The possible long term potential of Blockchain

The long term potential of the emergence of Blockchain

What is Blockchain and what are the possible consequences for the future?

Blockchain is the key innovation behind the cryptocurrency Bitcoin and have lately come in focus almost everywhere.

Blockchain itself can be described as a technology with the ability to displace the need for other (e g human, legal, governmental…) layers of trust between any numbers of globally distributed endnodes. We can compare it to how e-mail and messaging is displacing the need for mailmen and postal services. Or putting it another way: it is a global distributed platform for implementing algorithm based trust relations.

Ok, but what does all this mean for the world in the longer term?

Possible future implications

Service based organizations like e g insurance companies, banks and most governmental bodies rely on two core capabilities: (1) the ability to provide a certain service while (2) retaining their role as a trusted provider. We already witness how accelerated digitalization and democratization of technology moves processing power from centralized service centers to our smart phones and personal computers. One consequence is that our devices now have the capacity to completely bypass the central servers. If it wasn’t for the trust aspect many systems and apps would be redesigned taking advantage of the new technical possibilities. What Blockchain is doing is opening up the possibility to digitally integrate the trust component.

If the local endnodes in a global system of relations provide algorithmic trust i e have an algorithmic proof mechanism instead of having to rely on other ways of trusting each other, it opens up the world of global and individualized cooperation and collaboration. More specifically it opens up an innovation arena for the, now much larger, army of hackers that e g built the Internet.

A huge wave innovation around Blockchain will change the world quite dramatically. The administrative services we rely on today from a few large providers will be digitized, unbundled and reinvented by millions of innovative individuals who have better ideas. Specific platforms like e g Ethereum or more generic cloud platforms like e g Google, Facebook or Amazon will provide the trusted storage, processing and communication needed to run the societal administration.

If there is a wide adoption of blockchain-like technologies it will mark the beginning of the end of organizations, companies and governmental bodies who provide information and administrative services. Cloud platforms will be fully capable of provide a large part of their value. Those institutions who are not rendered completely obsolete in this transformation will at least live through an accelerated unbundling of services which will break institutions apart and turn them into new and unrecognizable constellations.

For nation states this might turn out to the greatest challenge of them all. Already today the nation states are gradually becoming reduced to insurance companies with armies. This is starting to become a huge problem for many governments who see their relevance for their people are being reduced step by step. With Blockchain there might radically less need for a trusted nationwide insurance logic. What is left is then – an army!

Supporting driving forces

  • The technology is supported by the combined forces of a individualization, bottom-up innovation and the increasing influence of Internet technology and mentality.
  • There is a long list of applications built on blockchain in the pipeline attracting a huge interest from early adopters and innovators around the globe
  • The current uncertainty and instability around the global economy, currencies and even the nation states is opening up for new models of trust and payment (see e g the book: Stuff and Money in the Time of the French Revolution)

Weighs and challenges

  • Most institutions, governments and corporations don’t understand and are skeptical to this new technology which seems both uncontrolled as well as uncontrollable. One notable exception of corporations supporting the technology is the recent interest from the bank community who is now investing in Blockchain knowledge.
  • The association with Bitcoin, an independent och perceived dubious currency by some nations, might be an obstacle (e g Russia and Thailand)
  • The huge interest and the many application efforts might not just have positive consequences for the development of Blockchain. Among the current projects there might be ideas and application that will be considered offensive or subversive to powerful actors like governments or corporations.

It is our stories, not technologies, that shape our future

We are drowning in news about new technologies every day. Technologies that are solving difficult problems as well as opening new possibilities. It is easy to see them as the most powerful forces transforming our world. But we forget one important aspect. We perceive these technologies through the stories of our time. These stories are much more important factors shaping our future than any technology. It is the stories by which we explain ourselves, our situation, our role in the world and our futrue that determine our thinking decisions.

In the late 1990’s I visited Global Business Network in Emeryville to learn scenario planning. During those meetings I met many interesting people:  Peter Schwartz, Stewart Brand and Kevin Kelly. I was fascinated by their long view of the critical importance of stories. Since then I have been following their work and soon after they initiated the epic project to build a 10.000 year clock. The core idea was to challenge our current civilizational stories. By running a public project with a civilizational time frame of 10.000 years in the future, it will require us to take a longer view. A longer view that change our stories about on ourselves, our civilization and our future.

I have written about this a couple of times before so why do I mention it now? One reason is that I feel our times are now accelerating even more and we are starting to feel the future dizziness and nausea like we are being rolling around in a washing machine. In short: we are in more need than ever of inclusive longer term stories that organize our thinking and our societies.

A more direct reason is that a group of filmmakers published this beautiful short film describing the project.

