Mess and reliability: five propositions, one conclusion

Proposition 1: The more services demanded from a single resource, the greater the demand for reliability in each service but 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 broadband internet services. Banks provided accounts and loans; then we required they source other financial instruments. During 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, as performance standards are clearest then.

Police now respond immediately only to 911 calls for activity in progress. The bank shifts from waiting lines in front of few tellers to smaller lines at many outside ATMs. Performance criteria are more evident in real time: Is the cash right at hand, did the police come at once, did you get your emergency care now?

Proposition 3: More services being reliably provided in real time, however, increases the likelihood that new services will be demanded from that single resource, thereby rendering it more difficult to ensure 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, through paying your bills and buying stamps, to booking rail 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 cellphone 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 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 mechanisms 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 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.

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