I was going to call this article 'Removing the Centre' but in a sense this sums up Blockchain in a single phrase.
My last article asked if Blockchain was a solution looking for a real business problem to solve, and like many new and emerging technologies it takes a while for the breakthrough to happen, where the critical mass of developers, designers, entrepreneurs start to see the real potential and bring to market real answers to real business problems…
But what is it? Is it a Block and a Chain?
I draw parallels from the arrival of the Internet in 93/94 and the age of distributed computing late 80’s that fought against the tide of the day, centralized mainframe computing. But then neither of these comes anywhere close to the magnitude of Blockchain, nor did these have the potential to destroy careers, wipe out businesses, and collapse industry sectors.
For any CEO, Chairman to ignore or be ignorant of Blockchain is tantamount to corporate suicide and shortchanging shareholders… And you can quote me on this.
Blockchain will erode and destroy corporate value unless it is dealt with, unless you have a plan to defend or attack. It will undo everything you have worked hard for, it will destroy your career by leaving you and your organisation very exposed or sitting in a pile of rubble with no customers…
You may think Digital is disruptive, and it is. You may have a plan and be trying to transform your operating model to accommodate a range of digital impacts. But digital impact is manageable and doesn’t require a complete re-think of everything. Blockchain is structural, it is fundamental and you cannot manage it because everything you thought you knew about business changes.
There is no business school module that will teach you how to handle Blockchain, albeit it applies a very simple principle to deliver one version of the truth; a block of information, a transaction embedded into a chain of other blocks where the previous and the next are linked and validated.
Traditional management and technology consulting want you. Few people get and understand Blockchain let alone are able to help CEOs and organisations. I am fortunate to know many of the Blockchain pioneers and work with others that are about to profoundly disrupt entire markets.
Blockchain is a disturber technology (its underlying technology based on cryptography that sits above the Internet Protocol network layer). CEO’s need to understand what is it, why it is important, and how to respond.
All organisations need a strategy for Digital but more fundamentally need an effective strategic plan to handle Blockchain. A plan that considers the supporting acts; AI and Machine Learning, BOTs, and Cognitive computing will accelerate the pace of change and then there is Ethereum.
Someone asked me what Ethereum was… My response: 'Imagine giving the Internet a dose of Viagra and increasing the dose each day'… The Blockchain Age is here!
I have been waiting for events to come along that redefine business, the very nature of work itself and something that not only helps you to compete but delivers what I call Game Over before anyone knows. This is Blockchain’s potential.
I have sight of several Blockchain innovations and industry-specific solutions that deliver Game Over for the incumbent players. Some of these deliver a 90% cost advantage over the most competitive of today’s businesses. Why? Because they have no central friction or variation of the corporate truth and completely disintermediate markets in a single move.
Erosion of Trust
It starts with the decentralization of everything, a single version of the truth (Golden Source) that removes the need for constant validation of everything. In the past few decades, there has been an erosion fundamental trust in commerce and especially any transactions involving government and/or banks.
Customers are looking for their version of the truth. This has manifested in ‘negative commerce’ where the focus is placing the burden of proof and risk on individuals and the 'small people', whose rights have been diluted and whose identity has been tampered with, as well as a forced reliance on systems that control your credit ratings, delay payments and play with your private information over which control has been lost, leaving people feeling powerless and exposed. With Blockchain, the underlying governance, risk and compliance essentially change, returning control and trust.
Blockchain is a diversion of power on all sides as it levels the playing field and makes the rules of engagement equal. However, in other areas it gives one a 1000% advantage. Leaving the broader social impact to one side, Blockchain along with its tech friends (AI and BOTs) will remove 90% of the non-value added roles in any organisation and 50% of the value added roles that will require only partial human intervention.
And there are Autonomous Agents that moves us one step closer to Distributed Autonomous Enterprises (DOA) that will start with hybrid models that control functions and run Business Units and discrete operations. Time and cycle time will be independent of human interventions. The disruptions I see in a new Blockchain world are:
- excess capacity will be sold creating new asset classes, traded by individuals who may live off grid
- all types of value can be stored and controlled by their owners (rights)
- new levels of cooperation and collaboration will increase the volume of individual commerce (i-Commerce)
- the use of physical cash will reduce by 90% with digital tokens taking over via micro-payment social media structures and the exchange of value itself
- people will be able to trade and compete on equal terms with corporations, or without them (banking without banks)
- the nature of leadership and decision making will change and managers will be accountable in new ways
- rewards, pricing value and payments will be immediate, transparent and secure, with consensus
- the concept of GDP will disappear as a means of judging value (output) and the need for double entry and audit will diminish
- new forms of banking (not banks) will enable ordinary people to hold and trade value not just cash and assets
- the costs we associate with many of the things we consume should more than half as unnecessary bureaucracy and intermediaries are removed
- people will create versions of themselves (avatars, social profiles) and will control/manage their online image, content and data, requiring a fundamental change in the law and intellectual property rights
- operating models will not be operating models but a means of sharing and transporting value as defined by smart contracts, living services and IoT insight
- standard cost accounting already struggling in a digital world will be replaced as value measurement on the back of entirely new into new asset classes
- open free trade will replace WTO using smart contracts helping to close the inequality gap
- augmented reality using VR and holographic systems will feed off sensory layers that will sit on the Ledger of Things connecting the world
- Governments will try to regulate Blockchain and will fail
- Banks and Financial Services organisations will have their own version of the truth ‘permissioned’ Blockchain’s which is a distorted view of the truth and lies
- CEOs and C-suite management teams will be fired more frequently for non-performance where all decisions and corporate conversations will be testament to their tenure
© Digital BOOM 2016