There are dozens of teams clustering around many different segments of the insurance industry, including micro-insurance. For the newest approaches, it’s still early and the work has the feel of science experiments. It’s likely the insurance industry first gains the most significant experience with blockchains in the areas where the pain of today’s model is most significant, like title insurance. But new business models will come, stoking macro shifts across the insurance value chain and potentially realizing, pulling from Gopi’s vision, a higher quality of life.
Atomization of business
With the internet came new opportunities for an individual to launch a business. All of a sudden, the average citizen could take a special skill, capacity in their house or car, or a unique personality and point of view, and turn it into revenue. The growth of the freelance economy, the debut of the sharing economy, and even social media influencer models have enabled people to make a living—sometimes a very good one—without working for a traditional company.
Blockchain technology could give individuals a plethora of new tools and access to marketplaces that they could leverage to diversify income, even build a personal enterprise—continuing the trend toward micro-businesses. We’ve already looked at a few ways this could happen. We saw how people could make money off their “data exhaust”—all the data passively flowing from their devices and digital interactions. The way the sharing economy could expand to a houseful of assets. Even how normal browsing behavior could be monetized.
But there will be an explosion of other models that bring revenue to an enterprise of one. They will unlock new value for skills that were previously unmonetizable. They will create more efficient markets for things that were lying dormant and unused but now can be easily bought or sold. There will be many blockchain companies that seek to provide vibrant marketplaces that enable this future, and it could change the dynamics for many businesses today.
Matt Chwierut of Smith + Crown speaks to this new world: “Where it gets really interesting is in the specific mechanism of compensation,” he said. “A platform can facilitate a peer-to-peer exchange: I sell a good or service to a buyer on the other side, and blockchains enable a very efficient payment rail. They can exchange a range of cryptoassets, or even be compensated through newly issued tokens or bounty ‘rewards.’ People could own their own business models. Take content, for example. An individual could sell their content as a subscription, make it advertising-based, make it sponsor-based where endorsement is embedded, or even focus on earning some form of token rewards. Regardless, blockchains open up the possibility for micro-actions and micro-contributions to be compensated in a variety of ways, and new value to be captured and given to the individual. Tokens can substantiate value that previously couldn’t be substantiated.”164
Platforms will offer their own tokens or use one that has built momentum elsewhere, but an individual—perhaps an artist or a filmmaker, or a small business—could also release their own private-labeled token to obtain funding and use in their own ecosystem. There are blockchain companies that are working to templatize the approach of issuing a token, and there are a growing list of artists, musicians, and filmmakers who have done so.
Solo developers could use the fat protocols described earlier to more easily create and monetize new applications. If she picks the right use case and protocol, a developer could have a fast path to network effects and no longer has to develop enough trust with a user to earn their data—it all lives in the shared data layer, and she can deliver value to users without even knowing who they are.
We probably can’t predict all the new businesses-of-one that could come out of blockchain technology, but this is sure to be one of the most interesting areas to watch.
Atomize—and liquify—assets
There is a call among some enthusiasts to “tokenize everything.” Often, what they are talking about is the ability to use tokens to exchange fractions of a large asset, which can then be used to open up new sources of capital or sharing models. Any “real-world” asset can be tokenized. Fine art and real estate are two favorites and there are dozens of projects that are working on many aspects of this, often in ways that look very similar. But, ultimately, these kinds of projects envision the release of billions, even trillions, of dollars of illiquid assets into liquid marketplaces that could be invested in or exchanged by anyone. Some believe this could upend the entire financial service industry, and herald a new system that is more transparent, liquid, and accessible. There are fascinating experiments happening today with this approach and many in the financial services industry are carefully watching what new financial instruments will take off via this new paradigm. This will be an interesting and fast-moving area to watch, one that could impact the very idea of ownership and access to capital.
Programmable Assets
Another related area that has captured the attention of insiders, although still in painfully early days, is the concept of programmable assets. Visionaries see leveraging blockchain functionality to make it fast and easy to intricately tune financial instruments—and see a world in which this capability becomes core to all new kinds of products and services.
Spencer Bogart is a partner at Blockchain Capital, one of the oldest venture investors in the blockchain technology sector. We sat down to talk about what he is observing in this area of development. “From a corporate perspective, programmable money and assets is one of the most exciting areas right now. For the first time, you have digital native assets built on digital native infrastructure, and this makes it possible to do all sorts of interesting things.”
For example, the transaction of an asset could be programmed with a “time lock,” in which a party can specify that asset can’t be spent until a time in the future. Or, they could specify a “multi-sig” requirement, ensuring a transaction won’t take place until a certain number of signatures are registered from a pre-specified pool of signers. Or any other criteria that could be programmed in code. Some entrepreneurs are even exploring ways to make productive use of capital with nearly zero counterparty risk, a concept that Spencer describes as “absolutely mind-blowing from a lending perspective.”
