Don Tapscott on blockchain, the next tech revolution
One of the world’s most influential management thinkers on how the modern firm is changing
You have said that the modern corporation is in the midst of a perfect storm. Please explain.
Four drivers are transforming the modern firm as we know it. The first is a new paradigm in technology that includes the social web, Big Data, the internet of things, cloud computing, robotics, machine learning and mobility. The next stage of the internet will be based on the underlying technology of Bitcoin. The blockchain is a globally distributed database of potentially all structured information, and it holds profound implications for the architecture of the corporation and how we create goods and services.
The second change is demographic – but it’s not about the ageing population. It’s about the young generation of digital natives who have now entered the workforce, bringing with them a new culture of innovation, speed, customisation, freedom, integrity and collaboration. There is no more powerful force out there to change most of what we know about talent and talent management.
The third driver is economic, and it has to do with the continuing struggles of the global economy as the Industrial Age comes to an end. For the first time in modern history, the 51st percentile of individuals and families is not getting ahead. Throughout decades of economic change, wars, even depressions, this group has always managed to progress; but that is not happening today. There are big issues on the table about how to compete through innovation, and create prosperity for everyone.
The fourth driver is the arrival of new business models. Digital conglomerates such as Alphabet, Amazon and Apple are rapidly evolving into adjacent and not-so-adjacent industries; then there are “data frackers” like Facebook and Dataminr that do “horizontal mining” for data. We’re seeing the first wave of service aggregators like Uber and Airbnb. These [new models] are shaking the windows and rattling the doors of traditional business; and through blockchain technology, they are about to be disrupted as well. When you put all of this together, “perfect storm” is probably an understatement for what business leaders are facing.
You believe that the problems the world faces can be addressed effectively, but we are using the wrong model.
There is no doubt that the world is a very troubled place: it is too unsustainable, unequal, conflicted and unjust. Poverty in the developed world has gone from $US1 ($1.40) a day to $US2 a day. Yet half of the world’s population is still living on under $US10 a day. With problems like conflict, it’s hard to say whether it’s getting better, and some problems are definitely getting worse. Climate change, for instance, has begun to take some significant tolls.
For the last few decades, the way we have approached these problems is through nation states, working together in global institutions. This approach began seriously at Bretton Woods in 1944, towards the end of World War II, when we created the World
Bank and the International Monetary Fund. A year later, a broader group created the United Nations and then UNESCO, the
GATT, the World Trade Organisation, the G20 and the G8. The trouble is, collaboration among nation states, while still necessary, is now insufficient. Since Bretton Woods, there have been some profound changes: the rise of the corporation; the emergence of a civil society, which didn’t really exist in 1944; and the internet, which dramatically drops transaction and collaboration costs on a global basis. These changes have enabled a new model to emerge: multi-stakeholder networks – or, as my colleagues and I call them, global solutions networks or GSNs.
In some cases, GSNs can govern resources on behalf of the planet. The internet is governed by a rag-tag ecosystem of global solution networks rather than by nation states. If we can govern the internet in this way, what else can we govern? The climate? Perhaps.
You have identified 10 distinct types of GSN. Which type is having the most impact thus far?
The most interesting one to me is the governance network, which involves companies, governments at all levels, civil society organisations, NGOs, foundations, academics and other individuals, co-operating to solve global problems. These combine a series of other GSNs like knowledge networks, advocacy networks, platforms, policy networks, diasporas, watchdog networks, networked institutions and standards networks.
Old-growth forests are now being governed through such a multi-stakeholder network, and the problem of conflict diamonds is also being managed in this way. These networks are attacking problems like child pornography and child predators on the internet – issues that cannot be addressed within the context of a nation state. By far the most exciting thing to me is that we are seeing the emergence of a governance network that could actually govern the world’s climate.
Please describe some of the changes blockchain will bring.
What if there were a next generation of the internet, where we could conduct peer-to-peer transactions – not just to exchange information, but to exchange value and money? We can’t do that today without a powerful intermediary, like a credit card company or PayPal. If we could create commerce without powerful intermediaries, there would be unlimited potential for creating a more prosperous and just world.
Today, 70 per cent of people who own a small piece of land have tenuous rights to that land. Over time, all land registry could be placed on the blockchain, this distributed database of all structured information that is incorruptible and un-hackable. That way, no dictator could say, “You don’t own this land; my friend does”.
What if half a trillion dollars in remittance from the world’s diasporas didn’t go into transaction fees, but was actually sent to the people who needed the money? What if we could create companies with tens of millions of shareholders by holding
Kickstarter- like campaigns on the blockchain? What if musicians, rather than receiving crumbs for the value they create, got fed first by posting their music with associated rights and contracts on the blockchain? Those are just a few of dozens of examples.
Given all of the above, are you optimistic about the future?
I am, because of the coming blockchain revolution. As indicated, the first era of the digital age has not fully delivered on its promise. We now have another opportunity to rewrite the economic order of things and dramatically improve the state of the world.
Don Tapscott is the Inaugural Fellow at the Martin Prosperity Institute at the Rotman School of Management, a senior adviser to the World Economic Forum, and the founder and executive chairman of the Global Solution Networks Program. Reprinted, with permission, from Rotman Management, the magazine of the University of Toronto’s Rotman School of Management. www.rotmanmagazine.ca
Tapscott at Rotman School of Management