Analyst firm CB Insights recently released a State of Innovation report, with the results of a study of nearly 700 corporate strategy executives. When asked, “How at risk is your company of disruption by emerging technologies and companies?” fewer than 4% said they were not at risk. But despite deep fear and talk of disruption, companies were investing in the small stuff—nearly 80% focused their resources on iterating on the status quo rather than on disruptive risks, even though 85% said innovation is very important. High-performing companies were more likely to be first movers, invest in disruptive projects, and build cultures of innovation across functions. The report also found that corporate propensity for building over partnering or buying was a key factor in slowing down innovation.170
In the Blockchain Era, This Is Not Good Enough
These trends are particularly worrisome at this moment. We are slowly, but steadily, approaching a flood of blockchain disruption. Large organizations will need to find a way to effectively experiment with, pilot, and innovate on the application of blockchain technology to their business. And because the real power of blockchains is activated when the technology is used to align and facilitate exchange within an ecosystem, the companies that will best leverage it will be those that understand how to partner.
Isolate or Integrate?
But there is value in first getting to know the technology yourself. And speed, agility, and iteration—attributes so essential to learning to apply a new technology—are easier in small, focused teams. It’s not surprising, then, that this is how many companies are starting. Jeremiah Owyang reports seeing a lot of this kind of experimentation. “I have talked to teams that are not even aware that another business unit is doing something with blockchains until the press release comes out,” he said.171 Blockchain entrepreneurs have also shared stories of corporations that were studying their work closely, watching and evaluating whether to skirt legacy infrastructure completely by creating a totally new venture that functions outside of the organization at large—and its constraints.
Time to Rethink Innovation
But, for the corporation, the biggest step forward will come from projects that reach far and wide, touching current processes and systems. And this requires diverse, cross-functional skill sets. To be successful, projects will need to connect true business and user needs to the vibrant innovation that’s coming out of the blockchain landscape. And that requires domain expertise from across the business. This is why as this wave approaches, it’s a great time to take a close look at your platform for innovation, and examine carefully what is working and what is not.
It’s also a good time to look at how you build knowledge across the organization. As we saw with data science and the importance of increasing the “data literacy” of a company, it will be vital, as the technology becomes more widely adopted, to increase “blockchain literacy” as well.
Corporations can take a look at how Fidelity Investments has been raising blockchain literacy. A unit of the company, Fidelity’s Center for Applied Technology (FCAT), is tasked with exploring how new technologies could impact customers’ lives. Four years ago, FCAT created an incubator to study blockchain technology and established a “Bits and Blocks” club that anyone in the company, globally, can join.
The club offers different ways for members to learn, and they can pick and choose how they participate. The team developed a curriculum that helps club members tailor content to their knowledge. An employee with no experience could enter the “101” track, while developers with prior knowledge can access more advanced “301”-level content. Local meetups provide a forum for members to gather in person. There is an online knowledge center. Monthly “office hours” give anyone an open forum to ask questions of FCAT’s blockchain incubator team. And, a speakers’ series brings in luminaries such as Ethereum-cofounder, Vitalik Buterin, Lightning Labs CEO Elizabeth Stark, and others you’ve met through these pages, such as Meltem Demirors and Lou Kerner. Now approaching 3,000 members, the club has increased blockchain knowledge across the organization.172
This focus on learning is paired with a willingness to experiment with purpose. Fidelity CEO Abby Johnson surprised the press by announcing in 2017 that the company was using excess compute capacity to mine bitcoin. Fidelity employees can use bitcoin to pay for coffee in the firm’s Boston headquarters. Fidelity’s charity arm has been accepting bitcoin donations for years. And the company has partnered with San Francisco–based exchange Coinbase to enable customers to view the value of their digital currency from the Fidelity website. The company looks at this experimentation as a way not only to learn more about what’s going on, but to take a temperature of market demand.
Teams also need to acquire knowledge quickly to be able to astutely discern, among a confusing panorama, where blockchain technology can truly move the business forward and where it adds unnecessary friction and complexity. In the buzzy enthusiasm for the new powers unleashed by this technology, many companies are making mistakes in this area, piloting a blockchain where an old-school database could be more effective. It takes knowledge to determine when to dig in and when to call bull, and teams will need to build it quickly.
Education will be the key tool for assessing the best time to make a move. There is recognition, in the words of one executive, that “whatever we build today will probably have to be changed again.” Some encourage finding a single area a company is comfortable with, no matter how small, and then moving on it to get applied experience and real data. Others make the conscious decision to drag their feet just a bit longer. Either approach may prove to be prescient, but regardless, wise companies will make moves now to educate their forces and to experiment, so they are poised to recognize the moment of clarity as it emerges—and are prepared to strike.