“You can do all these things using the legacy financial world, of course,” Spencer explains. “But it takes great time and effort. In this new world, you can reduce the work to a couple lines of code—this could unleash all kinds of novel uses that we’ve never seen before. It’s an extension of Marc Andreessen’s thesis that software is eating the world—software may also take over the way we move anything of value.”165
Machines Working Together to Serve Us
An enthralling futuristic vision is when the machines use a blockchain network to exchange value, autonomously and machine-to-machine, in order to make our world run better. In conjunction with IoT and new mobility technologies like connected cars or drones, blockchains could play an important part of enabling a new way for both people and things to move through the environment. Jessica Groopman of Kaleido Insights shares, “Machine-to-machine blockchain models, especially, are fascinating. There is such an opportunity for something good to come out of it.” With built-in token incentives, the movement of people and things through the environment can be optimized in exciting new ways. Jessica’s partner at Kaleido Insights, Jeremiah Owyang, adds, “When everything around us that is inanimate becomes animate, the world becomes alive around us.”166
Blockchains could help various devices and machines to interact more easily, and more securely, through the use of verifiable identities. For example, a drone could deliver a package to a lockbox, with the lockbox verifying if the drone is “safe” and opening, automatically, to receive the delivery.
Jessica shares another example: “A local government could incent how you move around the city with tokens”—and these tokens could be exchanged directly from machine to machine to optimize use of infrastructure. Dovu—a blockchain startup backed by InMotion Ventures, Jaguar Land Rover, and Creative En
gland, a fund backed by the UK government—is developing a protocol that could be leveraged for just this. The company is starting with a solution for seamless payment across transport services: one secure global token for riding a bus or train, or renting a bike or car. Users will have the option to sell the data produced by their vehicles as they use them—whether they are rented or owned. For example, smart cars are predicted to generate up to 25GB of data per hour. That data can be useful for identifying traffic congestion—and tokens could also be used to incent alternate routes or modes of transport to help traffic get flowing again. If you take the bus or walk instead of driving, for example, that action could be rewarded with extra token. But over time the technology could be leveraged to incent actions that mean smoother flow of both people and vehicles within the infrastructure we have today.
The DAV Foundation is a nonprofit based in Zurich, Switzerland. The team, coming from heavyweights like GM, Ford, SAP, UPS, Nasa, Google, and IBM, is building a network powered by the DAV token. DAV could be integrated into any vehicle, which creates a connective tissue among cars, drone, and ships, for example. Autonomous vehicles can then discover, communicate, and transact with each other—without human intervention. This means that the owner of any vehicle could buy or sell transportation services that employ that vehicle. I sat down with DAV’s thoughtful cofounder, Joe Lopardo, to talk about his vision. “Right now,” Joe explained, “I own a vehicle that is just sitting in my garage 96% of the time. If you fast-forward 10 years, that vehicle could be autonomous, and I could put it to work for me when I’m not using it. If I’m going on vacation for a week, I could set parameters for use—let’s say I don’t want it to go farther than 50 miles from my house. Then I set it free. In that week, it could deliver passengers, supplies, whatever. It would know when it needs to go to a charging station, or if the tire pressure is low, and could negotiate a rate and pay for these services on its own—without me or any other human getting involved.” Obviously, Joe points out, there are regulatory and infrastructure constraints right now, but with DAV, a token could ultimately move anything, anywhere.167 In collaboration with Skysense, Inc., the foundation has been working on a proof of concept using a fleet of drone charging stations. Certain drones are now able to access a network of charging stations in northern Italy, using the token to bid for electricity from charging pads based on price and location.
The vision extends to moving goods through a supply chain. “Imagine,” says Joe, “an autonomous 18-wheeler driving from California to Pennsylvania. That route could be optimized so it could unload packages along the way to smaller vehicles, also autonomous. It’s like UPS or Amazon does today, but not only without the human drivers—it’s with no human intervention at all.”
While mobility is a particularly interesting application of machine-to-machine, any IoT device or connected machine is a candidate. We’ve long heard talk of IoT-enabled refrigerators that can let you know when you’re out of milk. What about a future in which the fridge not only knows the milk is out, but also negotiates the best price from various vendors, orders it for you, pays for it on your behalf with tokens, and all you have to do is take it off your doorstep and put it inside? (Although we could take it even further, with a connected lock on your front door allowing a range of service providers to come inside and put it in the fridge for you, along with the insurance in case they break something in your house while they’re at it.)
