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Wednesday, May 25, 2016

Tech Savvy: How Blockchains Could Transform Management 05-25

What’s happening this week at the intersection of management and technology.

Re-architecting the firm with blockchain: Is Craig Wright really Satoshi Nakamoto, the mysterious creator of Bitcoin? Who knows — and really, who cares? The bigger issue is blockchains, the distributed ledgers that underpin cryptocurrencies like Bitcoin.
Blockchain technology has so many uses that trying to summarize them can make veteran tech experts sound like PR hacks. “As such, it holds the potential for unleashing countless new applications and as yet unrealized capabilities that have the potential to change everything,” write Don Tapscott and his co-author and son Alex Tapscott in their new book, Blockchain Revolution:

How the Technology Behind Bitcoin is Changing Money, Business, and the World.

That might sound like hyperbole, but it seems like everywhere you turn these days you run into blockchains. Banks are trying to harness blockchain before its blows up their business models. IBM is betting on blockchains to give its revenues a bump. Disney has a blockchain team doing … well, who knows what.

What we haven’t heard very much about is how blockchain could fundamentally change how companies are managed and operate. That’s a good reason to take a closer look at Blockchain Revolution, in which the Tapscotts devote a chapter to the topic. “Blockchain technology is enabling new forms of economic organization and new portfolios of value,” they write. “There are distributed models of the firm emerging — ownership, structure, operations, reward, and governance — that go far beyond enhancing innovation, employee motivation, and collective action.”

Intrigued? If you’d like read more about how blockchains might change the everyday operation of a business, check out the excerpt from the chapter, reprinted with permission, below.
The innovation hub — same as it ever was? The Internet has wrought significant changes in how we work, but some things — innovation hubs, for example — remain remarkably durable. “For hundreds of years,” writes freelance journalist Emily Sohn in Nature, “regions developed specialities that often arose from access to a natural resource, but then intensified as people moved to the regions to be among the expertise. The Internet was supposed to change all that. Around-the-clock connectivity that allowed researchers and entrepreneurs to collaborate from anywhere at any time meant that distance would no longer be an issue, predicted popular economic theory of the early 2000s. A decade later, it hasn’t panned out that way.”

Sohn reports that global connectivity seems to have stimulated the growth of innovation hubs, like Silicon Valley, rather than shrunk them. “Innovators and PhD students are now clumped together in fewer places, often in big cities,” she says. “And collaborations are more likely to happen between researchers who live, or have lived, close to each other.”

New and existing companies can’t afford to buck this finding. Locating in innovation hubs gives them greater access to talent. It also boosts their performance: Sohn cites studies that show start-ups located in hubs are more likely to survive, and firms in hubs are more likely to file patents than companies outside hubs.

It turns out that no matter how easy it is to collaborate at a distance, proximity remains an essential element in stimulating innovation. It sets the stage for serendipitous meetings. Face-to-face interaction also creates feel-good reactions in our brains that promote trust and more effective collaboration.

It’s not that digital connectivity inhibits innovation. Far from it, reports Sohn. Rather, it stimulates the enhanced innovation that is already taking place within innovation hubs — in effect, supercharging it. It’s a finding worth keeping in mind that next time your company is considering where to locate a new business unit or research facility.

Putting data to work with knowledge graphs: A brief story popped up in The Seattle Times last week: A data analytics company named Maana announced it had raised $26 million in Series B funding from the investment arms of Saudi Aramco and Shell. In these (waning) days of billion-dollar start-up valuations, $26 million isn’t especially jaw-dropping. But the company does have has an interesting approach to data analytics, which uses “enterprise knowledge graphs.”
There are a couple of problems with data in big companies. First, there’s lots of it, and it’s often stashed in separate silos. “A single division could have over 60 different information systems that they work with,” CTO Donald Thompson told tech reporter Rachel Lerman. Second, you need to turn the data into useful insights and recommendations. Third, you have get those into the hands of people who can use them to enhance results.

Bearing in mind that I’m a layman at best, here’s how Maana approach works: Instead of placing the company’s data into a common pool, it sends out a search engine to crawl the various data silos in your company. Then, instead of simply delivering a list of results, it uses analytics and machine learning to construct knowledge graphs — kind of like the ones that Google introduced a few years back — that provide actionable recommendations based on the goals and needs of the business and delivers them to line-of-business applications. Maana has used cases on its website that show how this approach works and the results it has produced in operational settings in industrial and oil and gas companies.

Reproduced from MIT Sloan Management Review

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