Mess and reliability: five inter-related propositions

Proposition 1: The more services demanded from a single resource, the greater the demand for reliability in each service and the messier it is to ensure that reliability (reliability defined as that safe and continuous provision of a vital service).

The more we rely on firefighters, the more services we demand from them: First, crews responded to fires; then they had to respond to other emergency calls. Power lines are expected to carry not just electricity, but now broadband internet services. Banks provided accounts and loans; then we required they source other financial instruments. During such service expansions, reliability mandates and service provision suffer growing pains and things get messier.

Proposition 2: The messier it is to provide multiple reliable services from a single resource, the more the services are provided reliably, if at all, in real time only, when the performance standards are clearest.

Police now respond immediately only to 911 calls for activity in progress. The bank shifts from waiting lines in front of few tellers, to many outside ATMs, each accenting the automatic. Performance criteria are clearer in real time: Did the police come at once, did you get your emergency care, and is the cash really there?

Proposition 3: The more the services are reliably provided in real time, the more likely the demand for new services from that single resource and the messier it will be in ensuring any of the services is reliably provided, right now.

Back at that ATM: Before, it provided cash and deposit services; then it became a one-stop for other transactions, ranging from recharging your cellphone, paying your bills, buying stamps, to booking railway tickets. Conditions get even messier when the multi-purpose ATM (and others nearby) are out of order, and none of the expanded services are available now. It’s the same with your multipurpose cell phone when reception is unavailable.

Proposition 4: The more the services and the messier the real-time management, the greater the pressure to decouple one or more services from the resource and the more likely a new or more differentiated resource will be found/created to provide the decoupled service reliably.

Cellphones are no longer just mobile versions of fixed-line telephones, but altogether different instruments with added services. Banks long ago ceased to source financial services sector on their own; all manner of novel financial transactions are provided outside the official banking sector.

Proposition 5: The more reliably the service is provided from the new resource, the greater the pressure to demand more services from that resource. . . and so the dynamic continues.

As illustrated in the lead-up to the 2008 financial mess, not only did the volume of credit derivatives increase, but so too did novel derivatives for other purposes. Credit default swaps came to measure even the creditworthiness of entire governments.

–Should it need saying, it is not obvious what new or more differentiated resources, if any, will emerge nor is there anything inevitable about the propositional dynamic. What can be said is that you’re in it for life, when it comes to managing mess and reliability.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s