Unblocked

by Alison McCauley

  A Shift That Presents Nuanced Challenges

  There are many other implications of this massive shift in the concept of data ownership. For example, platform loyalty could decrease. Today, users that have invested time into building reputation and networks on a platform are held hostage to that platform—leave, and it’s lost. The more data customers own in a portable data layer, the lower the switching costs to move to an alternative. Smith + Crown’s head of research, Matt Chwierut, explains, “The barriers for a user to exit LinkedIn or Facebook are very high. Many blockchain protocols are trying to have lower barriers, and build in interoperability of blockchains and tokens into their platform. So users could transfer their data, and value, more seamlessly than they can today.”

  Companies may also have to deal with a loss of visibility to a single customer’s digital lifecycle. As more data gets put into personal vaults, it will be more difficult to get perpetual access to a customer’s digital movements, or to stitch together behavior patterns across digital interfaces. Businesses that use questionable harvesting techniques will also find it harder to use those tactics.

  Know Thy Data, Know Thyself

  Consumers may be charmed by new services that could become available as they strategically allow access to more data. Already, the data consumers provide helps to drive, in part, better digital experiences. In her 2018 internet trends report, Mary Meeker speaks to how data-driven personalization drives growth and helps internet companies, from Nextdoor to Spotify to Facebook, to make low-priced services better. But, she warns, it also attracts the attention of regulators, introducing a “privacy paradox.”152 If data is self-sovereign, consumers could theoretically safely give services access to more data, and get even better experiences in return. If they can safely provide location data to applications they wouldn’t normally allow, they could get new context-aware offers and services. One can imagine how recommendation engines could deliver far more resonant results by leveraging deeper, richer data, even without identifying the consumer. Imagine a movie recommendation app that has a history of not only the movies you liked, but your physiological reactions to them as well (from, for example, Apple Watch heart rate measurements, or eventually, dopamine, serotonin, or cortisol measurements from devices that track hormone levels). Using your data along with anonymized data from other people with similar profiles, it could offer up movies that would make you weep, make you laugh, or get your heart to race with a great deal of reliability. Companies, too, could benefit, with better targeting and higher engagement. Tim Berners-Lee, who has been developing a new platform that works with the existing web, called Solid, believes that the principle of “personal empowerment through data” is fundamental. “Data should empower each of us,” Tim explains. “Imagine if all your current apps talked to each other, collaborating and conceiving ways to enrich and streamline your personal life and business objectives . . . you will have far more personal agency over data—you decide which apps can access it.”153

  It’s also conceivable that services may arise that enable individuals to commission their own data science. As a culture we spend a great deal of time and money on self-help and self-examination. In the blockchain future, people could accumulate and have easy access to a treasure trove of their own data—a lifetime (or even multiple generations) of health records, fitness metrics, even sentiments or emotions. No one is more motivated to find patterns that could unlock the best-fit cancer medicine, psychotherapy, or retirement plan than the person who needs it. It’s conceivable that we will see high-end services or software that offer analysis and recommendations based on the comprehensive profile in a personal data vault.

  Enabling a New Wave of Innovation?

  As blockchain-driven identity and data businesses mature, more data than ever before could be accessed by a wider range of organizations. This could be the missing piece to unlock the true economic potential in big data. It could conceivably catalyze a new wave of data-driven innovations that could change the way we work, live, and play—or even the trajectory of entire populations. But this next data arms race will also be much more difficult to successfully navigate than anything we have ever seen before.

  Cautions and Considerations

  The shift in data ownership presents both threats and opportunities to existing businesses. While some of these cautions and considerations are very future-focused, they are meant to provoke your thinking about what could come. This is by no means an exhaustive list; it provides additional food for thought on how to prepare for this new paradigm.

  Cautions

  You are behind in data science

  If there is a gap in your data science capability in relation to competitors, you are likely already well aware. In the blockchain era, a shortcoming in data science could be especially dangerous, as competitors use truly big data to outsmart you across the board.

  Hiring a few smart data scientists and turning them loose on your data is not enough. Truly great data science must be enabled from the C-suite. To deliver insight that makes a difference in your business, the work needs to be viewed as a strategic business initiative, not a technical project. A strong data science program requires focus, placing data scientists effectively in the organization, and enabling decision makers across the organization to act on insights by increasing their data literacy.

  Entering the blockchain era with a trust deficit

  Trust has always been important, but the blockchain era will amplify the negative effects that come from a lack of it. If you are already struggling to gain or retain customer trust, this could be a pivotal moment. Mobilizing now with a focused initiative, driven from the top, could help to build credibility before blockchain adoption goes mainstream. Start by articulating values and ethics that are closely connected to the core business, and formal systems for measurement. In a gross oversimplification of what is a very complex evolution, success will depend on deep management commitment, enterprise-wide discipline, link to incentive structures, training, transparency, and tracking.

