By popular demand I was asked to republish this since I wrote it 4 Feb 2017.
At the time the article caused some ripples, seemingly it resonates much harder now almost two years on, as in corporate-land Chairman and CEOs remain too passive, please with their Digital Labs which are no more than worthless theatre.
The article unedited:
I will say this only once…
Ignoring Blockchain is dangerous. Any company director that does not take Blockchain seriously, bother to find out about it, or come up with a plan will be viewed as being in breach of their responsibilities towards shareholders. They are exposing the business to unnecessary risk and, having been warned, could be held personally accountable. Yes, strong words.
I am staggered how many CEOs, the Chairman, and their boards do not have sufficient awareness of technology and so very often wrongly diagnose the storm as a passing shower. While others vested interests stand in the way of clear thought. And why so many underestimate the degree of change preferring a ‘follow the herd’ mentality that commit many industries to a slow painful decline.
Last week, Corporate Banking Vice Chairman Jeremy Wilson at Barclays recently announced in City A.M. 30th Jan 2017.
‘Blockchain will change not just finance, but the lives of everyone. Our view is that if it’s that significant we better get our heads around it’…
Blockchain is already here, but who to believe? The Head of Strategy is looking for incremental improvement compared to peers, the head of IT wants more money to spend papering over the cracks trying to hold tech that is struggling to keep pace, the CFO wants to cut costs and thinks too much is spent on IT anyway, and the Chairman often focuses on maintaining consensus hoping that each storm passes and they get away with just a few cuts and scratches.
There is a big storm coming…
However a slow visible Kodak-like decline won’t happen this time. Before long one of the thousands of people and organizations working on redefining and reinvent your market will do it, and then it is more likely your entire industry will be washed away, taking you with it…
The lack of understanding in the board room can create a falsehood that there is safety in numbers, that scale and market share delivers some form of protection; that IT outsourcing or digital transformation will deliver marginal improvements in performance, although is no more than putting lipstick on the pig. Projects delivering lots of activity that can convince management everything is OK, while others outside your business are envisioning new ways of delivering 10x the Customer Experience at less than 50% of the cost. A new generation of entrepreneurs is working hard to use Blockchain to destroy your shareholder value, completely. And they will win!
It all happens rather fast…
Remember Blockbuster but let us remind you of what really happened. A bricks and mortar business selling (renting) video cassettes and later DVDs was replaced by online consumption of video content (streamlining) as the Web became more efficient, faster, and as bandwidth increased as technology advanced time and again. It was technological advancement that sunk the industry and now we have Blockchain, crypto-currencies, AI, Deep Learning, BoTs and Internet of Things will change everything.
And now Netflix is 30% of all Internet traffic. The sight of the Nokia CEO with his head in his hands where he said ‘but we did nothing wrong’ was astounding. Yet he single handedly failed to see a storm coming and Nokia went from market leader to gone in just a few years, as they failed to see the smart phone revolution being cooked up by Mr Jobs over at Apple. Shareholder value never recovered and investors lost billions. All because management failed to have a plan for what was coming — that was then and Blockchain is now not only coming, it is already here…
Blockchain doesn’t discriminate, treating all industries the same. But it is more destructive to some sectors more than others. Any sector that acts as a ‘middleman’ will be first to be disintermediated, a horrible expression I know, lets say ‘destroyed’ then. Any layer in any industry where the core services is checking, validating, settling and matching will be gone!
I have great access to entrepreneurs building Blockchains for all industries — from new banking platforms, new forms of payment and remittance, for removing the friction in Insurance brokerage, dealing with the complexities of reinsurance, in music putting artists in control of payments and royalties, in government for land registry and voting, the disbursement of payments and Identity, capital markets for settlement and reconciliation, in healthcare for medical records and linking to devices, in legal services removing the need for lawyers and and and…
In Blockchain nobody knows how long you have, 12, 24, or 36 months…as things are already moving very fast…
I speak to management all the time and I don’t know where they get their information. They seem to have a crystal ball and be very well informed, and yes many have heard of Blockchain, but their conclusion there is nothing to worry about, apparently they have 5 to 10 years and apparently someone told them they can have their own private Blockchain… Well that is all good then, shame customers will still go elsewhere.
Pulitzer Prize winner, Thomas Friedman’s phrase ‘I’ll be gone, You’ll be gone’ sums it up for me the underlying attitudes to business . In other words, when the &*%$ hits the fan, I will be retired, long gone, and you will to. But as regulation changes, directors will be held accountable and bonuses will be paid back from your retirement home wherever you may settle.
Imagine a competitor comes into your market at a 50% or more price advantage.
It is going to happen, leaving you no time to react. At that point it will be game over for your business, shareholders as staff and customers move on to become customers of a new Blockchain enabled business. Time to get your brown box and clear your desk, call a lawyer because the shareholder outflow of the lynch-mob will hunt you down like a dog for failing to seen the signs, protect their value and do something about it.
