The world is just beginning to experience the disruptions being generated by blockchain, the technology that underpins Bitcoin and that provides a new way to fight fraud and improve cybersecurity. The waves of innovation already underway make clear that it will change our overall business environment in the same way that the groundswell of information technology did in the mid 1990’s. Many business leaders did not care about IT. But IT changed their world anyway.
Executives who carefully considered the new impact of information technology to the business world were able to improve business outcomes in game-changing ways. The same will be true today.
While not all executives and members of company boards are fans of cryptocurrency, all seem to be deeply interested in exploring the business impact of the “distributed ledger” that makes cryptocurrencies work. The blockchain is a new and exciting way to change business models, remove overhead, reduce waste and improve overall business outcomes.
Since are going to have that big of an impact, we should all dive deeper into the topic. Here are the things every executive should know about blockchain-enabled technologies:
- At least a basic understanding of how the technology works, including the technology of the blockchain behind bitcoin and the blockchain and computing fabric behind the even more powerful Ethereum, will be necessary to make good judgment calls on technology investments going forward. There are some good books on this topic, especially Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by New York Times reporter Nathaniel Popper.
- Investing in cryptocurrencies is different than investing in blockchain solutions for your business. For most companies, the most desirable big investment will be in developers who can program blockchain-enabled solutions (get your tech team learning the tool Solidity). Investing in cryptocurrencies is a special topic and may also be of interest (Everyone should open a Coinbase account and put at least a tiny bit of money into some of the currencies there).
- The use of the term “smart contract” in a blockchain context refers to computer programs that can be written to directly control the transfer of value when certain conditions are met. Smart contracts digitally facilitate, verify or enforce the negotiation or performance of a contract, all without third-party involvement.
- Although the blockchain will disrupt many industries, the one that might see the biggest impact fastest is the financial sector. Executives in the industry already know this. But all of us who are their customers also need to be thinking through this disruption. We can have a voice in how our financial-services providers serve us and should be pushing them to do so smartly, with blockchain-enabled solutions.
- Be on the lookout for new capabilities from venture capital-funded companies that can leverage the blockchain to accelerate or improve business functions for your own company. If your competitor works with a firm like this but you do not, you could be losing out. If you leverage a partner before a competitor does, you can beat them in the market.
- Consider the impact that blockchain technologies can have on your current company strategy. This is especially important for board members or CEOs. You should ensure your entire management team is smart enough on what the concepts are to be able to have intelligent discussion on coming opportunities and threats.
- Consider ways that smart contracts and blockchain technologies can improve your internal systems. Developers who know how to program blockchain solutions can provide applications that work inside your firm but deliver similar strong benefits as those that run on the public blockchain. We have seen proof-of-concept solutions like this already, and are also seeing a rise in new commercially supported solutions that will soon be available for human resources, administration, supply chain management and even cybersecurity.
Finally, maybe the most important recommendation for executives: View the blockchain with excitement. And channel that excitement into action to improve your business.