Introduction to Hacker Culture and the New Rules of Innovation (Routledge 2018)
This is from my new book, Hacker Culture and the New Rules of Innovation. The book is about hacking and how it has impacted the startup scene, and how this is changing the rules of business innovation. I hope you enjoy reading it.
'Software is eating the world!’ Marc Andreessen claimed in 2011. Andreessen, a Silicon Valley investor and co-founder of the web browser Netscape Navigator, was in a position to know. Andreessen’s venture capital firm, Andreessen-Horowitz, was riding a wave of innovation in software services, consumer electronics, biotech and computational medicine. Andreessen’s job ensured that software ate the world with gusto, in ever-expanding chunks.
Andreessen’s statement has become a mantra of the tech startup industry. Like the best insights, it became truer over time. In 2011, many people assumed that social media was the high-water mark of software’s intrusion into everyday life. Since then, a wave of new software products and services has flooded markets, delighting consumers, thrilling investors, terrifying privacy advocates, and enabling companies and individuals to manage themselves in increasingly productive and efficient ways. Software has emptied large plots of Main Street real estate, destroying record chains, bookstores and travel agencies. Entire marketplaces have moved into the cloud, dominated by companies who anticipated the digital shift and developed a range of disruptive technologies to exploit it.
Today, software structures the lives of billions of people around the world. Growth in network infrastructure, broadband capacity and processing power are driving technological change faster than ever before. By 2020, the text-based babble of first-generation social media will seem perfectly quaint. Facebook’s Oculus Rift is set to transform online social networking into an immersive virtual reality (VR) experience. Wearable tech like Google Glass and Microsoft’s HoloLens will transform the walls, tabletops and landscapes around us into interactive surfaces for art, games and data display, tailored to our needs and interests. Self-driving cars will cruise the streets, while drones buzz overhead, delivering parcels and monitoring crowds. Companies like IBM and Cisco are rolling out fully-automated workplaces and ‘smart cities’ that gather meta-data on citizens and their activities. By 2020, technology will be an invisible presence in all aspects of life, as ubiquitous as air and largely indistinguishable from magic.
To people who remember life before the internet, the acceleration of software in recent years is astonishing. How did software eat the world so fast? Providing a full answer to this question is beyond the scope of this book. But we can clarify the commercial success of the software industry by focusing on two factors: open standards and innovation culture.
For decades, it looked like proprietary technologies were set to dominate the software industry. Since the 1990s, the open source and open web movements have promoted a different set of principles for software development — open standards — which enable tinkerers and technologists to connect devices and build on each other’s work.
This has led to a golden age of ‘combinatorial innovation’ (Schmidt et al., 2014: 74). Thanks to open standards and open APIs, hackers and tinkerers can take different digital tools and combine or recombine them to create new innovations.
The culture of openness has supercharged the startup industry. Open standards make it possible for entrepreneurs to build app-based services that combine data from different sources, to serve different needs. They enable apps that access government data on traffic and weather, and deliver it to consumers in a real-time feed. The music streaming service Spotify draws on social graph data from Facebook and makes recommendations based on what your friends are listening to. Apple phones and watches feed health and wellness data from third party devices into a consumer-facing app, called Health. Waze, a social navigation app, enables drivers to ‘connect to one another to improve each other’s driving experience’.
This book focuses on a second factor that has contributed to the recent spike in technological innovation. This factor is often overlooked in discussions of technology. It concerns the culture of technological innovation, rather than technology itself. It concerns the way people coordinate, share, work and collaborate to produce innovation.
This factor is hacking. In the past decade, we have seen the rise of a new hacker innovation culture, coming out of the startup industry. This culture is evident in the suite of innovation tools used by startup entrepreneurs: agile development, lean startup method and design thinking. These tools were developed by different practitioners, in different contexts, for different tasks. They all feature elements of hacking.
Hacker culture emerged in the early days of computing. It scaled in the open source software movement in the nineties and fed into startup entrepreneurship in the aughts. The open source movement democratized innovation, placing a vast realm of free or cheap software tools and services at entrepreneurs’ disposal. Simultaneously, it introduced hacker mindsets and practices into the startup ecosystem. Tech hubs today are filled with hacker entrepreneurs, launching companies on their credit cards, building them to sell for million-dollar sums or running them as experiments to learn about market behavior.
In the mainstream press, hacking is conflated with ‘cracking’, the criminal act of breaking through security systems to plant viruses and steal data. This misleading view obscures the fact that hacking has become central to the way innovation gets done. Software developers hack products in iterated sprints, enabling them to respond to shifts and changes in technology and market conditions. Designers hack product and service ideas by prototyping and testing them with users. Entrepreneurs hack business models by identifying commercial assumptions, building Minimum Viable Products (MVPs) and running tests to validate these assumptions. The CEOs of some of the world’s largest technology companies proudly flash their hacker credentials. Growth hacking, productivity hacking and life hacking have become buzzwords for the tech and design set. Hacking has become a way of life.
The hackathon is the familiar face of the new hacker innovation culture. Hackathons are 24- to 48-hour coding events devoted to solving problems and generating new products and ideas. Participants at a hackathon self-organize into teams, which compete against each other for a prize. While some participants are there to win, research shows that most participants come along to learn about new technologies and to meet like-minded people. Hackathons are social events, reflecting the informality and collegiality of hacker culture.