The Clock of the Long Now from Public Record on Vimeo.

Is following BCG – Digital Imperative possible for anyone???

Skärmklipp 2015-10-08 10.47.30

I agree in principle with the analysis that BCG have done and which they conclude in what they call the Digital Imperative. They have also developed a nice animated presentation that explain it visually.

It is when I reach the end of their animation I suddenly see all five fundamental changes that a company needs to address I start to laugh and shake my head. I suddenly visualize something like a Larson cartoon where a bunch of dinosaurs are sitting in a conference listening to a presenter that shows PPT-slides which tells them to evolve into mammals.

– “A developed reproduction system known as a womb and a new and more advanced temperature regulation system is the core tricks here. We call this strategy the Mammal Imperative!”

It is very clear that all organizations that sustainable thrives in the new digital ecosystems are younger than 30 years of age and belongs to a different species. It is also clear the number of organizations that have changed and survived through disruptive business environment transformations are almost zero.

The BCG line of reasoning assumes that a single organism or system can have the ability to fundamentally redesign itself. Nature have so far for the last billion or so years taken a different path:

  • every individual organism tries to utilize their inherited capabilities, use it economically and efficient in order to survive until it can breed
  • change occurs between generations by the means of mutation

Isn’t it the same pattern we see in organizations as well? Organizations don’t seem to have very good capacities to change, but people are creative. When they start a new organization, their knowledge and capabilities of finding out how to create value in the current ecosystem results in that next generation of organizations have different capabilities.

I know this is a tall order to grasp. Could it really be so that my organization don’t have the capacity to change and adapt to the emerging digital world? Yes, and if we are looking at statistics so far it is even very likely so.

Back from the dead!

Rising from the grave

If you still are having this blog in your RSS-stream or elsewhere I think I owe you an explanation of the disappearance of this blog. It did NOT mean that I stopped working with future related things. This blog, and the whole of my site was unfortunately hacked, and I had to remove everything and start all over. I fixed my Swedish counterpart of this site which was the most important for as most of my work is taking place in Sweden. Anf this have been dragging ever since…

But now I am back!

If somebody is still here, why don’t you throw me a comment?

Digital transformation – Are some people starting to get it?

How does the digital transformation of your organization go? According to the global study DIGITAL TRANSFORMATION: A ROADMAP FOR BILLION-DOLLAR ORGANIZATIONS from CapGemini just 50 of 157 executives say that they have an effective approach. Not an easy task it seems…

But why is this so hard? The report states that

Successful digital transformation comes not from implementing new technologies but from transforming your organization to take advantage of the possibilities that new technologies provide. Major digital transformation initiatives are centered on re-envisioning customer experience, operational processes and business models. Companies are changing how functions work, redefining how functions interact, and even evolving the boundaries of the firm.

I couldn’t agree more. But isn’t this difficult? Yes, really! What makes it even more difficult is further described in another conclusion:

Successful DT comes not from creating a new organization, but from reshaping the organization to take advantage of valuable existing strategic assets in new ways.

This means that in order to succeed you have to understand what your valuable existing strategic assets really are and transform your business to leverage them in a digital approach.

I think these statements are correct, are really important and points in the right direction. But judging from my 10+ year experience in working with intelligence, strategy and change in a global company, I see is that this is incredibly difficult to do in practice. Is it really so that as much as 1 in 3 are successful in this process? And to what extent are they successful?

From a historical perspective from other technology driven transformations, there are extremely few companies that have been successful in transforming themselves across societal and technological shifts. How many companies are e g older than 100 years? 100 years ago there was another, albeit a magnitude smaller, technological and societal shift that also required transformation and how many organizations survived that?

We must correlate these insight with other findings e g John Hagel’s analysis of the performance of today’s companies:

Firms in the Standard & Poor’s 500 in 1937 had an average life expectancy of 75 years; a more recent analysis of the S&P 500 showed that the number had dropped to just 15 years.

I think it is time that people reread the former Shell executive Arie de Geus’ book The Living Company, Clayton Christensen’s The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business and Alan Deutchman’s Change or Die: The Three Keys to Change at Work and in Life.

In the end of the executive summary the CapGemini reports correctly states that:

Despite the hype around innovative digital technologies, most companies still have a long way to go in their digital transformation journeys. Leadership is essential. Whether using new or traditional technologies, the key to digital transformation is re-envisioning and driving change in how the company operates. That’s a management and people challenge, not just a technology one.

From my view from the outside I still wonder if change really is happening to the extent that people think it does. Because if it does it is against all historical odds. Or are we creating an illusion of change, when in fact organizations are failing more dramatically than ever?