Companies will educate their forces and experiment with this new technology—sooner rather than later.
Human resources thought leader Josh Bersin offers a path forward with his perspective on “agile organization models,” which he observes “are starting to go mainstream.” He points to research from Deloitte that shows “redesigning our organization to be more digital and responsive” is now the number-one human capital trend around the world (59% of companies rate this as “urgent”). Josh maps out how agile organization models, in which dynamic and diverse teams assemble quickly to focus on a specific outcome, contrast to traditional models.
This new organization model, according to Josh, is structured by projects, squads, and teams instead of hierarchical business functions. These structures assemble (and may stop) quickly, and are organized by assignment, tasks, and “expert roles” instead of traditional job descriptions and titles. People may even work on multiple projects, tapped for their specific skill, instead of holding a traditional, functionally aligned position.173
Heterogeneous Collaboration Required
This new model also offers a structure for bringing diverse skill sets together to focus on a common goal. In the movie Ocean’s Eleven, George Clooney’s character recruits a diverse team of specialists, each with a unique ability and disposition to pull off the perfect heist: rob three casinos at once. To do something that’s never been done before, you need to take calculated risks—and this kind of heterogeneous collaboration is crucial to bringing an ambitious goal into the realm of the possible. In her book Building the Future, Harvard professor Amy Edmondson speaks to how large-scale systemic innovation calls for “big teaming”: intense collaboration between professions and industries with completely different mindsets.174 This is especially essential when it comes to blockchain technology.
For those who choose to move early, it means getting in on the ground floor and being a part of shaping the structure at a foundational level. The technology is new, and the way that humans will interact with the systems built on it is still hypothetical (although informed by generations of economic and social science). If you do want to get skin in the game early, bring heterogeneous skills to the table. In add
ition to engineers, cryptographers, and blockchain developers, consider consulting economists, public policy experts, behavioral economists, social scientists, and even game designers. Build a working team of opposites that mashes up your own domain experts with complementary skills and approaches from diverse specializations to forge thoughtful innovations. Even if your focus is learning versus acting, creating a think tank of your best thinkers and an Ocean’s Eleven–type team of specialists could be a high-return investment that helps you more quickly and effectively focus your exploration within this complex and important space.
As the space evolves, we will see more people holding new titles and role mashups. Companies will start hiring token economists. Traditional disciplines will emphasize new skills, such as those represented by the seemingly at-odds title held by lawyer and blockchain specialist Diana Stern: Legal Innovation Designer.
Effective and Diverse
But how do you lay a foundation for success when your team is characterized by diverse (and often divergent) perspectives? Without existing relationships or previous shared experience, it can be a challenge for teams to even identify a best next step, much less a path forward.
I asked Amy Edmondson what advice she would share with organizations that are starting these efforts. “You have to recognize that there will be failures—small things and large things will go wrong along the way,” Amy explained. “So companies need to first step back and really understand the potential opportunity. If you don’t have a strong sense of what might be possible on the other side, you will not weather the storm ahead very well.” Secondly, Amy continued, “Organizations need to recognize where they lack expertise or vision internally—and reach out for help to external people or organizations who better understand this future to get up to speed.” Finally, “Leaders can’t be shrugging their shoulders if someone asks them why this is important. They must have clarity, and an elevator speech on why this matters. What is at stake? What is the opportunity?”
Ideally, this elevator speech paints a powerful but abstract picture of the future, instead of a photograph, explained Amy. Something so new can come into focus only as the team makes progress—you won’t know exactly what it will look like until you get there. Importantly, this approach leaves space for others to contribute their expertise. “When creating a terrifically interdependent new initiative,” Amy emphasized, “you have to leave room for others to make their contribution.”
But how do you align a team with a deliberately vague future vision? “The answer lies in the concept of purpose,” Amy explained. “Vision is the ‘what,’ but purpose is the ‘why.’ It could range from the desire to provide more value to customers, staying relevant in a changing world, or even being on the leading edge of what’s possible.” Regardless, the technology—whether it is driven by blockchains or not—is simply a means to an end, a way to help fulfill that purpose.
The next challenge is to create opportunities for people to come together to share their ideas. Amy has seen a methodology called charrettes, originating in architecture and urban planning, become more widely used across sectors. “It’s an effective way to plan for any multifaceted challenge,” she said, “such as improving K–12 education or stroke care—anytime you need to pull together experts from different domains.” The charrette is a focused and intense planning process that brings these diverse contributors together, lasting anywhere from a day to a week or more.
