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Preparing the Organization for Blockchain-Enabled Work

Image used with permission.

The transformation of the utilities industry from a sleepy, highly regulated industry to one characterized by increasing deregulation, competition, and the emergence of new business models began with the passage of the National Energy Policy Act in 1992.  This legislation created the outline for the competitive wholesale electricity generation market we know today.

Fast forward to today. Blockchain has the potential to impose the same amount of turbulence for redefining the economics, landscape, and human capital requirements of the industry.  Combine the potential for blockchain in the power and utilities industry with the impact created by the top three trends identified in the 2018 “Deloitte Global Human Capital: A Power & Utilities Perspective” report1, and those companies who do not prepare for blockchain may be left flat footed.  Senior Human Resource professionals need to remain vigilant in following developments in blockchain technology concurrently with how organizations are deploying human capital, as they are so closely related.

Blockchain is an emerging component in the digital transformation that is sweeping through the industry. As Gartner’s “Top 10” trends report points out, the industry needs to be actively navigating a path through digital transformation.  In their words, “a confluence of socioeconomic drivers and technology innovation is forcing utilities to transform into digital enterprises.”2

IDC predicts huge blockchain impact on digital transformation by 2021 coming from two areas3. The first envisions that the immutability and distributed ledger capabilities in blockchain could better support intra-industry value chains and, as a result, could drive down transactions costs by up to 35%.  For utilities, this could impact everything from generation, to trading, to distribution, to managing a confluence of “smart” internet enabled device. The second envisions that about 30% of manufacturers globally will have established digital trust with their customers through blockchain.  The transparency afforded by blockchain will allow consumers to access product and service history.  As such, if consumers are willing to pay a premium for energy that comes from a renewable source, utilities can create new product and pricing models that will support this.

When thinking of the human capital implications of blockchain, it is best to think of the relationship blockchain has with other 21st century technologies (see figure 1, Constellation of 21st Century Technologies). Blockchain has the potential to provide the infrastructure for many of the technologies that are emerging and already being adopted by utilities as vital components of their digital transformation initiatives.  In addition to accelerating the adoption of 21st century technologies, the adoption of blockchain will have implications on the profile of a company’s workforce and, with the rapid pace of change, lead to a growing – and ongoing – instability of skills.  Due to the distributed nature of blockchain, companies can expect an increase in reliance upon a distributed workforce.  We are already seeing the emergence of what is being called the “gig economy.”

As this new way of working becomes more prevalent, new kinds of organizational models will be needed to manage this workforce that can be both transient and not fully “owned” by the organization.  An organizational structure that has been associated with the rise of blockchain technology to manage the flow of work is the decentralized autonomous organization (DAO).

Adapted from Blockchain Revolution: Prosperity in the Second Era of the Digital Age (Tapscott, 2016)

Figure 1. Constellation of 21st Century Technologies

A DAO has no leader or centralized management. It is operated through smart contracts – self-executing contractual states stored on the blockchain that are programmed and agreed to in advance by all parties to a transaction that will execute when the programmed conditions are met. In the DAO system, participants are rewarded in a currency called “tokens” to provide group governance and support the transactions of the organization across the network. DAOs are becoming more popular as blockchain technology is being refined and more specialized work is being done by individuals who operate in this “gig economy.”  

In a world of work that includes an increased number of DAO relationships, the number of core, full time employees in an organization will likely decrease.  This new world of work will be made up of small, agile, multi-disciplinary teams excellent at solving large complex problems. As such, organizations will need to transition from hierarchical to networked structural arrangements, wherein senior human resource leaders will need to become adept at managing ecosystems where participants add value, rather than work in a rigid structure defined by employment contracts.

This new networked organizational structure will have more permeable boundaries with the external world, inviting ideas and innovation and embracing continuous change as a way of life. HR will be responsible for not only managing a core workforce, but also an expanded – and shifting – human capital base associated with DAOs. In order to address this organizational paradigm shift, companies need to develop agile and resilient structures.

Senior human resource leaders need to plan how to transition to this future world of work in a way that minimizes disruptive restructuring exercises where everyone re-applies for what will appear to be constantly changing new job roles, such as we saw in business process reengineering efforts of the 1980’s and 1990’s. Redesigning work and jobs for blockchain and associated technologies will simultaneously require providing the appropriate learning opportunities for the core organizational workforce while at the same time integrating the human capital considerations associated with the resources being provided by DAOs.

In a world of work that is supported by blockchain-enabled work flows, human resource leaders can take some proactive steps:

  1. Conduct thought exercises on alternative organizational structures. Evaluate different variants that address the greater role of gig economy workers, remote employees and outsourced specialists, and represent them visually as part of the organization rather than focusing on traditional functional units.
  2. Articulate with other C-suite executives the importance of Human Resources as a strategic partner in this new world of distributed work.  HR’s focus needs to include all human resources who contribute value to the achievement of the organization’s goals, which include those resources associated with the DAOs in your organization’s ecosystem.
  3. Work across the organization to pro-actively map the impact of blockchain and associated technology on work processes and jobs. Break the traditional functional boundaries between operations, information technology, and HR to create a vision for the evolution of jobs and understand the impact on the workforce.

Needless to say, all of the broad changes impacting companies, and the actions they may require, take some time to digest. But by carefully considering how the workplace and workforce are changing, both companies and the individuals that work with them – as core employees or in an affiliated DAO - can better assure themselves of success ahead.  

Peter J. McAliney, Ph.D. focuses on education-to-employment from both the employer and educators perspective. This involves clarifying the quantitative and soft skills needed for success in the workforce of the 4th Industrial Revolution. He can be reached at linkedin.com/in/pjmcaliney or on Twitter @pjmcaliney.

Notes

  1. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-human-capital-a-power-&-utilities-perspective.pdf
  2. https://www.juniper.net/assets/us/en/local/pdf/whitepapers/2000721-en.pdf
  3. https://www.ledgerinsights.com/idc-blockchain-digital-transformation/
Peter James McAliney's picture

Thank Peter James for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Sep 24, 2019 12:57 pm GMT

In a world of work that includes an increased number of DAO relationships, the number of core, full time employees in an organization will likely decrease.  This new world of work will be made up of small, agile, multi-disciplinary teams excellent at solving large complex problems. 

What an interesting perspective on how blockchain will make changes to the way we know the world moving forward, so different from the straight forward transactive use cases that are typically talked about for blockchain. 

Are there any unique aspects of this type of HR/blockchain operation that utility companies would have to prepare separate from other industries? 

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