Cautions
The weak get weaker
Blockchains will not hide blemishes—they will expose them. This can be frightening for internal divisions that know there are problems in the system and don’t feel equipped to address them. While there may be clear business benefit in finding and addressing problems, you may find well-fortified points of resistance. As the business landscape turns toward a culture of transparency, those companies that can’t keep up could be further weakened. If you haven’t yet felt any urgency to understand where competitors are making progress in transparency and focus on getting your own house in order, you should now. Face the problems you already know you have (or have a hunch you have), and get practice with working through them.
You pick the wrong thing
Transparency won’t always translate into improved customer trust—customers are already overloaded with information, and often not invested in learning more. Pick carefully what to focus on and, through the development of business cases and pilots, validate that it will drive enough value (in all interpretations of the word) for the business to garner long-term support from executives and investors alike.
Blockchains are overkill
Some transparency can be achieved with a distributed database that is not driven by blockchain technology. In some cases, these databases could be managed by a trusted third party that could enforce trust more effectively and cost-efficiently than blockchains can achieve, at least until the technology significantly matures. Be critical in evaluating whether blockchains are truly the right solution to increase transparency for your specific use case. Make sure you start first by honing your understanding of the problem you need to solve, and evaluate only from that vantage point whether blockchains are the right answer.
Considerations
Get your priorities down now
Take this knowledge of what’s coming and get deep with your customers to identify what transparency they care about most and how you stack up. Break down the data by segment to understand differences. You may be able to develop a stronger business case for investment in the areas that get the focus of your most profitable or highest-volume customers. What kind of transparency do they care about most? What makes them most skeptical? How do you fare compared to others, and what is driving any deficits in your credibility?
Practice a culture of openness
Take a look at what kind of transparency customers seek against what you could start to provide now, even without the support of blockchains. What could you start sharing? How can you start to authentically educate your market on your values, and how they are aligned to your actions and the metrics you can access now? How do your customers react to your attempts, and how can you involve your customers in improving your operations or your processes?
Identify a pilot with impact
From Coca-Cola to Starbucks to Walmart, top brands are far down the route of piloting blockchain-driven transparency. Yet in this early stage, pilots that are poorly thought through can easily look disingenuous to customers, the press, and the blockchain community, who may feel that your company is simply slapping the word blockchain onto a vanilla database project. With a solid understanding of what customers desire and what will drive value to your business, you can work to identify a pilot that will give you important practice in applying blockchain functionality to your business. You can experiment with finding the right tone with which to speak about your work, and deepen your understanding of how your customers react.
Examples
Talented and well-funded teams are focused on bringing transparency to a broad range of industries. While supply chains are an obvious and fascinating area of development, we’ll see a wide range of projects launching in this area. Time will tell if they will work out in the long run, but right now, here are a few projects chosen to whet your appetite for what’s to come.
Provenance: Meaningful Change through Supply Chain Transparency
Technologist and designer Jessi Baker founded UK-based Provenance to bring what she calls “radical transparency” to materials in the supply chain. “There is an alarming lack of information around the things we buy,” Jessi told me. “We may live in an age of hyperconnectivity, but we’re disconnected from the origin of our products.”
Provenance seeks to start a revolution in consumer understanding by making it possible for users to know more about where their products are coming from. Her team has been working on this complex challenge since 2014, and has been recognized as a pioneer in connecting physical “things” to a blockchain. Along the way, they’ve tackled challenges ranging from how to tag items (ever think about how a coconut could be tagged? This team has done studies), how to develop interactive smart labels, and how to make it easy for consumers to check on the item as they stand in front of it at a store.