The Rise of eCommerce was fast, Blockchain is like eCommerce on steroids and Viagra all at once, in an F1 car… Directors have no idea the intensity of the storm approaching and the amazing things due to arrive very soon.
Blockchain is a destructive technology capable of destroying shareholder value very quickly, far quicker than eCommerce did that sat on the Internet as part of Tim Burners-Lee’s WorldWideWeb. It was a layer that in 1993 enabled the then new commerce‘e’commerce to be created. That took just a few years to be accepted, and for new applications as business enablers to become the new norm. Commerce that today comprises Amazon, PayPal, eBay, Alibaba, WeBank, and every business on the planet that has a website that drives commerce and is part of a global integrated supply chain where things can be delivered the next day and people expect.
Generation X revere the technology, generation Z are odd because of it, and even the baby boomers understand the value of the web to help them lead more fulfilled and better lives (Airbnb, Uber, Easyjet, Secret Escapes to name a few). Everything is online, we live online, we accept online, despite the Web being vulnerable, despite the hacks and threat of our identity being stolen, despite the fact online nobody knows who anyone really is. Yet we accept the benefits and conveniently forget any misgivings.
The web sits on top of the Internet giving us Http:// and now has a new friend called Blockchain, that, rather than giving us a network connectivity of many to many, going through a central party (validating point) goes peer 2 peer and doesn’t requires a third party to be involved. Of course what I am describing is the Bitcoin payment system that writes transactions to a ledger called the Blockchain. Although everything related to this new technology, which isn’t new at all, is now called Blockchain.
OK dismiss Blockchain as a fad… I dare you
A lot of things are written about Blockchain and some are very quick to dismiss it as just another NEW technology…but here is the thing.
Blockchain isn’t new, as most of the underlying technology has been around for a long while and is mature. The underlying parts, the network, the devices (Smart Phones) and the servers used by Blockchain have been around for a while. The consensus mechanisms that create the rues and deliver the governance are quite old, the encryption used has been around for 3 decades or more, and the underlying software languages JAVA and C++ and others are also quite mature and stable.
What is new is that Blockchain is a structural shift in commerce and how it lets you design and organise the trading and exchange of value between two or more parties. And why 3000 of the world’s smartest people are working on customer and market propositions that are going to destroy your business, your career, and take you with it…
The biggest tech companies — IBM, Microsoft, Cisco, Intel, Amazon — are betting the shop on Blockchain and completely re-engineering their business around both the technology and the Internet of Things, that uses Blockchain and Robotics that work so well together.
There are 10,000 Use Cases, most of the big banks who recognised the opportunity and threat, most governments about assessing and working on projects ready to deploy land registry and voting; central banks contemplating a new cryptocurrency as an Altcoin or ColoredCoin recognising Bitcoin’s simplicity and the rush to use it as a Safe Haven currency. There are upwards of 20m Bitcoin Users today, when it hits 100m users as PayPal did, Blockchain maturity is complete, its future certain, its power of destruction magnified. But then this is merely Act One, Version 1 of Blockchain.
I would argue that Blockchain is the start of new commerce that will enable it to scale like never before. This is because the underlying technology offers a new starting point, a new set of rules and attributes with which to build new operating models, automate interactions and business logic, remove the layers of inefficiencies of an old WorldWideWeb that can no longer support an AI, Robo and Machine to Machine future. I can hear the corporate techies say Nick you are wrong, nothing really changes, because deep down they know and don’t like change and think they can still improve today’s organizations and markets.
In a sense they are of course right, but they are also very wrong. What Satoshi Nakamoto started in 2008 was a movement, more than a simple electronic peer 2 peer payment system. It was the beginning of something entirely new, a technology that when translated into business delivers an entirely different outcome for customers. The current systems based on Fractional Reserve Banking, a System of Record supporting Standard Cost and Value Based Accounting is and has always been structurally flawed. But this was all that there was at the time. It is today’s commerce that everyone accepts, endures, and struggles with because until now there was no replacement that worked better — until the Blockchain.
Act 2 Versions 2 to 5
Blockchain is trying to scale. Ethereum, the version of Blockchain that has the most current potential, is showing signs of scaling. A break out, with some entrepreneurs already achieving great things; but let’s not forget this is early days as new version of Blockchain, with new consensus models, new algorithms and languages, with new encryption and protocols are coming out every few months…and this is accelerating the rate of change and the Blockchains destructive potential.
It doesn’t look good for boards who prefer to ignore it, or pay lip service to Blockchain. Apart from this strategy being seen as corporate suicide it is unfair to stakeholders, especially shareholders, and it is time management joined the Blockchain party or be held accountable when things go wrong, and they will.
Don’t leave it too late, get your head up and have a look around as you don’t want to be the CEOs with a picture that sits alongside the Nokia CEO that everyone laughs at, his legacy and reputation in tatters as he didn’t see a very big the storm coming…
Do something, find out about Blockchain…your shareholders are counting on your…
Copyright Nick Ayton © 2017