Members may share a meal or an activity together before they begin formal planning, to establish some connection. And then the work begins. The key to success is careful curation and facilitation. It requires being deliberate about creating the context, setting the stage, proactively inviting participation, and making room for productive and thoughtful responses. It requires being thoughtful about establishing a psychologically safe space to share ideas and ask questions. It requires frequently slowing the conversation down to ensure that members understand each other. The word platform,” for example, means something very different to an architect than it does to a software engineer.
Facilitation can help close the conversational loop—one person says something, and everyone checks for understanding. It can help to sort those ideas that have the most practical strength versus those that may be interesting, but don’t yet have a path forward.175
Blockchain-Era Table Stakes
Several key tenets will characterize those organizations that connect more directly to success with this technology. While only the beginning of what it takes, these attributes will emerge as crucial.
Open Mindset
No one can do blockchains alone. It’s an ecosystem and a community-driven technology that requires collaboration to be effective. Wise companies are opening up their approach to innovation at levels that may have been unthinkable a decade ago. The accelerated pace at which innovation is occurring makes it critical to effectively tap into what’s happening outside the organization, both in the blockchain community and among potential partners. As the technology has evolved, dozens of consortia have sprung up, focused on everything from roundtables where contributors simply share their learning and perspectives to fully integrated test beds for new blockchain projects.
Consortia arise naturally as a consequence of the technology itself. The greater the number of users, the more valuable the technology is to all of them. These network effects can motivate competitors to collaborate, and to create shared standards and governance structures. Some consortia have made notable progress thanks to the outsized commitment of a single leading player, such as with Hyperledger (IBM is providing a significant part of the codebase), or via the sheer volume of companies involved. However, switching from a competitive to a collaborative mindset is, not surprisingly, very difficult. It will take time to see projects move into production and to be adopted broadly.
First, Search Within
One place to start a quest for internal knowledge is to mine internally for sometimes hidden pockets of passion and expertise. Blockchains, in particular, are a subject that captures the hearts and minds of a diverse range of people, and you may well have more resources inside than you think. They could be anywhere in your organization. Perhaps they are spending their weekends studying blockchains or investing in cryptoassets because it interests them. It may be, as John Oliver spoofed on Last Week Tonight, a few rogue people scattered around, like that “one guy in your office who [won’t] shut up about it...who’s been annoying everybody with his ‘you got to get into bitcoin’ #@$% for years.”176 Or maybe they have advanced degrees in cryptography or economics, even if they aren’t using them in the work they do for you today. Use LinkedIn to find them if human resources can’t help you. Give them a structure or platform, time to explore, a way to connect ideas to others in the organization, and a conduit for being heard by decision makers.
Connect the Nodes
A big part of this structure is connecting the pockets of interest, exploration, and learning across the corporation. Delegating blockchain efforts to a consortium and the few people across an organization who are working with that consortium will not be enough long term. Blockchain technology can drive benefit to multiple areas of the organization, from back-office divisions to marketers, in both top-line opportunity and in cost savings. Ultimately, focused efforts will need to be paired with broader, more dispersed learning across the organization. In each area of the organization in which blockchains could have impact, wise organizations will cultivate learning and foster connections between these “nodes.” An organization can benefit by facilitating and encouraging connection points from these nodes to the blockchain community, and mechanisms and structure for pulling knowledge back inside and sharing it across all nodes in the organization.
Put the Customer at the Core
But regardless of how well you have stocked your teams with well-balanced and diverse expertise, the make-or-break mindset is, bar none, that of the customer. Bring in domain expertise from every area in which th
e business touches customers. Even consider models that bring customer input more continuously into the learning process, from qualitative and quantitative research to more involved advisory programs. For years, companies have been working to “bring the customer into the boardroom.” As this next era takes shape, perceptive companies will bring the customer into emerging blockchain programs.
Research firm Kaleido Insights cofounder Jessica Groopman frequently points out this imperative in her conversations with corporations exploring blockchains. “Perhaps this is stating the obvious,” she says, “but I just need to emphasize, companies can’t forget the customer experience. How are they ensuring the blockchain user experience is well thought-out for any customer-facing application, whether that is for a nurse, a lawyer, or an end consumer? These are the core principles of good design and consumerization of applications, and they are just as relevant here as they are in any other digital experience—perhaps even more.”
Consider internal customers as well as external. Jessica also advocates for the importance of planning for hybrid architectures. In her view, blockchains will not replace existing structures and infrastructure overnight. Rather, they will evolve alongside incumbent systems and existing standards, complementing, then supporting, and then making certain workflows irrelevant. “Bring in the folks that will be impacted by technical changes,” she says. “Maybe they are the sys admin or the product manager. It is important they are bought in, but can also help ideate on top of the direction.”177
Change Agents in Action
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