financials, and educational records) in a virtual black box. They
alone would be able to decide what to do with the information.
Human resources and procurement staff will need to learn how
to query the blockchain with specific yes or no questions — for
example, Do you have this kind of license? Can you code in this
specific language? The responses from all the black boxes will
provide a list of people who meet these qualifications. Employers
can ask whatever they want, and job seekers can program their
black boxes with answers or refuse to answer.
Finance and Accounting Information about a business’s financial well-being changes all the time. When you search the web
for a company’s financial data, you search in two dimensions:
horizontal (across the web) and vertical (within particular
websites). What you find can be out-of-date or inaccurate in
other ways. On a blockchain, though, there’s a third dimension:
sequence. In addition to being able to obtain a historical picture
of the company since it was incorporated, you can see what has
occurred in the last few minutes. The opportunity to search a
company’s complete record of value will have profound implications for transparency as it brings to light off-book transactions
and hidden accounts. People responsible for records and reports
will be able to create filters that allow stakeholders to find what
they are searching for at the press of a button. Companies will be
able to create transaction ticker tapes and dashboards, some for
internal use and some for the public. As extreme as this may
sound, it’s really not.
Sales and Marketing Just as a blockchain provides a way to obtain information about potential contractors and partners, it will
be able to tell you about people or businesses who are potential
customers. As we have noted, individuals will control access to
their own data in virtual black boxes, which will limit a company’s ability to profile customers by tracking and capturing their
behavior online. However, the blockchain will allow companies
to engage with individual customers on a peer-to-peer basis.
This may seem like a lot of effort, but it could actually be a huge
opportunity. Some consumers may offer businesses access to
their data in exchange for freebies; others will charge fees to
license their data. Either way, companies will be able to reach
their target audience with greater precision.
What’s more, sellers won’t have to worry about who the
customers are and whether they are able to pay. With the new
platform, sellers won’t have to incur the cost of establishing
trust — thus they can facilitate transactions that would have been
risky or might not have been possible otherwise. Furthermore,
blockchains will eliminate the cost of warehousing data and pro-
tecting other people’s data from security breaches. It should also
be easier to target customers who make their interests known.
Despite the advantages of being able to reduce risk, there is
also a downside. The ability to make precise queries leads to pre-
cise results. This means that there will be much less serendipity.
With blockchains, you are less likely to discover people or part-
ners who don’t fit your profile but are open to change, willing to
adapt, and eager to learn.
Legal Affairs Coase and subsequent economic theorists have
argued that corporations are vehicles for creating long-term
contracts when short-term contracts require too much effort to
negotiate and enforce. Blockchains facilitate contracting in both
the short and long term. Through smart contracts — software
that, in effect, mimics the logic of contracts with guaranteed execution, enforcement, and payments — companies will be able to
automate the terms of agreement. A contract can refer to data
fields elsewhere on the blockchain (for example, a party’s account
balance, a change in a commodity price, or an additional sale of a
copyrighted work). It can trigger alerts and ensure payments.
Because the contracts will be self-enforcing, corporations will
not want to enter into them lightly. Changing the terms of deals
(or attempting to manipulate them) will be more challenging.
Lawyers and other managers will need to learn how to audit
legal templates and make sure the contract software supports
what both parties agreed to do. They will also need to become
knowledgeable on issues involving the blockchain and smart
contracts. The fastest-growing specialty in the law firm of the
future is likely to be “smart contract mediator.”
With the new platform, sellers won’t have to incur the cost
of establishing trust — thus they can facilitate transactions
that would have been risky or might not have been possible
How Blockchain Will Change Organizations (Continued from page 11)