In this episode, Frode Odegard, CEO of the Post Lean Institute, discusses the trend towards decentralization in both technology and society at large.

Transcript:

Blaine Hello, everyone, and welcome to the Business at the Edge series by Pratexo, our series of short video interviews with thought leaders and practitioners in digital transformation as it relates to edge computing. My name is Blaine Mathieu and I’m the CEO of Pratexo, the Intelligent Edge Computing and Distributed Cloud Platform. And that is the only ad for Pratexo you will hear today! But note that you can reach me at any time by sending a note to blaine.mathieu@pratexo.com, and I’ll be more than happy to follow up.

Our guest today is Frode Odegard, founder and CEO of the Post Lean Institute. Frode, I will have you do a deeper introduction in just a second, but first, I should let the audience know that I first met you earlier this year and had the honor of recently moderating a session about edge computing as part of your Post Industrial Summit series that’s now wrapping up. I appreciated the opportunity to do that. So why don’t you tell us a little bit more about your background and maybe what the Post Lean Institute is all about?

Frode I’m originally from Norway, which you can tell from my difficult looking name. I was sort of born into the tech industry as a kid. My parents had an industrial control company. That was kind of my first exposure to what was edge computing, but not yet called edge computing.

In the first part of my career, I worked on programming language design and implementation from a standardization perspective and also from a research perspective. In my late 20s/early 30s, I became more interested in organizational design and product development systems in organizations. I spent a lot of time teaching organizations about product development, best practices, not just the technical stuff, but the socio-technical stuff: how do you get people to work together and collaborate and all of this.

From 2004 to 2014, roughly, I had a company called the Lean Systems Institute. Myself and a small group of equally crazy people worked on redesigning, helping people on the board and C-level redesign a fairly large organization with a lot of complexity and developed a lot of methodology around that. In 2014, that was a year I had the big epiphany that the world’s really changing in a big way, which I’m sure we’ll talk about more. And I started focusing on the impact of decentralization on organizations and sort of reinvented what I was doing. And that became the Post Lean Institute, the mission of which is to develop a new management science for this post-industrial transition that we’re in.

Blaine Why do you call it a post-industrial transition?

Frode Well, there’s been a lot of talk about what age are we in. Are we in the information age or the age of A.I. and so on. To really understand this, you have to dig back, dig into the history of all of this a little bit and what the different ages are from an anthropological perspective. If you go back to up until twelve thousand years ago, we were in what’s called the Paleolithic, which is the old Stone Age. Lithic is Greek for stone. And we humans were basically hunter gatherers. We were very decentralized. We just roamed around and did the best we could to survive, hunt for food, gather berries and plants, and so on. But there was no organized work. There was no industry in that sense except for some very small degree of food production.

Then about twelve thousand years ago, the first humans in what is now in northern Syria, southern Turkey started doing part-time agriculture, a two-thousand year experiment until about ten thousand years ago. That’s when we see the beginning of what we now call the Neolithic. And this age is called the Mesolithic.

The Neolithic is where humans first start centralizing and we settled down. We have animal husbandry, agriculture, start planning for the future. Today, we have earnings seasons. The first silos, an organization that we complain about! The first silos were grain silos and that’s where this idea comes from, organizing around a shared resource. About five thousand three hundred years ago or so roughly, we have the beginning of what is now called the Bronze Age where innovation and building materials and mining and metals allowed us to build structures on larger scale. We see the formation of the first cities and a lot of sort of the machinery that we see in governance and in organizations today, like writing, accounting, laws, lawyers.

And so we were just centralizing more. If we fast forward to the Industrial Revolution and we see sort of the first modern companies being formed, you see people moving to factory towns, they have to move to where the work is and so on. We’ve been on this trajectory as we’ve increased our technological mastery, we’ve also increased the degree of centralization. So this continued up until we got the commercial Internet and smartphones, and then it becomes possible to decouple people and assets from firms in a scalable way.

So then you get business models like Uber and Airbnb. These are basically asset marketplaces and labor marketplaces and so on. This has huge implications for how we think about business and how we think about society, and all of this has been accelerated, of course, in the pandemic, which we can talk about more. That’s kind of the big change is when we switch from increasing centralization to increasing decentralization around that time. So that’s 15 years ago or so.

Blaine And even if people aren’t being decoupled from firms, they’re certainly being decoupled from location related to those firms. So you still have Google with tens of thousands of employees, but they’re not all going into the Googleplex every day, right?

Frode Yeah. And I think the pandemic really showed us how in organizations where people were already connected and collaborating online and some of them quite large organizations, or especially in the tech industry, you saw people moving back to where they grew up, to the Midwest and so on. They could keep their jobs and continue working. So that’s also a form of decentralization where we’re physically dispersing.

Blaine So we jumped right into it right off the bat. But I’m sure the audience listening caught on to the notion that this topic of decentralization is obviously very much related to the notion of computing on the edge and edge computing because, as you’re decentralizing society, business systems, organizational structures, then you need the kind of computing infrastructure to support this decentralization. Right?

Frode You absolutely do, because if enterprises decentralize and if you want to deliver products and services where the action is at the edge in the field, you have to rethink what you’re doing with IT in organizations. The Internet’s been part of that and has been on this trajectory of centralizing, moving things into the cloud, and so on. Another problem is that the latency, even with improving bandwidth, the latency is just too long. So you’ve got to move the resources to where the action is

Blaine Before we maybe get into more of the technical side, what are some more examples of decentralization or ways that organizations, societies, businesses are being decentralized?