Social-Aligned Models
One of the most appealing themes to come out of blockchain models is in the area of social good. Blockchains could help individuals, companies, and governments “see” the real impact of their actions. And the feature set of blockchains and tokens could enable many, many ways for businesses and individuals to align on shared values. Social good could be baked into a protocol or a token (for example, there are many blockchain projects that, through their governance, channel funds to a treasury or pool, which is distributed according to voting from the community). Individuals could show their support of an initiative by choosing to engage with the businesses and brands that use a mission-based token. In this way, day-to-day micro-decisions by individual consumers could conceivably fund real impact. Or, tokens could help drive specific actions.
One surprising example of this is The Plastic Bank, which was founded in Vancouver in 2013 with the mission to stop ocean plastic by gathering a billion people together to monetize waste. Scientists predict there will be more plastic than fish in the ocean by 2050. By compensating people for the plastic they gather, primarily in developing regions, the organization prevents the flow of plastic into our oceans. A blockchain is used to track the entire cycle of recycled plastic from collection, credit, and compensation through delivery to companies for reuse. Tokens are thus used to jointly tackle ocean plastic and poverty.
Various teams are working on projects to enable more transparent funding of development projects. In regions in which funding can be siphoned off through layers of “middlemen” (with some being outright bribes), or are frequently abandoned midway, there is hope that the trust via blockchains can encourage investment in crucial infrastructure.
The potential for societal-level impact is tantalizing. I am optimistic that we will see many exciting and far-reaching developments in this space. My personal hope is that many of these projects will eventually evolve into a virtuous, self-propelled feedback loop. That organizations will see the value of baking in elements that serve society, and will deepen their understanding of how this drives more sustainable long-term businesses.
Part III. UNLEASHING AN UNBLOCKED FUTURE
Chapter 12. WHERE TO BEGIN
Standing in the middle of the road is very dangerous; you get knocked down by the traffic from both sides.
Margaret Thatcher
Now, Where to Begin?
You’ve seen how this new technology will bring far-reaching change, and also the great uncertainty of when. Few organizations are prepared to deal with this level of ambiguity. And many will, understandably, hesitate to go through the pain change requires. Jeremiah Owyang, a founding partner at research firm Kaleido Insights, created an innovation council to help large corporations innovate with new technologies. “In many cases, large companies are resting on their laurels, dependent on multimillion-dollar product lines,” explains Jeremiah. “They may be led by senior execs who will retire in 10 years. They are not given the right incentives to make radical changes. These companies have to feel some pain, or have something scare them, before they are ready to take action.” But by then, it may be too late. “When blockchain technology catches fire,” Jeremiah warns, “it will go faster than a company can catch up.”168
Companies that want to thrive on the other side of blockchain disruption do not have a choice: they must learn how to learn, rapidly and effectively, to navigate through it.
Organization Models Birthed from Disruption
Disruption has become a perennial challenge. Many wise and celebrated organizational researchers have devoted their careers to developing methodology to help organizations cope.
One of the most tantalizing concepts for dealing with ambiguity came from Peter Senge, who, in the 1990s, popularized the idea of the learning organization with his book, The Fifth Discipline. This concept means that a company uses organization-wide learning to continually transform itself for competitive advantage. In a learning organization, Peter explains, “People continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.”169
While it has proven difficult for organizations to embody this ideal, the concept—and increasing necessity—of learning as a tool to achieve competitive advantage in an unpredictable environment has remained attractive. With blockchains, learning is the first big challenge, and that learning is not “one and done.” The environment is shifting constantly
, and new twists on the technology and new innovations are continuously debuting. And with the level of human and capital investment in the space, this is only going to accelerate. With blockchains and many other accelerating new technologies, there has never been a more important time for the organization to learn how to learn, continuously.
Another increasingly popular response to the threat of digital disruption, especially among the world’s largest corporations, is to create an innovation program. These programs can take on many forms and flavors, ranging from dedicated corporate incubators and outposts to light-touch innovation “tours.” In fact, Jeremiah Owyang identifies 10 different types of corporate innovation programs. But no matter the approach, they are all focused on tapping into the juice of innovation, and facilitating its flow into the minds and products of a company.
Tales of success continue to stoke interest in innovation programs, from Volkswagen’s collaboration with university researchers to Walmart’s rapid experimentation and prototyping. But the majority of large companies struggle to find the right model to propel their organization to sustainable innovation. It’s proven to be extremely difficult to bridge new opportunities to the organization at large. These programs tend to push the responsibility of innovation to specific groups, whereas long-term business-changing innovation has historically been most successful when it becomes a way of business—an essential part of the culture.
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