The DAML smart contract platform as a Building Kit for “Invincible Companies”
TL;DR: the DAML smart contract platform is a strong contender for implementing the Central Nervous System of a company, which wants to excel in innovation and execution at the same time.
One of the most successful approaches to business strategy and innovation in recent years has been the Strategyzer framework, started by Alexander Osterwalder.
Based on the Business Model Canvas
The winning streak of Strategyzer started with the Business Model Canvas, which helps you to draw a holistic picture of all important aspects of a functioning or planned business organization, non-profit, or even yourself as a player on the job market. It “abstracts away” (as software developers would say) the incidental org chart of any specific company, focusing on the basic building blocks of the “front stage” and “backstage” functionalities that make up business activity.
The fundamental message of the Business Model Canvas is the following: successful companies don’t compete with product, price, and technology alone, but with entire business models (which also include the profit model, channels, partners, owned assets, etc), with elements fitting perfectly and aligned. It also gives us an easy-to-understand visual framework and a whole host of workshop tools for co-creation.
The book series of Strategyzer consists of four volumes now, the latest one being the most comprehensive of all, called The Invincible Company.
It explores how successful companies exploit a portfolio of existing business models, explore new ones, promote new business models into their BAU operation, and how they build the right innovation culture.
How to implement an Invincible Company?
For people who are in the corporate architecture and operations business, the million-dollar question is after all this: How do you implement such a thing as an Invincible Company? (The question was inspired by Eric Saraniecki’s excellent blog post ‘That’s awesome, but how do I architect this?’, which puts a similar question for startups.)
It turns out, smart-contract-based interaction design and implementation in general, and the DAML smart contract platform in particular, is a very good candidate for being a building kit for this.
Two caveats:
One: I don’t make the claim that there is ONE RIGHT tool to do this, consequently that DAML is THE tool. It’s a strong contender though.
Two: I don’t make the claim, that with DAML you can implement EVERY ASPECT of a well functioning, innovative company. I would say it’s an excellent tool to implement the Central Nervous System of it. Something similar to the central platform which serves as a fundament for the tightly aligned and loosely coupled parts of a Connected Company, or “podular organization”, according to Dave Grey:
Why is DAML a good fit?
As explained by Osterwalder and his co-authors, in reality no company is invincible. But those that come closest to this ideal are the ones that “constantly reinvent themselves in the face of disruption”.
This means, they do not prioritize either innovation nor execution but are “ambidextrous” at both simultaneously
- Exploring the future, that is a portfolio of new business models, cultivating a culture of innovation, and
- Exploiting the present, that is a portfolio of existing business models, cultivating a culture of execution.
For DAML, both innovation and improvement of execution are a fitting job.
DAML for innovation
The term “innovation”, in the spirit of the Lean Startup movement, means “a large innovation pipeline of small bets of which the best get follow-up investments”. This means, innovation is portfolio management: the management of business models that need to be tested and decided upon in terms of viability for transitioning into the BAU operation of the company.
In the Exploration phase, our goal is twofold: 1) increase the expected revenue of our candidate business models, and 2) decrease the Innovation Risk of them (“Innovation Risk” meaning that we believe in the idea but it fails to deliver on the market).
The exploration of new business models is not a linear process, nor is it possible through analysis: the business models need to be tested, in order to gain tangible evidence supporting the “desirability” (usefulness), technical feasibility, “viability” (profitability), and adaptability of a business idea.
DAML supports cheap and fast business model experimentation with a numbrer of features:
- On the language and IDE level: easy-to-understand smart contract template structure, scenario testing, contract flow, and template package visualisation, theDAML Web SDK which can be used without installing anything on the local computer, and automatically generated admin UI in Navigator.
- On the inspiration level: the DAML Marketplace, offering applications developed by partners, and reference applications published by Digital Asset, covering diverse industries.
- On the learning level: excellent interactive tutorials.
- On the data storage integration level: it is integrated with several persistent data layers which include traditional databases and blockchain platforms. This feature means that we don’t need to decide in advance, which platform we want to use, let alone invest in any of them. We can start testing the business model on an easy to set up and cheap database, then transition to the persistent platform most suitable to the non-functional requirements of the use case, without changing a line of DAML code.
- On the legacy system integration level: automatically generated API’s.
- On the tooling level: a React-based UI framework for DAML applications, and project:DABL, which is a full-fledged online platform for hosting DAML-drive applications. As the front page puts it: “DABL is your secret weapon to building the company of your dreams. Our platform takes care of all the boring, meticulous engineering tasks while you experiment with new, differentiated features.”