Frode We already talked about the location of individuals, what you’re also seeing is the threshold for starting new organizations is decreasing. We’ve had examples of companies like Instagram and WhatsApp acquired for billions of dollars with a very small number of employees. And that’s continuing. You have companies like Marathon Digital Holdings, I think that company has something like 11 employees and their market value now is about two billion dollars.

Blaine And it’s not only about the number of employees, though, it’s about increasingly these companies are so-called virtual companies where these 11 people are not in the same room all the time.

Frode They don’t have to be. One of the frequent guests on our our talk show, Dr. Julie Allbright at USC, she talks about work that’s embodied, work where you have to show up physically to do the work. You’re tending someone’s garden or you’re picking up waste and so on, and how that work had a very different response or there was a very different outcome for those people during the pandemic, as opposed to people who could just continue working digitally, except maybe they were doing it from their home office now instead of going into the office.

So there is decoupling in terms of physical location. There’s decoupling in terms of dispersion of ownership; when you have people starting more new organizations that are very small. There’s decoupling in terms of production. In the world of manufacturing, we’re starting to see manufacturing move to the edge, decentralizing where people are 3D printing spare parts.

One of the sessions that we have in the post-industrial summit series, where thank you again for moderating, was Amar Hanspal, who is the CEO and co-founder of Bright Machines. So that’s where they’ve been working on very interesting design tools and design tools have made a lot of progress.

Manufacturing is very complicated. It’s been really stuck in sort of this paradigm of incremental optimization within continuous improvement. They’re not making radical leaps. But now when you have machines that can do production in the case of Bright Machines assembly on a Just-In-Time basis where the demand is and where you can have that driven by a software description just like we have postscript for laser printers, we’re getting a similar type of technology from manufacturing that enables moving manufacturing to the edge. So, yeah, there’s an endless number of examples.

Blaine So with all these trends toward decentralization going on in business and in wider society, it seems to me like much of IT’s response has almost been the opposite, centralizing into central clouds. SaaS has been a driver of this to some degree. What do you think the IT response to decentralization has been in general and is it moving in the right direction?

Frode Well, no, I think certainly there is an awareness on a technological level that the deployment of IT resources has to become decentralized in order to provide adequate response to customers who are in the field at the edge and so on. I think the challenge in many ways is not so much a technological challenge, although there are technological challenges to make all the stuff work, which is why we have companies like Pratexo working on these things. But the biggest challenge maybe is organizational. Historically, we’ve had large organizations become more scalable because of IT. And if you think back a few decades before IT, organizations the size of Google and Amazon just wouldn’t have been possible. The coordination cost with so many people is just too high.

What’s happened very naturally is you’ve had specializations of your competency and resource allocation, so you have these organizational silos emerge. Those were there obviously before IT was invented. And so there’s an IT silo, and it’s very natural to start thinking about how you do centralized governance of IT and where you put all the experts and where you put the IT budget. It’s all going to the same place.

We have to start thinking about IT as something that’s baked into the organization as opposed to a centralized area of competency and expertise. You can compare it in a way to the emergence of the quality movement. You have a VP of Quality and there’s a quality silo and they’re doing continuous improvement, or any kind of excellence. And in many ways, whatever your version of this Department of Excellence is, they’re often the biggest impediment to actually achieving excellence because you want all this to be organically baked into the organization.

Decentralization isn’t just a matter of where’d you put the equipment and so on. It also is everyone in your organization becoming actually savvy about this sort of stuff. Can they assemble solutions as much as possible in the grassroots level to make the organization respond to what you need to do. Edge computing is a means to making that practically possible. But if it’s so difficult that only a few wizards centralized in the IT department can do this and they have to manually configure anything and everything and tweak everything for ages until you get something you can deploy, also in a very centralized, top-down driven fashion, it’s going to slow down the organization’s ability to adapt and respond and exploit, not just respond to threats, but also to respond to emerging opportunities.

And since every industry is decentralizing, everything is moving more and more to the edge, that means that there’s going to be more and more opportunities and more and more examples where your organization needs to be able to respond at the edge. As long as you have a large organization. Because, of course, the emerging future organizational landscape is networks of micro-organizations where embedded computing is just taken for default, as everything is decentralized.

Blaine Well, Frode, I I think that’s a great cliffhanger to end on because I’d like to take a break now to keep these videos short. But in the next installment of this, let’s continue this discussion. And I really want to talk about what businesses should be doing to respond to these forces, specifically how they should be supporting the inevitable decentralization that’s coming. So we’ll continue this in the next installment. In the meanwhile, if anyone would like to reach out to you, how should they?

Frode Probably the best way is just to find me on LinkedIn, so search for Frodo Odegard Post Lean Institute. I’m happy chat more with people about this. We have a number of events that are going on. We have a summit coming up in November. We have a lot of content to share. There’s a big community out there with leaders who are interested in keeping tabs on all this stuff.

Blaine Excellent. And your website is www.postlean.com. Is that correct?

Frode Correct.

Blaine You can see it on the video here. And of course, anyone can reach out to me any time, also via LinkedIn or at blaine.mathieu@pratexo.com.

Thank you. See you next time.