Hacker practices shape the leading products of the tech industry. Take out your phone, and open the Airbnb or Uber app. Whatever you think of these companies, these apps are things of beauty. The interface is simple and intuitive. Even a first-time user can find their way around the app with ease. The user experience is everything we would want it to be.
This is not an accident. These apps have been designed with the user in mind. Unlike the physical interfaces of hotels and cab companies, which evolved in an ad hoc fashion out of 20th century practices, these tools have been designed to serve user needs and to deliver real value. They have been hacked, tested and perfected with users to ensure they deliver the desired results, and continue to be hacked, tested and perfected as part of their design.
This book features hacker entrepreneurs, like Dean MacEvoy and Phil Morle, co-founders of the Australian startup Spreets, who hack new business models by turning risky assumptions into experiments. We meet open source developers, innovation leaders and cultural engineers, and learn about high-performance hacking in the Silicon Valley startup industry. We meet designers, architects and teachers who have incorporated hacking into their commercial practice. We meet business leaders, changemakers and consultants who are hacking the hierarchies of large organizations and making space for innovation culture.
While the tech industry is the natural home of hacking, companies outside of the tech sector are increasingly showing interest in hacker culture and seeking to adopt it. These companies typically find that hacker culture is at odds with the hierarchies and attitudes of traditional business life. This culture clash can kill the spirit of innovation. Corporate heads of innovation may like the idea of innovating like a startup. But when the CEO and board understand the kind of culture that is required to enable hacker entrepreneurship, their response is usually: ‘That’s not the way things get done around here’.
In a culture of quarterly reporting and strict return on investment (ROI) requirements, it can be hard to justify ad hoc experiments, which often result in failure. In a culture shaped by hierarchies, Key Performance Indicators (KPIs) and egos, few people are brave (or crazy) enough to step up with a new idea and defend it against detractors to the point that they’re given the go-ahead to develop it. It is easier to quit one’s job, sign up to a startup incubator and do it oneself. Coworking spaces are filled with corporate refugees, gleefully hacking products and business models with a view to disrupting the companies they have left.
This situation puts progressive leaders in a fix. These leaders know their companies need to become faster and more innovative to compete with the groundswell of competition coming out of the startup sector. Many of them appreciate that culture is the key factor that enables startups to innovate quickly and effectively. They may not call this hacker culture, but they know their companies cannot outperform startups unless they embrace it. They are behind the ball on innovation and running hard to catch up.
How is a traditionally-structured company, with its layers of hierarchy and permissions systems, to reinvent itself as an agile organization with a hacker culture? Rather than seriously engage these questions, many business leaders still try to dodge them. They give lip service to hacking and experimentation, choosing ‘innovation theatre’ over genuine innovation, wasting money on motivational speakers and brainstorming sessions, which only serve to convince employees that the company has no real vision for innovation. It is unclear what this strategy aims to achieve, besides making leaders look foolish.
I once sat in on a meeting with the Director of Innovation of one of Australia’s largest retailers. The Director assured the room that he loved innovation and experimentation. When asked to speak about the experiments his company had run with customers, he admitted they hadn’t started any yet. The company was in the process of rolling out a set of six-figure innovation projects and they hadn’t tested their ideas on a single customer.
There was an awkward silence around the table. Everyone knew this was breaking the rules. The retailer was taking huge, expensive risks on the basis of a hunch. This is not how smart leaders approach innovation today. It is not the hacker way.
This book is for enlightened leaders, entrepreneurs, changemakers and culture designers. It is for anyone interested in how digital culture is transforming our economies and societies and who wants to be part of it. It is written especially for people who are starting companies and are looking to build an innovation culture. Leaders of established firms have a hard road ahead of them. They need to hack their organizational operating systems — their reporting and permission systems, management cultures, and governance and accountability systems — to have any chance of enabling hacker culture. Leaders who are starting new companies have the advantage of being able to bake hacker practices into their businesses from scratch. They can bring a hacker mindset to developing the business and embed hacker culture into the organizational DNA.
Leaders should be thinking ten years ahead. They need to ask: ‘How can we build companies that are future-ready to learn, grow and thrive through change, and that will continue to learn and innovate as they grow?’ Hacker culture is the answer. This book synthesizes the work of leading business theorists and entrepreneurs including Steve Blank, Eric Ries and John Kotter, and hackers including Eric Raymond and Linus Torvalds. We reflect on the new rules of innovation in the startup industry and how they emerged out of hacking. We consider the implications of these rules for business and organizational management. We look at how future-focused leaders can build agile organizations that never stop hacking.
We tend to see innovation as a technological process. But innovation is a social process, driven by human beings. Companies that embrace hacker culture are more future-focused, innovative and responsive to change because they activate the human energy in their organizational systems — the creative spark in every human heart — and affirm it. These companies seek out passionate people who believe in what they are doing and their capacity to make a difference. Hacker leadership is all about making space for these people to create and innovate, enabling them to find new ways of driving change. Irrespective of what products or technologies they produce, these hacker teams are a force for good, since they bring out what is best in human beings — our social nature, our creative spirit and our capacity to innovate.
Andreessen, M. (2011). ‘Why Software Is Eating the World’, Wall Street Journal (online). Available at: https://www.wsj.com/articles/SB10001424053111903480904576512250915629460. Accessed: 22/05/2017.
Schmidt, E., and Rosenberg, J., with Eagle, A. (2014), How Google Works, New York: Grand Central Publishing.
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Tim Rayner is the author of Hacker Culture and the New Rules of Innovation (Routledge 2018). He teaches at UTS Business School in Sydney.