Several authors on the DAML Driven blog have shown the innovation value of DAML and DABL, for instance:
How DAML and DABL Lower the Cost of Innovation by Digital Asset CEO Yuval Rooz.
‘That’s awesome, but how do I architect this?’ by Eric Saraniecki, co-founder of Digital Asset
To DLT, or not to DLT? That is not the question — DAML allows developers to build distributed applications to meet multiple market structures — by Bernhard Elsner, Product Architect at Digital Asset
DAML for execution
For “Invincible Companies”, innovation vs improvement of execution is not a question of “either-or”, but of “both at the same time”.
In the Exploit portfolio, a company wants to increase the actual return from its existing business models, and decrease ”Death and Disruption Risk”. The business model patterns, which serve as improvements to established, but deteriorating business models, are called “shift patterns”.
Every such shift in a business model requires new types of transactions. For instance, if a company shifts from selling its products to providing services around the same products, like Hilti, the example mentioned in the book, needs to implement very different mechanisms to track the devices and collect fees from customers. The same, if a company shifts from a low-tech platform to a high-tech platform, like Netflix. New internal processes need to be established if a company shifts from a business model in which the formerly dedicated resources are used to serve multiple value propositions, targeted at multiple customers at the same time.
In all these cases, DAML’s flexibility in implementing new transaction flows, or modifying existing ones, described above, pays handsome dividends.
On top of the business model shifts mentioned here, with DAML driven applications companies can improve the efficiency of their existing business models substantially, simply by bridging data silos without requiring constant reconciliation within the company.
DAML’s capabilities on this field were demonstrated by other blog posts and webinars, like the following ones:
How Smart Contracts Can Accelerate Your AI & Analytics Roadmap by Guido Santos of Genesis.studio.
Smart Contracts in the Enterprise: Bridge data silos & tangibly representing your business processes (virtual meetup recording)
DAML apps spanning entire business models
Business models don’t stop at the boundaries of a company, no matter if the business model resides in the company’s Explore or Exploit portfolio. The very concept of “business” involves external parties like customers and vendor partners.
This is where the main value proposition of a DAML-based shared transaction system comes into play. The system does two seemingly contradictory things at the same time:
- It clearly separates the common rules from private strategies. The common rules are mandatory for the individual — potentially even competing — parties of a business activity. Their private strategies are nobody else’s business, and can be implemented either via DAML Triggers operating on behalf of a specific party, or private client applications.
- It also connects the common rules with the private strategies of the parties via implementing the basic principles of contract law — just like paper-based contracts, but much more effectively. (As I explained in my previous blog post How DAML smart contracts are digital twins of human relationships.)
As an analogy, we can think of an online chess or poker platform, where the enforcement of the rules of the game (and potentially payout automation) is everybody’s common interest. On the other hand, nobody wants to reveal how they make decisions. Or an online exchange, where order book matching and settlement must be regulated and enforced, but the individual trading bots are everyone’s private business.
(These analogies also highlight the possible connection points between shared ledgers and AI applications: the ledger implements the common rules and golden source of truth, the AI can enhance the operation of private applications. The ledger must be strictly deterministic, the AI apps can implement possibly statistically deterministic behavior at the risk of their owners.)
The four main stakeholder groups of a business model are the internal stakeholders, customers, partners, and regulators. They are either connected by agreements or regulations and reporting obligations with each other.
DAML based workflow composition, through DAML’s sophisticated authorisation and privacy model, creates an excellent platform for all these players to collaborate.
An example: supply chain management
A striking example of a workflow spanning an entire business model (or even multiple business models) is a supply chain management system. A reference application for a supply chain management system is available on the DAML marketplace.
The use case modeled in this reference application spans two business models: that of a Seller, and that of a Supplier. The example also demonstrates how a privacy boundary can be set up between two joining business models.
In order to match the expressions used by the Business Model Canvas with the expressions of the reference application:
- For the Seller, the Buyer is a Key Customer, and the Supplier is a Key Partner. The Value Proposition provided by the Seller is the General Contractor service.
- For the Supplier, the Seller is a Key Customer, and Transport Companies are Key Partners. The Key Activity of a Supplier is collecting quotes from its Key Partners, and transferring the quotes to the Seller.
The two business models are connected, but separated by privacy boundaries at the same time: the Seller doesn’t know about the details of the quotes given by Transport Companies, the Supplier doesn’t know the details of the Seller — Buyer deal.
Further reading on the business potential of DAML
How DAML smart contracts are digital twins of human relationships by Yours Truly
‘That’s awesome, but how do I architect this?’ by Eric Saraniecki
Smart Contracts in the Enterprise: Bridge data silos & tangibly representing your business processes (webinar recording).
