practices have largely evolved around available technology.  Since most application software was very tightly coupled or hard-wired, business practices have tended to be tightly coupled or hard-wired.  This hasn’t just been a reflection of available technology.  It also reflects management priorities.  Until relatively recently (let’s say until the early 1990’s), management has been heavily focused on driving more efficiency in business. The desire for major cost reduction was certainly one of the key drivers of the adoption of enterprise applications – some of the most hard-wired and tightly coupled software known to mankind. If your only concern is to optimize around existing conditions and practices, you are generally well-advised to adopt tightly coupled or hardwired design approaches.  Loose coupling only matters if you value flexibility and learning.

Business managers have come to regard information technology as a prison as the importance of flexibility has increased relative to optimization.  As conditions become more uncertain, managers yearn for more freedom to change more quickly.  But like many prisoners who yearn for freedom, many managers are not quite sure what they would do with the freedom if they had it.  All their management practices are still geared to tightly coupled designs.

The instinct for freedom is a sound one.  In today’s rapidly changing environment, those unable to change become clay pigeons for the sharpshooters amassed on the horizon.  Flexibility enhances the ability to react to new market demands.  Even better, it creates the opportunity to anticipate new market demands and help shape the changes that will challenge others.

The desire for flexibility is a powerful force driving the move towards loosely coupled systems, but there’s an even more powerful reason to adopt loosely coupled systems.  It has to do with experimentation, learning and performance improvement.  Within well-designed, loosely coupled systems, there’s a lot more room for experimentation.

We’re all familiar with the feeling of dread that often accompanies experimentation within tightly coupled systems.  If I modify an operation over in this part of an application or business process, what unexpected and disruptive ripple effects will it generate it totally different areas of the application or business process?  Talk about a chilling effect.  Do I really want to be discovered as the person who made a seemingly trivial enhancement in one area only to discover that the application crashed or the assembly line came to a halt because of unintended consequences elsewhere?

Loosely coupled systems reduce this risk by enforcing standards for behavior at the interfaces of modules while providing a great deal of freedom to modify activity within the module.  What happens within any one module matters little to the other modules as long as each module meets the specifications for deliverables at the interface of the module.  This creates a safe harbor for experimentation within the module.  Greater ability to experiment enhances the ability to learn. New approaches can be tried more frequently and participants can learn which approaches yield higher performance within each module.  As these successful experiments yield better results, the performance of individual modules tends to improve at a faster rate.  The cumulative effect of this performance improvement across an entire loosely coupled system can be significant.

We are no longer talking about flexibility in configuring modules with given performance levels.  Now we are talking about flexibility to configure modules that are rapidly improving their own performance.  This combination of flexibility plus accelerating performance improvement is what drives the real power of loosely coupled systems.

So, it’s powerful, but remember the prisoner who yearns for freedom but doesn’t know what to do with it.  Business managers have become so used to the hard-wired nature of their practices that they will have a hard time adapting to this newfound freedom. To exploit the business potential created by more loosely coupled technology platforms, managers will need to creatively design new, more loosely coupled management approaches to take advantage of the flexibility provided by the technology.

Loosely Coupled Business Practices

Truth be told, loose coupling will force us to rethink all aspects of business activity.  We’ve already made some significant progress in adopting much more modular and loosely coupled designs for a broad range of products ranging from computers to automobiles and washing machines.  For a fascinating, if somewhat dense, read on the concept of modularity in the computer industry and its impact on industry structure, check out Design Rules by Carliss Y. Baldwin and Kim B. Clark.

But product design is just the beginning in terms of the move to loosely coupled systems. It will have profound impact on the way we manage business operations.  The thick process manual (OK, we’re modern, it’s now on a DVD with animated pictures) remains a testament to our hard-wired approach to business operations.  Specify all activities in great detail in advance and then carefully monitor all activities to wipe out any variations from standard.  Tighten operations as much as possible.