Provenance has worked with over 200 businesses so far, with pilots from fishing (to ensure fish is coming from sustainable sources, and from those without human rights abuses) to tracking produce from “origin to supermarket” for a consumer cooperative. While scale is still elusive and the team is using hybrid “on-chain” and “off-chain” solutions for the time being, they have made notable progress. With their focus on helping producers and retailers to distinguish their brands and products and encouraging shopper engagement with the careful crafting of customer experiences, Jessi’s design mindset shows through. “Getting buy-in from the entire supply chain, integrating into existing systems—these are big challenges,” she explained. “But it’s just a matter of time until more pioneers take the leap, and pressure the market to shape up or get left behind. We are already seeing the beginnings of this shift.”96
Blockcerts: Trustworthy Digital Records
Blockcerts, incubated by MIT Media Lab, is a protocol that makes digital credentials and official records trustworthy. Not only does using Blockcerts ensure the record is tamper-proof, but it verifies the identities of both issuer and receiver. A company called Learning Machine was founded to bring the technology to market. While the initial focus is on educational credentials, the free, open source, and blockchain-agnostic software could be used, according to Natalie Smolenski, a Vice President at Learning Machine, “for any kind of high-value, high-stakes credentials that need to have extraordinary longevity and remain verifiable across space and time—15 or 30 years from now, in any geographic context, anywhere I end up in the world. This could be diplomas or transcripts, drivers’ licenses, passports, birth certificates—anything.”97
There are many facets to the potential impact. Obviously, when records and credentials can be quickly verified, without question, it cuts time and increases quality in hiring. For example, in the US, over half the PhDs awarded in a given year are purchased from degree mills that exist only to issue fraudulent certifications.98
But Learning Machine has a bigger vision. “We need systems of record that can withstand war, economic collapse, and climate catastrophes,” Natalie said. “They need to be internationally portable, universally interoperable, and fully verifiable without dependence on vendors or issuers. We need academic institutions, governments, and corporations to invest in the infrastructure to put this system of record in place before the war, before someone becomes a refugee, before the natural disaster. Look at the conflict in Syria. There are five million people who have been displaced, and this is one of the most highly educated refugee populations in human history. Without proof of their credentials, they can’t practice medicine, or law, or teach at universities, as they were doing before. It’s a massive loss of human capital.”99
The same idea of universally trusted official records can be leveraged to enable more people—and assets—to actively participate in the global economy. The World Bank estimates that 20% of the world’s population cannot legally prove their identity, restricting their access to employment and financial capital.100 Prize-winning Peruvian economist Hernando DeSoto estimates that $20 trillion worth of assets have no titles—which means
they are, essentially, dead capital. With no legal proof of ownership, it’s hard for an individual or an organization to lend or borrow against them.101
GiveTrack: Holding Charities Accountable for Use of Donations
Blockchain pioneer Connie Gallippi created BitGive in 2013 after recognizing the tremendous opportunities for social impact in bitcoin. With many entrepreneurs making fortunes in cryptocurrency, Connie wanted to find a way for them to share their wealth and give back to society responsibly. The foundation’s flagship project is GiveTrack, which uses the bitcoin blockchain to track contributions and engage donors in project results on the ground.
Charities are held accountable for the donations they receive—the blockchain publicly records every transaction, so donors can see exactly where money is spent. BitGive has worked with well-known nonprofits including Save the Children, The Water Project, TECHO, and Medic Mobile.
Chapter 8. FAIR COMPENSATION
You are what you do, not what you say you’ll do.
Carl Jung
Summary
Blockchains can enable the more equitable sharing of value creation between a contributor and the business that benefits from the contribution. Compensating fairly for the value contributed to a network could be the next step in a natural progression toward a more sustainable digitally driven world.
Consumers are accustomed to contributing great volumes of data and content to companies with little direct compensation. This has created an imbalance, of which consumers are increasingly aware.
Blockchains can provide plumbing to facilitate more equitable sharing of value. And they offer a new benefit of the digital experience: feature-rich compensation for consumer contribution.
As the space evolves, innovators will launch viable alternatives that embody this paradigm. As consumers are exposed to these alternatives, this will change the equation of what a consumer is willing to give up versus what they get. Over time, consumers will be trained to recognize the true value of their contribution and will be influenced by which brands or businesses compensate them most fairly for the value they help create.
The Setting
Imbalance is Baked into our Digital Norms
Over the years we’ve become reliant on the internet. For many of us, internet applications are an essential tool for staying connected to the people in our networks. They are becoming the primary tools we use to learn, schedule, shop, research, manage finances, and entertain ourselves. And over these years, we’ve been trained to donate our search terms, our clicks, and our attention to those companies that provide these tools. We’ve even donated our thoughts in the form of posts, our opinions in the form of reviews, and our perspective in the form of videos or blogs.
Often we didn’t even pause to think about this. Or, perhaps we hovered for a moment before clicking yet another “yes, I accept the terms” box wondering if we should, this time, read the reams of legalese—and then clicked, impatient that something was standing between us and whatever we were in the middle of doing. Reading privacy policies can come at a great cost of time. Researchers from Carnegie Mellon estimated that it would take 76 work days to read all the privacy policies that the average American encounters in a year.102
Our tendency to ignore all this legalese has proven very profitable to the companies behind these internet tools. We have granted them great flexibility to use our contributions for a host of self-serving ends. They’ve used our content to drive traffic and revenue. They use our search terms to serve us personalized ads that compel us to spend more. They sell our data to brokers, who sell it to other brands, and so on. Very infrequently are we offered specific compensation for what we contributed, whether data or content.
