Distrust 2.0

Maybe I’m projecting, but there seem to be some parallels between the current liquidity crisis and Web 2.0. The financial engineering associated with bundling millions of mortgages and securitizing them seems similar in some ways to the Web 2.0 vision of a composable CONOPs and an enterprise IT capability that’s 90% in the cloud. Here’s a few points of commonality:

• In both cases, entities (loans, services, content) are being engineered for interoperability. Although the details differ, the basic purpose is to allow something heterogeneous (specific to a context) to be made homogeneous so that it can be combined/recombined to create new value
• There is a dramatic reduction in transparency in both areas. This is seen in part by the discussions of governance in both areas. For mortgages, the talk is about increasing governance (and reducing some existing governance that incentivized risk taking). For Web 2.0, the talk is about the governance needed to provide predictability (e.g., SLA’s), and to enable the required agility and adaptability.
• Both areas highlight an issue that often overlooked: trust. The fundamental importance of this issue cannot be overemphasized. In a stovepiped world, mortgages and IT depend on the stovepipe to ensure trust. Superficially, stovepipes enforce trust via the fortifications surrounding specific stovepipe entry/exit points. At a more fundamental level, stovepipes are trustworthy because they’re transparent and static. Composability in a cloud dramatically reduces transparency, and in doing so, dramatically increases the need for more robust trust mechanisms.
  
  The exploding alphabet soup of security related services, protocols, and frameworks in Web 2.0 indicates that the need for formal management of trust is clearly understood. However, I’m not sure I’m seeing a clear appreciation for the fact that formal mechanisms may severely constrain the very adaptability and agility that Web 2.0 promises. Informal mechanisms (e.g., emergent trust networks) are being explored, but I suspect that both the IT and financial industries will eventually have to come to grips with the tension between increasing mashability and maintaining a desired level of trust.
• Distrust is discontinuous; trust is continuous. Trust is built slowly and incrementally over time. Distrust often emerges instantaneously when a single incident reveals that fundamental predictions about how someone or something will act are dangerously mistaken. We’ve seen the fallout in the credit markets; a similar fallout in Web 2.0 would seem inevitable.

Finally, since this is not a sociological or anthropological blog, I’ll just mention that the type of cultural ecosystem your enterprise inhabits (i.e., low-trust vs. high-trust) may be the most fundamental driver of all.