  A business model reliant on proprietary consumer data

  If the lead is yours to lose, be alert to which segments of consumers are making the transition to blockchain-based stores of data, and with what kind of data. If your business has historically depended on this kind of data, you may have a lead in data science expertise and data culture. Use your lead to leverage the new breadth and depth of data more effectively than others—if the vision of data marketplaces is realized.

  Considerations

  Boost your data culture in advance of blockchains

  There is no need to wait for bigger data to become available (which may take many years). Start the hard work of developing your organization’s data capabilities now so you are better prepared when the time comes. The field of data science has advanced greatly in the last few years, and best practices have emerged for building data science capabilities, increasing data literacy across an organization, and forging collaborative relationships between data scientists and the business. Study them, and develop a strategy to grow your data skills that starts with C-suite sponsorship.

  Tap into the state of blockchain identity work

  Explore new blockchain applications that offer consumers identity and data ownership as they launch. Examine them from the viewpoint of your own role as a consumer. Identify which approaches make you feel secure, and your own willingness and ease with which you contribute data. This will help you spot the moment user experience is refined enough to more broadly appeal to consumers, just before adoption spikes.

  Work on your relationship

  Conduct research to understand the areas where your organization is trusted, and the areas where you are not. Do the difficult self-examination work to understand the origin of your organization’s shortcomings and consult outside experts to tell you straight what it would take to transform untrustworthy to trustworthy.

  Look especially for opportunities to demonstrate to customers how you give th
em value via the data they contribute to you. Market this value and put in place frequent feedback loops so the idea of getting value in return for what they provide is continually enforced. In the years it will take for adoption to take hold, you have an opportunity to create a foundation of trust in your customer relationships, if you are willing to take on the investment.

  Take a critical look at your mission

  Mission statements can be worthless, or they can hold powerful galvanizing power for an organization. How does yours stack up? Are your customers and their needs and desires at the core? In what ways do you operate to this mission, and in what ways do you fall short? A well-crafted statement that builds on the heritage and belief of your organization and has the support of leaders and managers across the organization will help you win customers to your cause—whether it’s social good or building a better product—and increase their willingness to continue to share data with you directly.

  Examples

  Identity and data are at the heart of so many blockchain projects, and this is probably the hardest area to select just a few examples. These two serve as just a glimpse at what entrepreneurs are working on now.

  uPort: Take Back Control of Identity

  At the crux of the concept of bigger data, and indeed much of the vision of a decentralized future, is self-sovereign identity. There are easily over 100 projects focused on this, but for their vision to be realized, the industry will likely need to adopt some standards. The Decentralized Identity Foundation, which now counts nearly 60 members, focuses on just this.

  uPort is one of the members, and is focused on building an open standard protocol layer on top of which any digital transaction can happen—but with self-sovereign protected identities. The team aims to enable a world in which a user can truly own their own identity and all the data associated with it, and establish a reputation for that identity. They do so by verifying key components of that identity (such as via reputable, certified authorities), for which the identity receives credentials or “claims.” When the identity is used for an application, it is the consumer who grants the permissions, and dictates who can access which pieces of data. Everything from friend networks to browsing and purchase histories could be eventually incorporated into this self-sovereign identity. And “identity” doesn’t have to be a human, either. It could be an organization, a device, or a bot, enabling all sorts of new business models.

  I sat down to talk with Rouven Heck, the cofounder of uPort. “If we want to truly empower people to own their identity as well as their data, it must be interoperable,” Rouven said. “I believe there will be not just one identity company that will dominate the market, as we saw big players like Facebook and Google dominate the Web 2.0 world. Particularly because identity is so critical, I believe we are only successful if we achieve global standards. When you send an email, it doesn’t matter what server or device you use. That’s why we’re focused on building an interoperable identity layer. Standards and protocols, ultimately, should be blockchain agnostic.”

  Rouven imagines a world in which blockchain-based identity gives the end user new kinds of value, and eliminates the friction we have become accustomed to today when we sign up for a new product or service. “You could walk into a bank or insurance company, and you could choose to share reputation data that would enable them to make a fast decision to offer you a financial product. Or, you could decide to share your purchase history with a shopping site—without revealing who you actually are—and get custom recommendations. You could establish all kinds of trust and get all sorts of valuable interactions and experiences without middlemen.”154 Various organizations are conducting pilots with uPort, and Zug, Switzerland, has even begun a pilot program to offer citizens access to a new suite of e-government services by using their uPort identity.