You are not the customer, you are the product.
In 1999, the author Claire Wolfe wrote in an article, “You’re not the customer any more. You’re simply a ‘resource’ to be managed for profit. The customer is someone else now—and usually someone without your best interests at heart . . . The customer is everyone who wishes to own a piece of your life.”103
Feeding this trend are new smart, connected products that gather and transmit detailed information. The consultancy Gartner estimates that over 20 billion connected “things” will be in use in 2020.104 We are increasingly surrounded by sensors and devices that gather information about us—sending it to the companies that sold us the product, who can then use it in any way they’ve specified in their user agreements.
We’ve Been Willingly Looking Away
These internet companies have set armies of researchers and engineers on a mission to harvest our attention in ways that, some say, render us defenseless. Former Google strategist James Williams, who cofounded an advocacy group to build public awareness of the impact of technology design, has said, “The dynamics of the attention economy are structurally set up to undermine the human.”105 But in addition to the intent behind technology giants’ design, there are other forces at play.
Broader social forces make us feel like we don’t have an alternative. We often perceive that we don’t “have a choice”—and, indeed, opting out of using a tool like Google, Instagram, LinkedIn, Yelp, Facebook, or Amazon is seen as an extreme move. Tools like these not only help us run our lives more efficiently, but also have become a primary mechanism for commerce, connections, and communities.
We also see more value in what we get than what we give. Decades into internet application development, these products have become very finely tuned to give us utility, and so we tend to be very willing to make the tradeoff. When we do, we get to participate more fully in our modern, digital society, and access the cool things this new technology can do for us. We are rewarded with immediate benefit, in contrast to how we perceive the somewhat esoteric and far-off harm of giving up our data. We often even appreciate that donating data and content can lead to products and services that make our lives easier and more entertaining, educate us, and save us money. Our content, combined with that of others, drives value for platforms like Twitter, Facebook, Medium, or even the cultish spin bike Peloton, but in turn, gives us a more valuable product too.
The pull to give, and give more, is strong even for those that understand intimately how it is used. I’ve had the honor of working with top data scientists since the days the term was first coined in 2008. I am very well aware how my data can be cleaned, mashed, and leveraged to deliver a rich profile of who I am and what makes me tick—perhaps even richer and more accurate than my own understanding of myself. Yet, as I write this book, Gmail has access to my inner thoughts as I run them by friends and colleagues. Nest is tracking my movements from room to room, and knows when I am pacing back and forth to the fridge. Waze follows me as I escape to a quiet mountain retreat to work, keeping track of where I stop to eat, and how often I break the speed limit. I am giving Google (who owns Gmail, Nest, and Waze) quite an arsenal of influence over me. And I’ve done it willingly in exchange for the assistance each has given me in my work.
But Now, We are Poised for a Shift
Consumers don’t want to turn back the clock on these tools. But there is an increasing awareness that every like, share, search, or purchase is making these internet giants rich, giving them a highly effective tool for shaping our behavior, and influencing our thoughts. Consumers are more frequently asking, “Why should someone else profit off what I’ve given them?”
Consumers are more frequently asking, “Why should someone else profit off what I’ve given them?”
When the news got out that a small research firm named Cambridge Analytica had used the data from 87 million Facebook accounts to influence an election, it triggered a highly public unpacking of what Facebook gathers, how they sell it, and how they obscure it in the tome of legalese that is their user agreement. There were grassroots campaigns to delete Facebook accounts. The regulators pounced. The advantages and disadvantages of opting out became the topic of dinner party conversation. The question was jettisoned into the mainstream:
“Should we be just giving this away?”
Primed for a Better Alternative
Crises like these jolt us from blissful ignorance to sudden awareness of the actual cost of this dependence. We may be disillusioned, but without attractive alternatives, and deterred by high switching costs, we continue our use (sometimes reluctantly). However, these moments lay the groundwork for change should a day arrive when new competitors arrive with a better offer for consumers. Once primed in this way, consumers may see alternatives that not only protect, but also provide, as very attractive—and this may neutralize any perceived cost of switching.
This progression—from ignorance to awareness to receptivity of alternatives—is a maturation that could move us as a society to a more sustainable digital future. It is a future characterized by more balance between business and individual contributor. It lays a foundation for longer-term relationships and mutual value. It could be an essential part of our digital “growing up,” and a big part of how we consumers and companies learn how to navigate this digital future together, as shown in Figure 8-1.
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