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Preparing for a Blockchain Future Consider three key questions when determining how to make blockchain a useful part of your business strategy.

F A L L 2 0 1 8 I S S U E

Michael Ferguson

Vol. 60, No. 1 Reprint #60124 https://mitsmr.com/2CHjFS7

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This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.

Preparing for a Blockchain Future MICHAEL FERGUSON

Consider three key questions when determining how to make blockchain a useful

part of your business strategy.

Blockchain technology is set to be a major player of the

future digital economy, but many business leaders remain

unsure what that means for their companies going

forward. In a Deloitte survey of 308 senior executives at

large U.S. companies, 39% of respondents had little or no

knowledge about blockchain technology. A survey of

more than 200 board-level, non-IT executives in the U.K.

yielded similar results: About 40% said they do not fully

understand the technology, and less than 10% believe

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their organizations have the necessary skill sets to adopt

it.

To start by unpacking what blockchain really means, let’s

refer to HubSpot’s approachable definition: Blockchain is

“a record-keeping technology that is nearly impossible to

tamper with. That’s because a blockchain’s records, or

‘ledger,’ is hosted by everyone in the network and openly

available to everyone in the network, like a public

spreadsheet that they add to but can never edit or delete.”

But where should business leaders go from there? How

can they determine best practices for utilizing the

decentralized web and make blockchain technology a

useful part of their business strategy? My organization

has found it useful to focus on the following three

questions. These offer particular benefits for platform

businesses, which will need to address weakening

network effects as they lose ownership of participants’

data.

1. W1. Whhaat vat vallue wue wiilll wl we oe offffer?er? This first question gets at the

paradigm shift the decentralized web presents. The

advent of blockchain isn’t just about new ways of

operating. It forces many businesses — platforms in

particular — to take a fresh look at why they exist.

For the exclusive use of b. Peddireddy, 2020.

This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.

Consider, for example, eBay, Uber, and Airbnb.

Throughout the era of TCP/IP (the web protocol that

computers use to talk to each other), these platforms have

acted largely as centralized repositories of information.

You want to buy a product, they know who has it for sale.

You need a ride, they know who can give you one. You

need a place to stay, they know who has an extra

bedroom to rent.

But as blockchains become more common, this kind of

information will become publicly available and

searchable. You won’t need a centralized authority to

show you who has the waffle maker you’re looking for;

you’ll be able to see a verified record of who is selling the

waffle maker you want at a price you’re willing to pay and

who has a track record demonstrating trustworthiness in

such exchanges.

To stay relevant, companies will need to provide value in

new ways. This requires creative thinking. In the case of

my startup Rainmakers, our current business model

focuses on placing sales professionals with leading

technology companies. However, people will soon own

and fully control the data that they now make available

and view on our platform. Hiring managers will be able

to find candidates with the right skills, experiences, and

recommendations to meet their needs — without our

help.

Read more free MIT SMR articles on the future of blockchain.

What Problems Will You Solve With Blockchain?

Blockchain Is Changing How Media and Entertainment

Companies Compete

So, we’re investigating other ways to make hiring

managers’ lives easier. These offerings include phone

screening, validation of candidate data, and onboarding

support. We’re also exploring how we might help

candidates make themselves more attractive to employers.

We’re rethinking our business model because blockchain

could render the old one obsolete. This kind of strategic

foresight and ability to sense and pivot will be crucial for

organizations trying to compete in a blockchain-enabled

world.

2. H2. Hoow pw puubblic wlic wiilll ol our bur blolocckkcchhaainins bs be?e? The next step is to

decide whether to invite everyone into the blockchain

network or create a more limited system just for verified

participants. This, too, is a strategic question. It involves

weighing the advantages and risks of an “open source”

approach.

My team could end up doing both. For instance, we

might build a public network where candidates can share

much of the information that employers are looking for

and also set up a private one with paid access to more

granular data about individuals’ work experience and

sales records. For everyone in the private blockchain —

candidates and companies alike — all public and private

information would be funneled through one integrated

profile, simplifying the user experience.

Having a robust and growing public blockchain would

draw all the right players to our business, including job

seekers, hiring managers, and other staffing companies.

And the bigger our public blockchain becomes, we’re

betting, the more companies will want to pay for access to

the private one.

3. W3. Whhaat int incencenttiivves wes wiilll wl we oe offffer ter to po paarrtticiicippaatte?e? We

recognize that we won’t suddenly have millions of

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For the exclusive use of b. Peddireddy, 2020.

This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.

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individual job seekers and stafng companies creating

profles on our blockchain. We’ll need to draw them in by

frst attracting a critical mass of hiring companies to the

platform early on — which means providing immediate

value to those partners.

Even if the number of candidates on our private

blockchain is small at frst, we’ll be working to gather

information from them that isn’t available elsewhere —

this kind of information will help companies make the

right hires, as we’ve seen over the years placing

salespeople into different organizations. Likewise, other

businesses could follow a similar model, capitalizing on

their expertise in their respective industries while moving

to a blockchain strategy.

For example, businesses might offer crypto tokens, or

blockchain assets, as additional incentives for

participation. (For a helpful primer on tokens, see “Some

Simple Economics of the Blockchain,” a working paper by

Christian Catalini of MIT Sloan School of Management

and Joshua Gans of the Rotman School of Management.)

We’re considering how we might use tokens as incentives

at Rainmakers. We could allow job candidates to earn

them for keeping their résumés updated, for example, and

cash them in for enhanced visibility on our platform, the

chance to apply for certain positions, or services such as

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training and assessment. Employers who use our site

could earn them by validating employees’ data and spend

them on vetting and onboarding services. We could allow

third parties to provide services on our platform and earn

tokens, as well.

To Innovate, Be Willing to Evolve Of course, our strategy will most likely evolve as we see

how blockchain technology is adopted in our industry

and as our own implementation presents new challenges

and opportunities. That will be the case for every

business. It’s important to revisit these three questions

and continually assess and adjust the business model.

Blockchain and the decentralized web aren’t just hype.

They’re what lie ahead. According to the Deloitte survey,

21% of senior executives who are informed about

blockchain indicated that their company has already

brought the technology into production, while 25% plan

to do so within the next year.

Businesses that don’t sort out their blockchain strategy

soon risk being disrupted by competitors and, worse,

watching their entire business models go obsolete.

Copyright © Massachusetts Institute of Technology, 2018. All rights reserved. Reprint #60124 https://mitsmr.com/2CHjFS7

For the exclusive use of b. Peddireddy, 2020.

This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.

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About the Author two other startups and holds an MBA from University of Oxford’s

Michael Ferguson is the CEO of Saïd Business School. Rainmakers. He previously founded

Copyright © Massachusetts Institute of Technology, 2018. All rights reserved. Reprint #60124 https://mitsmr.com/2CHjFS7

For the exclusive use of b. Peddireddy, 2020.

This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.

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Copyright © Massachusetts Institute of Technology, 2018. All rights reserved. Reprint #60124 https://mitsmr.com/2CHjFS7

For the exclusive use of b. Peddireddy, 2020.

This document is authorized for use only by badarinath Peddireddy in BLCN 634 Human Resource Management and Blockchain-1-1 taught by Lenore Pollard, University of the Cumberlands from Apr 2020 to Oct 2020.