Or Why the Old Tech Business Models No Longer Work
The abridged version of my latest Substack post. You can find the full essay as The Great Unraveling on The Puzzle and its Pieces.
The tech industry is transitioning from high-margin, high-growth to low-margin, low-growth, greatly contributing to the market ‘chaos’ we’re experiencing. After decades in of optimising processes within closed ecosystems, we’ve hit the limits of this approach.
Signs include:
- Technology vendors pushing subscriptions as upgrade cycles lengthen
- Capital allocation struggles (hiring freezes disguised as AI efficiency)
- The chase for technological silver bullets (Big Data, crypto, Metaverse, LLMs)
These aren’t signs of innovation but reactions to a maturing industry where companies generate more capital than they can productively deploy.
A new era is emerging, focused on open ecosystems where competitive advantage shifts from internal optimisation to managing exceptions and relationships across ecosystem boundaries. Consider how supply chains have mastered forward logistics but struggle with returns management.
The future belongs to firms that can manage value, material, and labor flows across open ecosystems, addressing the productivity challenges that have accumulated as Phase Two reaches its natural conclusion.
The transition is manageable, but those clinging to the old reality may find their glory days behind them.
You can find the full essay as The Great Unraveling on The Puzzle and its Pieces.