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The many faces of Digital Transformation – Societal Scenarios XX

Graphic showing the historical waves of centralisation vs decentralisation. We are now approaching a decentralisation phase. Image credit: Alexander Shulgin

Decentralisation of Everything

Before the “invention” of Societies all of humanity lived a decentralised life. The invention of societies and its early manifestation with religion and military organisations led to centralisation. Someone was in charge, orders where given centrally and communicated, then monitored for execution. The crucial enabler was, and still is, “communication” and the enabling communication infrastructures. Without road and organised messengers there couldn’t be a centralised organisation.

Historical periods (different in different parts of the world) have been characterised by strong or weak centralisation, the latter usually corresponding to disorder and chaos, loss of economic growth and decreased quality of life but also propelling innovation and change. The reasons of the shift from centralisation to decentralisation were to be found in wars, epidemics and depletion of resources that resulted in a degrade of the infrastructures that made centralisation possible.

The positive effects of centralisation are the reason why centralisation took root in human history. At the same time that centralisation is making a society more efficient it is also making it more rigid, conservative, and fought by evolutionary (revolutionary) forces. One can see this interplay throughout human history.

Over time the same forces that push one way or the other have been found in the increased complexity of society and of its economic engine.

The first big “revolution” in economy was the industrial revolution where capital intensive deployment on factories had as result the centralisation of labour. From that point on, technology has been the driving  force supporting centralisation (not its reason why, that is rooted in economics on one side and on power/politics on the other).

As technology progressed alternative ways of execution have become possible, resulting in alternative cycles of centralisation and decentralisation with an overall push towards increased centralisation in these last centuries (see the graphic and notice how decentralisation in the last two centuries has decreased as result of wars).

Technology advance in these last fifty years has accelerated and at a micro level has led to alternating cycles of decentralisation vs centralisation. 

Take as an example the relatively recent evolution of the answering service architecture in telecommunications. The first answering service provided by Telcos was based on a centralised service installed in an electronic switching system. As technology became more powerful and cheaper several third party companies started to sell answering machines to the end users and the centralised service died out. After few more years the answering service became so cheap that it was provided basically for free by Telcos. At that point users dropped their decentralised answering machine and went back to the free centralised answering service.

The problem of centralisation is that it doesn’t scale (only to a point). To allow for scaling hierarchy is introduced. You see that in everything. A solitary preacher once reaches out a significant number of followers need to establish some intermediary, call them cardinals, bishop, whatever… and have to divide their followers into parish….In military it is the same. Napoleon had Marshals, Generals, Lieutenants, Sergeants…. and so do with different names all military army. Governments are no different with prime ministers, ministers, secretaries… and likewise companies with CEO, CTO, Directors, Managers…

There is no way out. To scale hierarchy is introduced. However, hierarchy comes packed with inefficiencies and it turns out that in most situations a fractal structure is the one that best balances scalability with efficiency. Living beings have a fractal structure (although living being have scaled through evolution, they are not scaling anymore in their present form). So are cities with bigger roads and many more smaller roads, big warehouses and smaller points of sale, big water pipes feeding the city splitting over many smaller pipes to reach houses.

Telecommunications infrastructures went the same way. To scale they had to introduce hierarchy and to increase efficiency they ended up with a fractal architecture (few big “things” many more smaller “things” and many many more very small “things”).

The digital transformation is changing the rules of the game. By shifting infrastructures to the cyberspace (not all of them, one still needs the big pipes but these can support a virtual software based infrastructure supporting data communications) they can scale graciously, there is no longer need for hierarchy and the whole data set can be seen as booth centralised and distributed.

This is also enabling a shift towards distribution that is unprecedented in recent history. Processing and storage  can be “outsourced” anywhere, from big data centres to edge computing to devices each at the same conceptual level.

Autonomous systems are another example of distributed control and organisation, like a flock of starlings. There is no hierarchy in the flock, no central point of command but a distributed organisation that gives rise to an emerging global behaviour.

The technology evolution enabling autonomous systems, the shift of control from atoms to bits, the virtualisation of infrastructures the conversion of bits into atoms through additive manufacturing at the point of sale/use is transforming the economy. Shared economy, gig economy are examples of this shift from centralisation to decentralisation. Individuals are empowered by this shift and inject innovation in the whole system further pushing towards decentralisation.

It is also transforming values and the way to look at knowledge, artificial intelligence and shared intelligence are also fuelling and supporting decentralisation. This is going to impact all ways of life and organisations, both in companies and in countries.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the New Initiative Committee and co-chairs the Digital Reality Initiative. He is a member of the IEEE in 2050 Ad Hoc Committee. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.