Stacks, Blockchain and the death of capitalism?

If you’ve been reading my blog, firstly, thank you kindly, and secondly, you may have picked up that I like to take themes from the world of IT and apply them in a wider context.

This is because I find it interesting to take stuff from one domain, abstract it and apply it to another just to see if any insights pop out.

Given IT is my specialist subject I find it’s a good place to start, and IT has previous form for originating useful stuff that ends up being applied more widely across business; take PRINCE and Agile, for example.

Digitalization has created a new dynamic between IT and business, driving a world where IT and business are increasingly inseparable, and where automation, AI, the Internet of Things and social media are creating a  society with IT at its heart.

Watching Blockchain climb the buzzword charts got me thinking about its potential to transform business and society. More specifically, it got me thinking about stacks.

Before you read on, I should flag that some of the following is a tad more controversial than my previous posts, and may upset, in no particular order, Service Oriented Architecture (SOA) platform providers, supermarkets, banks and supporters of Donald Trump (I guess the last is a given – this isn’t Fox News).

Rest assured that it’s just my partly informed ramblings, and I shall be delighted if someone takes the time to challenge it.

In IT, we’ve always loved a stack.

I realised just how much IT loves a stack when I moved from developing a service oriented architecture (SOA) for a large corporate to running the same company’s data networks team.

Having spent months getting to grips with the SOA service stack, from base resources up to user interfaces, the first thing I was presented with as a networks newbie was the 7 layer Network OSI model; ‘a stack by any other name…..’.

A stack is a way of visualising a complex service in layers. This helps you to understand more clearly how the service works, and to manage the layers and their interactions more effectively.

At the bottom of the stack you will usually find the basic resources or most fundamental component; for example, data in an IT services stack or the physical network in the OSI model.

At the top you generally find the elements which the customer interacts with, the user services and applications.

If you drew a stack for Uber, the roads, cars and fuel would be at the bottom of the stack with the Uber app at the top.

When I started out in programming in the 80s, the layers of the software stack tended to be tightly integrated. We designed and built databases and applications in one big lump, and you couldn’t rock up with your neat bit of C coding and expect it to work with our IMS DB/DC Cobol or PL/1 without putting in a load of complicated plumbing.

SOA and related innovations broke away from this by separating the layers of the stack, moving away from one big lump to lots of loosely coupled entities interacting via a management or intermediation layer.

This management layer was where the big bucks were for SOA developers. If you have lots of separate, loosely coupled services and components floating around, you need an intermediation layer to orchestrate them and get them to deliver the end service, particularly where some of them are older and not designed to play nicely outside their immediate circle.

Software houses started to make good money developing and selling intermediation layer platforms, and a whole new IT architecture came into play.

Fast forward a few years, and enter Blockchain.

If you’ve read any of the screeds of material, you’ll know that Blockchain and disintermediation go together like ham and eggs, or maybe these days quinoa and tofu.

Disintermediation sounds like the opposite of intermediation, so does this make Blockchain the nemesis of SOA?

I think the answer is a resounding ‘well, kind of’.

As far as I can tell, disintermediation in a Blockchain context is mainly talking about removing the need for a third party (e.g a bank) to intermediate a transaction to assure trust. It’s not specifically about what goes on in the software stack.

However, I think that in Blockchain and related technologies, and in areas like application containerisation, we are seeing a natural evolution away from intermediation in IT.

SOA got us away from the old ‘one big lump’ system stack at the cost of introducing an intermediation layer.

Surely the end game has to be a world of services and components which have the necessary intermediation built in, and that’s where Blockchain and its ilk are leading us.

However, I don’t sense SOA vendors quaking in their boots, and I don’t believe they should.

We have a long history in IT of proclaiming new worlds while the old world quietly goes about its business in the background, simply because it’s so costly and dangerous to rip out the old and replace it with the new.

Blockchain might be the beginning of the end for SOA, but if it is it’s going to be a long end.

Now let’s take that IT use case and drag it kicking and screaming into the wider world.

As with the Uber example I mentioned earlier, I reckon you can think of pretty much any business or industry as a stack.

The bottom layers consist of the base infrastructure, raw materials, and the industrial processes which create a deliverable product or service, while the upper layers are about delivering that service or product in a commercial environment; marketing, selling, distribution and so on.