The good thing with this report is that they are starting to formulating the difficulties in a much more realistic way than I have seen before from IT-consultants. And that is a good thing… If they show the correct picture of the reality, I am not at all sure.

The future of 3D printing

3D Printed shoe

This is a 3D-printed shoe I recently found search Flickr for images on 3D printing. It is obvious that the quality of 3D printing is rapidly getting better and according to the discussions on the Internet most people seems fascinated of and apparently caught in the race towards higher and higher quality. The problem with this race is that it might draw us down into the technical details of 3D printing rather than into the important implications 3D printing might have in the future.

There are (at least) four aspects that is much more important that product quality to note when thinking about where 3D printing might take us in the future. 3D printing might:

  1. Potentially fill the basic but enormous global needs of relatively simple objects – From a global perspective the greatest need for things is not the need for advanced and complicated things like Stradivarius violins or electron microscopes but more small and mundane things like cogs, wrenches or gaskets that is needed for maintaining or developing the irrigation equipment that is needed for producing food. What 3d printers is on it’s way of doing is potentially give the people of the planet the access to the spare parts and daily practical tools that is needed to help themselves and fight poverty.
  2. Redefine the distribution and personalization of products – Since the industrial revolution a product is typically mass produced in a factory and distributed over long distances through a complex web of transportation modes and storages. If 3D printing becomes more widespread production can instead be performed by a local and basically unmanned printer, which also with no extra effort can produce a personalized version in a way which is very complicated to do in a traditional mass production facilities. If this happens large parts of the distribution and production structures will then be bypassed for a long row of small products. A direct consequence for trade regulations is that they will most likely to be obsolete since the current ways of limiting import of products is by border controls wheree customs personal looks for physical objects.
  3. Blur the border between ideas and physical things – Since we have been living in a world of physical things, our thinking, habits and rules are constituted by physical objects. E g society have decided that certain objects are illegal or heavily regulated since they are potentially dangerous if spreading in an uncontrolled way. Guns and certain drug manufacturing equipment are examples of such regulated physical objects. What if everybody everywhere can download or draw and then print out those objects on their personal 3d printer? Should ideas and sketches of illegal physical objects also be illegal? When the border between the physical object and the idea of the physical object blurs, we will have unprecedented and conceptually really difficult challenges.
  4. Break down the current model of factories and value chains – What is becoming possible with 3D printing in the longer perspective is the transformation of one object into another without the need of a factory. That means that if you have an empty plastic bottle you could use a 3D printer to transform it into things like a required spare part, a wrench or a shoe. Or if you have a pair of childrens shoes which becomes too small, why not scan them in a 3D scanner, reuse the material of the old shoes (and maybe add some material from the empty plastic bottle) and print out a pair of identical shoes in a larger size. All without the need of a factory, distribution chain and a shoe store.
Every one of these changes has the potential of radically transform the industrial society into something very different. I think it is worth thinking about the consequences and track the development in this area closely. Especially since most of the 3D printing development currently seems to happen outside all the large corporations.

Welcome to the transition society

On October 11 Thomas L. Friedman, author of widely selling books like The Lexus and the Olive Tree, The World Is Flat and Hot, Flat, and Crowded as well as a NY Times columnist wrote a massively referred and tweeted column by the name Something’s Happening Here, which he started off by:

When you see spontaneous social protests erupting from Tunisia to Tel Aviv to Wall Street, it’s clear that something is happening globally that needs defining. There are two unified theories out there that intrigue me. One says this is the start of “The Great Disruption.” The other says that this is all part of “The Big Shift.” You decide.

And ends with:

So there you have it: Two master narratives — one threat-based, one opportunity-based, but both involving seismic changes. Gilding is actually an optimist at heart. He believes that while the Great Disruption is inevitable, humanity is best in a crisis, and, once it all hits, we will rise to the occasion and produce transformational economic and social change (using tools of the Big Shift). Hagel is also an optimist. He knows the Great Disruption may be barreling down on us, but he believes that the Big Shift has also created a world where more people than ever have the tools, talents and potential to head it off. My heart is with Hagel, but my head says that you ignore Gilding at your peril.

You decide.

Since I have been following and been talking about the future based on the underlying driving forces that lead up to this development for many years now, I couldn’t agree more to about the relevance of these narratives. But I think Friedman makes a mistake when he thinks just one of these two narratives about “The Great Disruption ” and “The Big Shift” are right. To me these two theories actually describes two driving forces that play out simultaneously , which both will have huge ramifications on our society. Because of this model I call our society which now lives through this the transition society.

This is a compressed version of a slide I usually show in order to talk about how these forces are related to each other. As you can see here I think of the impact as a transition phase where one s-curve shaped development is replaced, being succeeded or eventually melted together with another development in form of an s-curve. As we know from ecological systems, the outcome from such a transition is highly uncertain, and I think we should think about our future in the same way.

