Anyone who’s attended cryptocurrency conferences in 2019 has experienced the narrative confusion that hit after the ICO bubble. “Blockchain” companies push lame enterprise products which are, at best, nice to have; token issuers shill new issuances; exchange operators look for capital.
Who isn’t there? Big corporate technology customers. like all technological device of the last 50 years, cryptocurrency must catch their attention before large-scale adoption is possible.
But two years after the bubble, killer apps are nowhere to be seen. So at the beginning of a replacement year, it’s worth asking ourselves what kind of path might bitcoin and its competitors fancy get there, and whether 2020 is an inflection point.
Whatever the path and timeline, the transition period for companies building on bitcoin is certain to be painful; at an enormous company, technological change always is. Automating payroll, invoicing, expense-reporting and other financial operations on top of the bitcoin network would be a slow and expensive process, requiring a huge amount of your time and money spent on building software and retraining workers.
Only a particularly significant issue might be the impetus for such a scenario. Does such a drag exist today, and if so, how might cryptocurrency solve it?
The speed of corporate implosion
Consider a couple of data points:
In 1958, the mean lifespan of a blue-chip company was 61 years; by 2016 it had dropped to 24 years.
Almost three-quarters of a billion hours per week are spent by U.S. workers on internal compliance activities, roughly half which don’t create value.
The return-on-assets of the highest 25 percent of public companies declined from 12.9 percent in 1965 to eight.3 percent in 2015.
Things are going badly for workers, too; since 1976, productivity growth (from technology) has outstripped wage growth by an element of 5.9.*
From Nokia to Microsoft to Borders to BlackBerry, incumbents fail again and again to preserve their market position and grow wages, despite all the market data they vacuum up annually, all the consultants they pay and every one the brilliant young college grads they hire.
This is an enormous problem. Why is it so?
The problem is that digital technology has advanced the “practical arts” (from spreadsheets to movie-making) to such a degree that advanced planning and hyper-efficient processes – once strengths of the massive hierarchical organization – are not any longer as valuable. In hit or miss, ad-hoc business environment, agility rules and bureaucracy may be a drag.
If Bitcoin and similar networks can’t help large companies become more agile, they’ll have little relevance within the economy of subsequent 20 years. what’s the trail to utility?
The philosopher Bertrand de Jouvenel theorized that we will reason about the longer term by conceiving of “futuribles.” “A future state of affairs enters into the category of ‘futuribles’ as long as its mode of production from this state of affairs is plausible and imaginable,” he wrote. “A futurible may be a descendant of this, a descendant to which we attach a genealogy” that extends from conditions today.
What are the “conditions” of the whirlwind corporate world of the last decade? In their attempts to maneuver faster and forestall their early demise, the most important incumbents have begun to reorganize to scale back hierarchy and push more decision-making to the margins of the business and faraway from upper management. what’s the corresponding futurible as we glance to the 2020s?
What kind of operating model might corporations be forced to adopt next, because the physical world digitizes and therefore the speed of business further increases?
The dual-OS company
While he’s never written about cryptocurrency, Harvard graduate school professor John P. Kotter originated the concept of “the dual-operating-system company,” which mixes a standard hierarchical management organization with a “network” of supertemps, some paid and a few unpaid, outside the office walls.
Hierarchies, he says, are good for planning, creating budgets, defining roles, HR functions and measuring results. “What they are doing not had best,” he wrote within the Harvard Business Review in 2012, “is identify the foremost important hazards and opportunities early enough, formulate creative strategic initiatives nimbly enough, and implement them fast enough.”
He advocates what he calls a “second OS,” a network of individuals who design and implement strategy from outside. The network half the dual-OS company is like an system for the normal corporate hierarchy, constantly surveying the business, its markets and its competitors to bring new information and practices in.
Kotter says about 10 percent of the network should be comprised of full-time employees, and therefore the rest carefully-selected part-timers and volunteers, who are given highly structured processes to form sure their contributions are meaningful, and whose work is seen at high levels of the hierarchy.
There are a couple of practical problems with a perfect implementation of Kotter’s dual-OS model, however, especially with a really large network. One is payroll. If roles are non-standard, with varying schedules of compensation for part-time, full-time and contract work (and payees constantly dropping on and off at high volume), a military of HR staff would be needed to handle the load. It’s even worse if paychecks are being remitted round the world to a network of external contributors, in places where the business doesn’t have an area office.
Could it’s that dual-OS is that the panacea to ailing corporations which it needs a replacement kind of financial infrastructure to be implemented economically?
Where bitcoin comes in
Bitcoin is, at heart, infrastructure built for (and by) leaderless groups, operating by emergent consensus. samples of leaderless groups include not just FOSS developers, but also hashtag-based movements like #metoo, or Occupy Wall Street-style protests just like the Arab Spring in 2011. In Kotter’s dual-OS company, the “network” half is one such leaderless group.
Bitcoin is right infrastructure for leaderless groups, because wallets are often issued without permission, and Bitcoin payments are easy to automate, giving companies the pliability to pay people in very small or very large amounts, at large scale, anywhere within the world.
Another headache of dual-OS is budgetary permissions. Companies wish to set thresholds where staff can spend money with or without permission, but these rules are often not very granular at the company mastercard level, and enforcing them otherwise are often hard. Custom wallet software, perhaps with multi-signature functionality for giant wallets, can help companies put the spending power within the hands of employees, reducing the bottleneck of managerial approval by formalizing the spending rules into the wallet software iself.
Remittance is another issue, for companies and their employees overseas. Remote offices often got to remit payment back home, but forex conversions are often difficult, slow and expensive in some geographies. Employees working in far-flung places got to be paid locally, but also wish to send money home; fees and delays abound with existing financial systems. The increasingly global nature of business means suppliers, manufacturers and logistics agencies may have to be paid in dozens of various currencies.
Thus, the dual-OS operating model looks like a legitimate futurible for today’s corporations, and its challenges create a requirement for digitized financial infrastructure.
To the business world, bitcoin and its competitors are effectively competing to be the premier inter-settlement-network network. That is, networks which transmit value between poorly connected fiat systems, filling gaps where other services are too expensive, bureaucratic or slow.
Before long, local money transmitters are going to be ready to push large amounts useful cheaply and instantly through Lightning (or similar) channels from one country to a different, meaning that their customers never even got to own bitcoin to profit from the technology to remit value overseas.
This has been a cursory check out how bitcoin might find its way into the mission-critical enterprise stack. In an effort to stay agile, large incumbents have already begun to wrap themselves in permeable networks, even without knowing how such a dual-OS structure might scale. As they grow their networks, it’s only a matter of your time before the cryptocurrency narrative regains its strength.
*Data from Aaron Dignan’s new book, Brave New Work.