2016 has certainly been an interesting year for Blockchain. I have been following developments with interest, ever since it first came to prominence as the underpinning technology of the Bitcoin cryptocurrency in 2009. From my perspective, 2016 has been the year in which Blockchain has emerged into the mainstream business consciousness with all of the associated media coverage. I have now lost track of the number of articles I have read that have pronounced Blockchain as being “as disruptive as the internet itself” or similar. Some may see such pronouncements as the hyperbole around a technology at the peak of its hype cycle. Some may be turned off by the focus of some commentators on the technical complexities of the Blockchain structure.
As a futurist, I try to avoid focusing on any technology in isolation. It is far more informative to view technology in the context of how it is used by people and organisations – a socio-technical systems perspective, where societies create and select technologies that in turn shape those societies and their institutions. Adopting more of a high-level cultural view has helped me to think about why Blockchain is disruptive and how it might evolve in the future to reshape our organisations. Let’s start by thinking about how todays’ organisations and institutions have evolved to manage trust around a fundamental technology for organising and storing their knowledge and collaborating.
SQL – a story of centralisation
If we cast our minds back several computing generations to the 1970s, we witnessed the arrival of another disruptive technology – the SQL database. This technology was wildly popular and remains so today. Most major businesses and institutions have a large centralised database installed at their heart that holds ‘organisational truth’ and institutional knowledge of the organisation. SQL was revolutionary in that it helped organisations to build and manage a much greater degree of trust in the data they held and the relationships between them than had been achievable with previous technologies. Groups and individuals could be allocated permissions to create and consume data to a detailed level. For example, as project manager I might be trusted to see a list of names and addresses for the members of my team but I might not be able to see their salaries – only the HR team and divisional manager could trusted to see and alter that information.
In most organisations there is also a great deal of information that is held in ad hoc knowledge repositories, spreadsheets and smaller databases. But when it comes to organisational truth and certainty, if it’s not in the central database then effectively it doesn’t exist. In an era when the dominant organisational structure was centralised, hierarchical and organised around command-and-control, such SQL databases were a highly complementary fit.
Grit in the machine
When you have a big database at the heart of your organisation that is the source of all truth and wisdom (and therefore competitive advantage), you are reluctant to let anyone else access it. Collaboration is indirect – an organisation transmits its ‘truth’ from its database, data is transferred to another organisation that does something to it, before storing it in its own database. Often, intermediaries are required to establish consensus between parties who don’t inherently know or trust each other, when information is shared. Think land registries, clearing houses etc.
Good collaboration is based upon trust, transparency and efficient sharing of information, but when it is predicated on centralised and closely guarded private databases, the result is indirect, bureaucratic and inefficient.
Enter the network…
The greatest technological disruption to occur since the situation outlined above has been the arrival of the internet – undermining command and control structures, and overturning and flattening hierarchies. Power and influence have migrated to the network edges and information is more fluid than ever, but, and it is a big but, our institutions, governments, corporations and regulatory regimes are still struggling to adapt to this enormous change.
We are still living and working in a society that is dominated by huge, centralised database-backed institutions that often communicate with each other through very inefficient and indirect means. This can lead to the creation of silos and monolithic bureaucracies that struggle to cooperate well and can be difficult to interact with due to a lack of mutual trust and transparency. At least some of this is down to the technical limitations of the SQL database. Trust in SQL was designed to work in a traditional hierarchical organisation of individuals in groups that were considered as working in rigid(ish) teams responsible for a defined set of functions. This has then become unmanageable at scale in a fluid constellation of organisations and relationships.
What if we were to design a database technology optimised for cooperation between organisations and constant rapid change? I suspect it would not look much like SQL. Moreover, from a socio-technical systems perspective, if we had designed such a technology several decades ago, might it be possible that we would today see a completely different macro-socioeconomic structure because it would be easier for people, businesses and governments to cooperate, share and efficiently respond to optimise for change?
A database for a networked world
Perhaps if we were to design a technology for our modern networked world to support trust, transparency and data sharing, it might look a lot like Blockchain. If we start to think about Blockchain as an invention at the same level of abstraction as the SQL database, we can begin to understand its potential to transform. I propose that a good place to start is to view Blockchain as a new kind of database and web infrastructure, which compliments rather than replaces existing web technologies. But it also allows us to radically redesign our organisations and institutions for a networked, rather than a centralised, age.
By acknowledging there is currently tension between two generations of technology – the old characterised by centralised SQL databases, and the new characterised by Blockchain, the IoT etc, we can begin to think about redesigning organisations to support a decentralised, rapidly changing, fluid and highly networked society.
I will explore this theme in further posts and illustrate the kinds of transformation that could be enabled by Blockchain in different industry sectors.
What are your insights on how your organisation is responding to this emerging technology?