The distribution of technological capability has provided smaller and less concentrated entities with the ability to influence their own destinies and those of far larger enterprises. Money and power, the two traditional goals of human endeavor, are no less important, but far harder to define.
We talk about data and disruption as if the outcomes they engender will only affect others; as if we think they can be managed. By us, of course (whoever 'us' may be). But we are in the process of discovering that surprises are as unevenly distributed as assets. JL
Greg Satell comments in Digital Tonto:
Digital technology is creating a titanic shift toward distributed models. Rather than assets managed by centralized institutions, we have ecosystems managed by platforms. Once money is pure information, it becomes programmable, which means it can become a product unto itself.
In his novel The Castle, Franz Kafka tells the story of a man named “K” who is summoned by mysterious authorities for unknown reasons. He finds himself at the mercy of their bureaucracy and endless paperwork, which is carried out for a purpose that nobody can fathom yet everyone seems to accept.
Most people can relate to the story. 20th century era bureaucracies often seem as if they were designed by Kafka himself. From governments to corporations to international institutions like the IMF, we are often at the mercy of a monolithic central authority we don’t really understand, but must submit to.
Yet although we’ve mostly come to accept the realities of central authority, digital technology is creating a titanic shift toward distributed models. Rather than assets managed by centralized institutions, we have ecosystems managed by platforms. While most welcome this change, it does create new challenges. We’re all going to have to learn to adapt.
Distributed Identity
When I was about six or seven, I opened my first bank account. My friend and I had ridden our bikes to a nearby town and I noticed that I had some extra money. So I went into a savings bank, filled out some documents, made a deposit and received my bank book. Boy was I proud! I felt like I was really moving up in the world.
A few years later, I ran into a little problem. As I grew older, my signature evolved and the only one the bank had on file was the one I put on the card during my original visit. The lady at the bank was kind and understanding, so we got the issue resolved without too much trouble, but it was still a bit of a hassle.
Today, much has changed. We increasingly use digital signatures, which don’t reside in any central place like a bank filing cabinet. In fact, they don’t really sit anywhere at all. They are sophisticated algorithms that use large prime numbers to establish highly secure verifications of identity.
If you think about it, that’s fundamental shift. In the old model, the key to my identity lay in a filing cabinet somewhere. Today, I have a small piece of my identity everywhere, waiting for me to bring the other piece so that a computer can complete a complex equation.By merging the private key with the public one, the puzzle of my identity is resolved.
As it turns out, this little oddity is showing up in more places than you would imagine.
The Future Of Money
The bank I went to when I was a kid was a large, stately building, which made it feel like a secure, trustworthy place. It needed to be. Bank machines and credit cards were still fairly rare back then and so people routinely went to banks to conduct serious business. Yet as technology improved, so did banks.
By the time I entered college, going to the bank became a rare event. If I needed money, I just went to a bank machine, which were not only at banks, but just about everywhere—at the campus center, convenience stores, shopping malls and so on. I usually didn’t even need money though, I just used a credit card.
Today, the financial world is going through a similar upheaval. Rather than using institutions to facilitate transactions, money itself is becoming a system of algorithms. Much like digital signatures, these new cryptographic currencies (Bitcoin is the most popular, but far from the only one), reside not in one place, but everywhere.
At first, it seems like this new digital money is just another version of a digital signature, but it’s much more than that. Once money is pure information, it becomes programmable, which means it can become a product unto itself. In the future, if I want to set up an escrow account or a trust, I won’t have to go to any central place. I’ll be able to do it on my smartphone.
The Distributed Mind
Throughout history, scholarship was focused on a small number of knowledge centers. In the ancient world, the Library of Alexandria served as the epicenter of learning. Later, a number of places served as hubs, such as the Königsberg of Kant and Hilbert, the Vienna of Freud, Brentano and Wittgenstein and the Bloomsbury Group centered around Cambridge.
Yet today, there is far less need to be in a place physically. I remember when I first moved overseas in the late 90’s. Besides email and expensive telephone calls, there was virtually no way for me to keep in touch with family and friends back home. Yet within a decade, my mother was videoconferencing with her newborn granddaughter over Skype and I was keeping up with the lives of people I knew back home on Facebook.
Similar technologies are being deployed in more substantial pursuits. Services like GoToMeeting and Zoom allow executives to not only videoconference, but to share documents. We can collaborate using Google Docs or Microsoft OneDrive. People from all over the world can take courses at top universities on sites like Coursera.
The prestigious journal Nature recently noted that the average scientific paper has four times as many authors as it did in the 1950’s. It’s also become common for co-authors to work at far-flung institutions. We’ve largely moved to a distributed model for the advancement of knowledge.
The Shift To A Distributed Mental Model
Bill Joy, a cofounder of Sun Microsystems, is partly famous for what has become known as Joy’s Law: No matter who you are, most of the smartest people work for someone else. Originally, it was meant as a retort to Bill Gates’s assertion that Microsoft was an “IQ monopolist,” but in a distributed economy, it’s taken on a greater significance—most things lie somewhere else.
Today, rather than resources being centralized in institutional bureaucracies, we increasingly access ecosystems through platforms. Consider the case of Apple which, for all its massive market clout, has surprisingly little control over the capabilities of the iPhone. In large part, they are determined by people who develop apps for its App Store.
That’s led to what I call the Tony Soprano problem. Much like the popular mob boss in the hit series, even seemingly omnipotent institutions like Apple are far less able to coerce people to do what they want. If Apple, for example, became too heavy handed with its App Store, it would lose popularity and its power would diminish.If Kafka was writing today, we can easily imagine the bureaucrats at the Castle perplexed, brainstorming over how to attract “K” to their cause. The existential crisis of the digital age is not one of personal identity, but institutional purpose.
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