This way of visualizing the future is of course highly abstract and theoretical, but is nevertheless one of the few ways I have found to visualize the complex development of what we see happening around us. One argument for this S-curve/transition model is that it would also explain the transients and rapid swings we see today and which is a normal effect in the observation of phase transitions in e g  physics, chemistry and biology.

Toyota takes the resilience path

Courtesy of Agecom Bahia (Creative Commons license)

We can talk about scenario planning in order to see, understand and manage uncertainty on a longer term planning level but when it comes running the daily business the result of the process i e how we design companies and structures will be the crucial point for the future.

I am again talking about the need to redesign society and businesses and build resilient and shock-managing institutions, rather than slim, lean, efficient and just-in-time structures. Or maybe they can be slim, lean, efficient and just-in-time, but ONLY of these properties are helping organizations to be better at managing dramatic and sudden changes. Otherwise this mental heritage (or garbage) of efficiency and just-in-time thinking from an obsolete industrial age will lead to a certain death when the grim reaper of unexpected shocks or changes comes to take his tribute.

One sign of change comes from Toyota who seems to maintain it’s thought leader position when it comes to taking the next level of industrial development into the area of resilience…

Based on the terrible experience of the Japanese earthquake Toyota are now aiming at change their manufacturing and supplier structures with these three steps:

  1. Standardizing parts – so Japanese automakers could share components manufactured in different locations
  2. Increase supplier inventories – so the outsourced delivery of components will be able to deliver parts longer and not so fast be victims of sudden shortages of material
  3. Making each region independent - i e procurement of components are local so a disaster somewhere would not affect production overseas

This is really interesting but it is worth noting it is just a part of the solution and just from the perspective of the manufacturing plant. There are much more and deeper work to do in order to make the whole value process around the automotive industry resilient and future ready.

But from a longer term strategic perspective, taking this path, or rather being forced to go down it, could turn out to be as important for the long term future success of Japanese auto manufacturers, as the collective Japanese decision to decrease fuel consumption was in the 1980:s.

Are the Japanese again using their problems and tragedies in order to improve before everybody else does?

Read more in Reuter article.

Sarkozy is misinterpreting the Internet revolution completely

Mr Sarkozy has now taken the battle of the Internet to the next level of open conflict between governments and the Internet by initiating the e-G8 meeting where he argued:

“The universe you represent is not a parallel universe. Nobody should forget that governments are the only legitimate representatives of the will of the people in our democracies. To forget this is to risk democratic chaos and anarchy.”

“We need to hear your aspirations, your needs,” but that “You need to hear our limits, our red lines.”

(quote from Don Tapscott – G8 and the Internet – Sarkozy Messes With a Good Thing – you can read even more about this in Alex Howard’s article: At the eG8, 20th century ideas clashed with the 21st century economy)

What Sarkozy miss completely is that the current form of democratic government system, the current ideas and laws around Intellectual Properties, well the whole concept of the nation state and even of our current civilizational form is in fact a result of, and is completely built on the previous major communication revolution: the printing press.

How revolutionary we might regard the printing press, we must understand that it provided just a gradual change of human organization. It was a innovation that only increased the efficiency and effectiveness of the old model of one-to-many communication. We are now facing a much bigger and more profound change in human organization than ever. The global diffusion of Internet is the birth of something completely new and unprecedented, a fundamental change of the inner wiring of human society and organization: many-to-many communication between already hundreds of millions and soon billions of people and artifacts on this planet.

Fundamentally new communicational and computing capabilities is on it’s way to  completely redefine almost everything and in particular how humanity is organized in larger groups as e g cities and countries. To use Sarkozy’s words and seeing the world from his or many other traditional democratic governments perspective: this will without doubt result in democratic chaos and anarchy. The change will not take the form of something to fight with or decide about but will rather emerge from the inside of ourselves and take the form of old concepts, systems and structures that suddenly and curiously become irrelevant or at times even dangerous and counter productive.

The challenge for all of us now (including governments) is to put ourselves into a state to avoid repelling everything new but continuously learn about the new logic as it emerges in order to 1) dismount the current systems which in the current situation might cause more harm than good and 2) in their place develop new interim systems that will result in temporary islands of order where we can thrive in waiting for the next wave of deep change. Always knowing that the current structure, the current idea or the current system soon will be irrelevant again and need to be rebuilt .

It is becoming increasingly clear that the knowledge and systems that have taken us this far NOT will take us into the future.

And in times of fundamental transformation any firm and unadaptive construction will most likely turn out to be the things that keep you immobile and stuck to the bottom when the water rises and the tsunami is rolling in.