When making boundary choices, firms should start using the blockchain to
marshal a 360-degree view and reach consensus on what is unique and what is
mission critical in their business. Let’s return to Joe Lubin and ConsenSys, as
they foreshadow the modus operandi of the blockchain-based enterprise.
Remember that ConsenSys is in its infancy, and much can go wrong to
undermine its business. We can still learn from this company’s example.
1. Are there possible partners who could do the work better? In
particular, could we benefit from harnessing new peer production
communities, ideagoras, open platforms, and other blockchain business
models? The company ConsenSys is able to orchestrate extraordinary
expertise to do its work, even though many are outside its boundaries.
2. Given blockchain technology, what are the new economics of
corporate boundaries—the transaction costs of partnering, versus
keeping/developing in-house? Can you develop a suite of smart
contracts whose core elements are modular and reusable? ConsenSys
uses smart contracts to reduce coordination costs.
3. What is the extent of technological interdependence versus
modularity? If you can define business components that are modular,
then you can easily reconfigure them outside corporate boundaries.
ConsenSys sets standards for software development and provides access
to various software modules that its partners can build upon.
4. What are your firm’s competencies with regard to the managing of
outsourced work? Can smart contracts enhance those competencies and
lower costs? From the get-go, ConsenSys was a blockchain business.
CEO Joe Lubin embraces the technology and a modified holacracy, and
we can see the seven design principles at work.
5. What are the risks of opportunism where a partner might encroach on
fundamental parts of your business, as some have suggested Foxconn
may do to smart phone companies? ConsenSys tries to mitigate this
challenge by building loyalty through incentive structures whereby its
talent shares in the wealth they create.
6. Are there legal, regulatory, or political obstacles to deeper networking
(and shrinking) of the organization? Not a problem for ConsenSys yet.
7. Speed and pace of innovation are important to boundary decisions.
Sometimes firms have no choice but to partner for a strategic function
because they cannot develop it in-house fast enough. A partner
arrangement can be a placeholder. Will partnering help us build an
ecosystem that will improve our competitive advantage? This is
ConsenSys’s strategy: build a network of collaborators around the
Ethereum platform, grow the platform and ecosystem, and increase the
probability of success for all components.
8. Is there a danger of losing control of something fundamental—for
example, a product or network architecture? Firms must have a sense of
which parts of the value chain will be key to creating and capturing
value in the future. If these are farmed out, the firm will lose. The
Ethereum platform provides a basic architecture for ConsenSys.
9. Is there a capability, like the exploitation of data assets, that must
be part of the fabric of your enterprise and all its operations? Even
though you lack a unique capability, you should view partnering as a
transitional tactic to develop extraordinary internal expertise and
capacity. Blockchain technologies will introduce a new set of
capacities that need to reside in the cranium of every employee. You
can’t move culture outside your boundaries.
My sponsor @June34
@MarcDeMesel Thank you sir. You are always my idol.