  Other identity players include Evernym (which is building its own identity blockchain and is tied to the Sovrin Foundation, which counts as partners heavyweights including Cisco, IBM, Deutsche Telekom, and Workday), Solid (a project led by Tim Berners-Lee, the creator of the World Wide Web), and Blockstack (which has an ambitious plan for encouraging the development of consumer-focused services built on identity).

  Ocean: Unlocking More Data

  Trent McConaghy has been a prominent blockchain innovator for years, but his first love, he says, was AI. For years he had hoped that the blockchain and AI worlds would collide—and they finally did in 2016 when he realized that all roads led to the same place: the problem of data. Specifically, said Trent, “Latent value lurks everywhere in the data—enterprises have plenty of data but don’t know how to make it available to the world. Startups know how to turn data into value using AI, but they’re starving for data . . . Society runs on data, yet much of it is controlled by a handful of companies with more power, resources, and reach than most nations. That’s a problem.” Trent founded Ocean “to give society equal opportunity to access data through a new kind of data marketplace.”155

  The Ocean Protocol team is led by top-tier experts in big data, blockchains, artificial intelligence, and data exchanges. Their focus is to make more of the world’s data usable by enabling it to be shared and sold in a safe, secure, and transparent manner. This is particularly important to advance AI, which will affect nearly every sector of the economy in the coming years, including advertising, finance, health care, retail, automotive, energy, transport and logistics, and aerospace. AI requires vast volumes of data to be trained effectively—models have limited accuracy and usability without appropriate data. But a small handful of organizations have accumulated both massive data assets and AI capabilities. The Ocean team saw these organizations as potentially becoming so powerful, they could endanger a free and open society. The protocol aims to unlock data to enable more for more equitable use and outcomes of data.

  Their solution hinges on safe sharing and their belief that data is locked up because sharing has been too risky. Ocean Protocol is a business, technical, and governance framework that is brought together to serve the needs of all stakeholders in the data ecosystem. Ocean ensures payment to the provider, using Ocean tokens, while guaranteeing control, auditability, and transparency to everyone. “If we do this right,” said Trent, “the marketplaces can even handle a data commons, where data is free to use, yet you are rewarded if you contribute to the commons. This can complement paid data; free and paid can work hand-in-hand, making each other stronger.”156

  Chapter 11. NEW MODELS

  The worst place to develop a new business model is from within your existing business model.

  Clayton Christensen

  Summary

  Blockchains open up the possibility for unprecedented business models driven by decentralization. These new models flip the rules for what it takes to be successful, will influence today’s incumbents, and could drive new competitors to power.

  The success of decentralized models will be driven in great part by how powerfully an organization attracts the support of the crowd and an ecosystem of partners. This changes the dynamics of what drives dominance—but it will be a long road of trial and error to determine how to drive sustainable long-term revenue from these new models. We may see a shift, in many areas, to businesses that trade margin for scale or operate under new structures designed to return more value to a community at large.

  Flipping Conventional Wisdom

  Every one of the examples we have looked at so far, of course, represents a new business model. But the models we’re about to look at deserve their own dedicated section. This is because these models have a tendency to flip and twist conventional wisdom of what an effective business looks like, and it takes some study to understand the implications. Eva Kaili, the member of the European Parliament who chairs the Science and Technology Options Assessment panel, asserts that these emerging blockchain-driven models could “democratize value chains, remove transaction costs, optimize the allocation of resources and risks, expand social inclusion, and improve the
quality of services and products we receive as customers and as citizens.”157

  Much is still to be learned about these models, and the next few years will bring an explosion of experimentation in the quest to find a path to both disruption and profitability. This tension may feel familiar. As with the early days of the internet, the sustainability of a new model is not always clear. Do not make the mistake of writing them off for this reason. While many businesses that attempt these models will fail, some probably spectacularly, as a whole they could collectively impact the way we work and live (think about how players like recently public and high-valuation Dropbox, Spotify, and Snapchat have struggled to crack profitability—even as they played a role in changing our world).

  The territory we’re about to enter gets a little muddy, but also a little more exciting as we look at how blockchain technology can enable new industries and merge and transform existing ones. What follows is a high-level tour and is by no means exhaustive; it is simply a glimpse of where things are headed. We are at the beginning, and it will be fascinating to watch how innovators will improve and build on these models, and which new ones will emerge over the next decade. But each theme I’m covering represents an embryonic movement, and as it evolves, it will morph and shift, be pulled into different industries, and cross-pollinate with existing models—and each will lend its impact to the new expectations of the unblocked customer.