Loosely coupled business processes operate in a very different way.  Check out my white paper (co-authored with John Seely Brown and Scott Durchslag),  Orchestrating Loosely Coupled Business Processes: The Secret to Successful Collaboration, to find out in more detail how these loosely coupled business processes work and what business benefits they provide.  My latest book, Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services, also discusses the concept of loosely coupled business processes (see especially chapters 6 and 8).

But the notion of loose coupling doesn’t stop there.  It also begins to reshape organizational design and behavior. Think about the organizational equivalent of component-based software or modular product design.  Rather than traditional hierarchies driven by command and control management styles, we are likely to see relatively independent organizational modules brought together to perform one set of processes and then different arrangements of modules to perform other processes.  Some of these modules will belong to the same enterprise, but modules from other enterprises may be brought in to perform specific tasks on an as needed basis. Richard Veryard in The Component-Based Business: Plug and Play offers an intriguing early exploration of some of these organizational design opportunities and issues.

Even business strategy will become more loosely coupled.  Conventional business strategy approaches emphasize the need to develop a detailed strategic blueprint and then tightly couple operational initiatives to execute the blueprint. As uncertainty grows in business environments, these hard-wired approaches to business strategies are becoming less and less viable. In their place, companies are developing much more loosely coupled and layered business strategies.  My final chapter in Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services discusses this promising new strategy approach.

Bottom line? If we really want flexibility, we can’t just look to IT to solve the problem, even though a promising new generation of technology offers the potential for flexibility.  Business managers are going to have to get creative as well.  The old, hard-wired approaches to business practices just won’t cut it any more.  The real winners in the race to create economic value will be those who understand the need to move to more loosely coupled operations, organizations and strategies.  This is not a technology issue, it is a business management issue.

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Blogs
- The Big Shift (HBR)
- EdgePerspectives blog

Books

The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion
by John Hagel III, John Seely Brown, and Lang Davison

ALSO

The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization
by John Hagel III and John Seely Brown
- Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services
by John Hagel III
- Net Worth: Shaping Markets When Customers Make the Rules
by John Hagel, III and Marc Singer
- Net Gain: Expanding Markets through Virtual Communities
By John Hagel, III and Arthur G. Armstrong

Deloitte

ongoing research:
The 2009 Shift Index
The Big Shift Index: Uncovering the Emerging Logic of Deep Change
www.edgeperspectives.com

Cloud Computing working papers

BusinessWeek

The Next Wave of Open Innovation
April, 2009

Does the Experience Curve Matter Today?
April, 2009

Peer-to-Patent: A System for Increasing Transparency
March, 2009

How World of Warcraft Promotes Innovation
January, 2009

Harrah's New Twist on Prediction Markets
December, 2008

Innovation for Hard Times
November 2008

How SAP Seeds Innovation
July 2008

Student Activism Can Change the World
May 2008

Myelin Repair Foundation's Institutional Innovation
May 2008

Learning from Facebook
April 2008

Learning from Tata's Nano
February 2008

Catching the Innovation Wave
January 2008

Phoning from the Edge
January 2008

Embrace the Edge - or Perish
November 2007

Funding Invention vs. Managing Innovation
February 2006

Articles

- Creation Nets: Harnessing the Potential of Open Innovation (co-authored with John Seely Brown) April, 2006

- Connecting Globalization & Innovation: Some Contrarian Perspectives (Prepared for the Annual Meeting of the World Economic Forum in Davos, Switzerland January 25 – 30, 2006; co-authored with John Seely Brown)

- "The Benefits of a Long Distance Relationship" (co-authored with John Seely Brown), August 9, 2005

- "Feed R&D - Or Farm It Out?" (HBR Case Study with Commentary co-authored with John Seely Brown), July 2005

- "Productive Friction: How Difficult Business Partnerships Can Accelerate Innovation" (co-authored with John Seely Brown), February 2005

- "From Push to Pull: The Next Frontier of Innovation" (co-authored with John Seely Brown), 2005, No.3

- "Innovation Blowback: Disruptive Management Practices from Asia" (co-authored with John Seely Brown), 2005, No.1

more articles >>