Don Tap­scott on blockchain, the next tech rev­o­lu­tion

One of the world’s most in­flu­en­tial man­age­ment thinkers on how the mod­ern firm is chang­ing

The Australian - The Deal - - Front Page -

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

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