As with IT, the layers of the stack can be more or less tightly integrated, and often have some form of intermediation layer to orchestrate delivery of the base level products and services.

For example, the motor and oil industries have traditionally been fairly tightly integrated from a customer perspective, with the same company controlling everything from raw material acquisition through production to distribution and servicing through dedicated dealerships.

Elsewhere, a lot of retail works at the intermediation layer and higher; retail banks, department stores, supermarkets and many e-commerce sites are about orchestrating the delivery of a range of base products and services to the end customer.

Traditional capitalism (and indeed socialism) grew out of the Industrial Revolution, which was mainly focused on the lower layers of the stack.

The model is to control the lower layers of the stack – the raw materials and means of production – and integrate them tightly with the upper layers, the orchestration, distribution, marketing and selling of the product or service.

Over the past few years we’ve seen growing disruption to this traditional model, particularly in the service and intermediation layers.

Technology is enabling customers to get at the products and business services through a much lighter, more dynamic service layer, and Blockchain, application containerisation and the like are starting to thin out the intermediation layer even further.

Even at the bottom layers of the stack, technological advances are starting to have an impact. Apart from automating production processes, new technologies are starting to replace physical infrastructures with lighter, virtual alternatives with less environmental impact.

Wireless IT networks mean that the bottom layer of the old OSI Network Model, the physical network, can be microwaves, lasers or LEDs rather than fibre optic cables.

This wireless capability is essential for the Internet of Things, Smart Cities and the like: I don’t believe that fibre optic cabling will be a museum piece anytime soon, but its use where there’s a practicable wireless alternative will diminish.

Domestic solar panels are becoming commonplace, and it’s reasonable to expect there to be a similar trend towards low-consumption eco-housing.

The massive public reaction to the global plastic waste crisis could be the first of many similar mainstream environmental movements.

I believe people will be looking for the next big environmental thing once the single-use plastic issue is tackled (or gets old).

All these are examples of how the traditional business stack is under pressure at all levels, and along with the pressure on the upper levels from digitalization and disintermediation, this is starting to raise challenges for our fundamental economic models.

Everything from smart contracts to generating your own power to charge your car threatens the old stack in some way.

If I’m even 50% self-sufficient in the utilities I use, and if I can acquire even 50% of the things I need without intermediaries like banks, supermarkets or stores, it potentially puts a big hole in a lot of business models.

Extracting raw materials, turning them into products and delivering them to customers through heavyweight intermediation and service layers takes a lot of capital investment. It’s also where big business has traditionally made a lot of its profit.

New models are taking us towards a world where we use (and, importantly reuse) raw materials efficiently, and where there is the potential to create a much thinner layer of intermediation between producer and consumer.

We’re already seeing small examples where this is facilitating and driving a more ethical, transparent approach to doing business.

Starbucks have recently announced they are piloting a Blockchain driven approach to make their supply chain more transparent and empower their coffee producers.

Add to this a highly informed customer base who are increasingly demanding high ethical standards in business and the power of social media to hold big businesses’ feet to the fire on standards, and we have the potential to evolve a more fair and equable version of the capitalist model.

Of course, there are vested interests in sustaining the old models, in continuing to deplete our resources, keeping the layers of the stack nice and thick and heavy so that they can keep taking their cut at every level, and exploiting social media’s tendency to value ‘virality over veracity’ to spread misinformation, as Jonathan Freedman of the Guardian newspaper so eloquently put it recently.

But I believe the new, lighter stack approach is gaining a foothold.

It won’t replace the old stack completely if it follows the IT model, where innovations like Service Oriented Architecture tend to be additive rather than replacing what’s already there.

Many organisations still used tightly integrated application stacks from the 80s or earlier, and indeed, one of the great advantages of SOA is that it accounts for this in its architecture.

So Blockchain, its associated technologies and the business model they enable may not kill off traditional capitalism overnight, but I believe it and other disruptors will continue to nibble at its toes and, you never know, may reach its heart one day.

I hope you’ve found this piece at least thought-provoking. Whether you agree or disagree with it, I’d love to hear your thoughts.

You can find more on my website  and I’m always up for a bit of consulting, writing, presenting or anything interesting really, always on a ‘pay as you want’ basis, or free if it’s a good cause.

 

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