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Will Blockchain Put Trust Out of Business?

By Bill Hester

blockchain hand shakeMy Dad turns 80 this year, and he has seen a lot change in the world since 1939. But one thing that hasn’t changed—at least for him—is what he does when he needs to pay for something. My Dad goes to the bank, waits patiently in line and takes out some cash. He won’t use ATMs, online banking, or Paypal—quite simply because he doesn’t trust them. While this of course drives me crazy, it is not entirely unreasonable as online fraud cost the UK over £10 billion last year.

Throughout our history, humans have been trading, selling, buying, and transacting. And there has always been an element of risk: Will both parties honor the deal? For 300 years the London Stock Exchange Group has led with the promise, “our word is our bond” and they understand as well as anyone the importance of trust as the common denominator in all transactions. No matter how advanced or automated the technology, some element of trust and integrity has always been the cornerstone of commercial exchange.

All that is about to change.

If you are anything like me, you might have dismissed blockchain as the latest flavor of the month, a style crypto-bubble that will no doubt spectacularly burst all over its misguided investors. Put a gun to my head, though, and I would struggle to talk for more than 10 seconds about what blockchain actually is or does.

While it’s unlikely that anyone will actually put a gun to my head and test me on this, I do know that a number of my clients are not just investigating this new technology but actually piloting new systems. It’s clear that blockchain is here to stay. So what, exactly, is it?

Defining blockchain

The problem with online systems is their vulnerability to hacking and this, along with scamming and other manipulations of trust, account for much of the cyber fraud prevalent today.

What makes blockchain different is that rather than software and associated transactions sitting on a single machine, it uses the idea of distributed computing and shares components of the software system across hundreds or even thousands of individual machines. This in turn promises complete security and a system that is essentially unhackable. The bottom line is that when two parties commit to a transaction facilitated by blockchain technology, they can both be 100 percent confident the transaction will take place, thereby eliminating the need for trust by eliminating risk.

This may not sound like a big deal but consider the way businesses run today and the number of jobs and systems dedicated to managing risk. Ask any credit controller how much of their time is devoted to investigating and resolving things that have gone wrong, and to helping manage financial exposure and business risk. Now imagine what would happen to these functions if that risk was simply… eliminated?

This is the promise of blockchain, and it has the potential to profoundly change the nature of business as we know it. As the trading of anything and everything of value becomes more secure and reliable (and happens peer-to-peer) the need for intermediaries and people managing these processes will decrease.

At present, people have started to hire out their cars or homes; however, there are usually centralized intermediaries, such as Uber or Airbnb, plus the ever-present financial institutions involved in the resulting monetary transactions. Blockchain, as a decentralized, peer-to-peer system, allows individuals selling or hiring anything to anyone else to do so directly, securely, and with no central corporation nibbling away at their share of the profits. Imagine buying Ed Sheeran’s next single directly from Ed, with no record company involvement.

At this moment the full potential of blockchain is not fully understood, but many things are already being talked about: the sharing of spare resources and smart objects, buying and selling excess electrical power from private homes, real estate transactions, healthcare records, electoral voting systems, food supply chains—all within a completely reshaped (decentralized) financial system. It’s a very long list; the internet of information will turn into the internet of value.

Interpersonal transactions remain

As we become accustomed to transactions becoming completely trustworthy, and industry and commerce are fundamentally reshaped by this new economy, we might guess that the very currency of trust will become obsolete.

However, there is one kind of transaction that will forever remain separate and untouched by this new technology: interpersonal exchange.

At the very moment that trust is no longer needed in commercial transactions, interpersonal transactions will become more important than ever. As businesses change—delayering at the mid-levels—there will be fewer people to lead, placing an increasing premium on the skills that underpin quality, trusting interactions. Leaders who can listen and respond with empathy, share their thoughts, feelings, and rationale, and maintain or enhance self-esteem—to build trust—will create more value than ever within these new business structures.

Of course, this won’t just happen automatically, but today I am seeing some of the world’s most iconic companies preparing for this future by placing an increased focus on carefully designed learning journeys to embed these skills from the moment people step into their first leadership role (or even before). As a result, these companies are more quickly growing a cadre of frontline leaders who can trade confidently in the commodity of trust, make their people feel great about their work and contributions, and unleash high performance.

While these skills have always been at the very heart of great leadership, the rapid rise of blockchain and associated technologies mean that very soon they will be in more demand than ever before.

I certainly expect to see this happen long before I’ll persuade Dad to put his debit card details into the computer.

Reserve your spot for the March 28 webinar, “Get Ready for the New World of Frontline Leadership Development!” to learn how to address the learning and performance needs of today’s frontline leaders.

Bill Hester is a Managing Consultant in DDI’s London office. Outside of work, he spends his spare time responding to various IT-related questions from his Dad.

Posted: 19 Mar, 2019,
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