What if selling your house would be as easy as sending an email?
The Blockchain is known as the underlying technology for cryptocurrencies such as Bitcoin. When you combine this technology with a new organizational model, management is reinvented. Writers Paul Bessems and Walter Bril wrote the book ‘Blockchain Organizing for Managers‘.
“Blockchain can contribute to challenges such as low productivity growth, the new European privacy law, the power of large tech companies and fake work & fake news. Traditional management is in need of replacement because productivity growth doesn’t keep up with our rising welfare costs.” – Paul Bessems
The book is aimed at managers who want to know more about Blockchain Organizing for business and want to make decisions about this by starting (proof of concept) projects, developing strategies or making policy. Earlier in 2017, both writers published the ‘Blockchain Bible’.
Next internet phase: transfer of value
Blockchain can be seen as the next phase of the Internet, but also as an extra layer on the internet. With the Internet, we easily copy information: an email in the outbox of the sender and one in the inbox of the receiver. But when you have to pay two people ten euros, it is not the intention that you take a photo of a ten-euro bill, send it to those two people and then say that it has been paid. We do not want to copy money or in general value or assets. You also want to be sure that the sender is the rightful owner of the value you are going to receive. These are two important additions of blockchain on the existing internet. You have to prove that you are the owner, that you spend your value only once and the digital transport from sender to the receiver has been done safely. In principle, these three agreements can be programmed via a blockchain protocol. To do peer-to-peer transactions, all you need is a computer device, internet connection, and blockchain protocol. This simplification of doing business will have major implications for management.
Changes in traditional management
Two main reasons that companies – and with it, traditional management – exist, are: minimizing transaction costs and (efficiently) connecting resources to activities, with the aim of increasing productivity. Blockchain Organizing is a renewed invention of management. It is disruptive technology (blockchain), applied in a fundamentally new organizational model (Weconomics). This allows us to organize trust, work, and economics without increasing complexity and bureaucracy.
Walter Bril, one of the authors of the book ‘Blockchain Organizing for Managers: The Reinvention of Management’, adds: “Management as an invention, as technology, has not fundamentally changed in the last hundred years. Up to now, adjustments have certainly been made, such as recently Agile or self-managing teams. But these concepts have never challenged ‘the firm’ or hierarchies as a superior form for organizing work. It turns out to be relatively small adjustments within an existing invention, which largely consists of using buildings, hierarchies, plans, informing, assessing, deciding, rewarding and punishing.”
With Blockchain it is possible to change almost all business aspects.
Blockchain technology in practice
Except for office buildings, many business aspects can be programmed. As an example, the basis of the bitcoin community (if you would like to see this as a company) consists of three roles: miners, maintainers, and movers (users). Miners receive an immediate reward for their work, maintainers, and movers indirectly (as the value of their community and corresponding coin or token grows through their effort to organize trust). This means that an important management aspect (rewarding) has been fulfilled. Other aspects, such as hierarchy, planning, informing, assessing and deciding, are ‘rules’ and can be replaced by a protocol. Management can therefore also become a mechanical technology. A blockchain protocol delivers the same output against much less bureaucracy and complexity. This reduces organization costs and increases productivity.
This principle applies to all offices, including government, education, and healthcare. For example, Blockchain Organizing can not only be used in the financial sector or by HR professionals but also for applying for a passport, keeping track of your e-portfolio or the electronic patient file and within supply chain management for tracing & tracking. The way in which we connect people and resources to activities, projects, and goals in order to increase productivity has not fundamentally changed since Taylor and Ford. Blockchain Organizing can certainly change a lot. When organization costs as a result of bureaucracy increase and transaction cost, as a result of digitalization, decrease: hierarchies become markets.
About the authors:
Paul Bessems brings blockchain technology and organizational science together. He moves between science and practice, is an international speaker, blockchain consultant, and (co) author of more than ten management books. He has more than 25 years of experience in designing and developing new organizations that align better with our new context (data economy) and new organization technologies such as blockchain. He is an expert in the field of Blockchain Organizing.
Walter Bril is a process knowledge management expert. For more than 25 years now he has been involved in analyzing, (re) designing business processes, with his focus mainly in the field of practical knowledge retention management. Currently, this shows concretely in the form of contributing to the San Francisco based SaaS start-up Elements.cloud. As one of the original co-creators of the Universal Process Notation (UPN) and member of the core team of Elements.cloud, he adds value to mainly Salesforce customers.