Decode.

Topic:

Digital means fully distributed not just partially decentralised

Submission:

My area of specialism is disruption dynamics and with more than 20 years’ experience in various form of innovation I have come the conclusion that disruption happens.

Disruption is driven by one of the primary forces in physics – entropy. As a species, we build things that we need and for a while they work well, but over time they start to breakdown. An unconscious alliance between the emerging victors and the vanquished incumbents sees an all too familiar narrative play out. Those who ‘have’ eventually get greedy or stale while those who ‘have not’ get more desperate or more optimistic as the cracks appear.

The incumbent ignores the threat at first but eventually viciously attacks the attacker. Resistance is futile however, as the insurgent dynamic is one of ‘monkeys with typewriters’. – given enough of them and you will eventually get the complete works of Wiliam Shakespeare. It doesn’t matter how many attackers you kill off the smell of decay is too tempting. It promises the riches of the incumbent’s past to the winner of the newcomer lottery. Every wave learns from the last, so like superbugs defeating antibiotics eventually society will find that it takes less energy (money) to build a new house that to keep repairing the old one.

I came as a partial novice to the Energy Sector in 2014 with a 14-month stint building bridges between industry and the International Energy Research Centre (IERC) based in the Tyndall Institute in Cork. I say partial novice because my father was the local electrician in this beautiful host village of Cong. I spent all my free time growing up working on either: maintenance or repairs in the local Sawmill (now long gone), maintenance and installation in the local Quarry (still going strong) or rewiring homes where the original rubber-insulated wire and brown Bakelite fittings needed replacing. Many of the houses in North Connemara that I rewired with my dad as a teenager were originally wired by him as an apprentice during the later stages of rural electrification. Unfortunately, my father passed away in 2013 so I never got to discuss my work in the energy sector with him, but I suspect he would not have been surprised by the inevitable progression of technology. I also suspect that for all its complexity this next wave will only have a fraction of the social impact of the wave he had the foresight to catch in the 1959.

I present this biographical note to highlight an empathy with the homeowner in the face technological change. Market forces will decide the outcome of the disruption facing the energy sector, like every sector before and while they can be artificially slowed down by monopolies and cartels the prize is too great for the tide to be stemmed for long. People will make local decision based on their own needs and will not be swayed by rational arguments about grid stability or future demand. Brexit and the spectre of Donald Trump are testament to the fact that when society is not happy with the status quo and in the absence of a complete alternative, they will vote for half-baked ideas. Disruption relies on this.

When I arrived in the energy sector in 2014 I found an industry still struggling with the low carbon disruption and its implications. It seemed it was so distracted by wind that it was ignoring the bigger threat posed by the tsunami of digital disruption that was hitting all sectors. Digital is not about decentralisation, that’s its least threatening first gambit, digital is about complete distribution of all decision-making.

The following is a thought experiment rather than a prediction, but it illustrates the problem of not thinking the dynamic through fully before acting. Yes, decarbonisation is the primary challenge in the supply side of the energy equation but digital disruption is an even bigger threat to the demand side. To homeowners, smart metering is just digitally enhanced centralised control. It is not the fundamental step towards decentralisation that evolution is poised to reward. Disruption dynamics suggests that that fundamental step in the ‘right direction’ is more likely to l come from outside the sector. The non-travel interloper Expedia was founded as a division of Microsoft in October 1996 killed off the travel agents, and its non-energy equivalent is exactly the type of entity that could steal the customer from utilities.

In manufacturing, too, digital means fully distributed not decentralised. Imagine a world where sensors were tracking each task, much less each machine, line or plant. Such granularity will create opportunities for efficiencies not currently possible. The Internet of Things, the Cloud and Big Data are new highways. Imagine if each workstation, tool and task had a sensor that spoke directly to the cloud without the need for any central hub. Imagine the addition of the 5G communication technology that is working towards a millisecond response time control loop reliable enough for autonomous vehicles. Imagine more and more ‘lights out’ facilities optimising production and energy consumption while been managed remotely from headquarters with the help of artificial intelligence.

Again, this is just a thought experiment and not a prediction, it is intended to highlight the fact that there is no ultimate intermediate position. Considering the inherent stability of the distributed internet compared to the centralised electricity grid, this ultimate evolution is so superior to the analogue pyramid that its realisation is completely inevitable.

History tells us the transition cannot be centrally controlled, it may be managed in parts but for most players it just needs to be navigated. The classic disruption prognosis here is either a credible alternative emerges just in time to prevent system collapse or the system collapses. There is no progressive scenario where the old ways are reinstated and life returns to the old normal.

About Damian Costello:

Damian Costello is a Digital Technology futurist and MedTech Innovation expert.

As a futurist in such industries as Medical Devices, Pharmaceuticals, Consumer Electronics, Telecoms, Financial Services, and Energy. Damian uses deep expertise in disruption dynamics to create far reaching scenarios that inform and future-proof the strategy of businesses large and small.

As an innovation expert, Damian works with Medical Device and Pharmaceutical companies to identify opportunities, develop new products, services and collaborations, and to find innovative solutions to the technology and organisational problems impeding success.

A natural storyteller and generous teacher, Damian inspires innovators and entrepreneurs to, first believe in, and then to achieve the previously impossible.