Enterprise Blockchain: Law of the Few

Enterprise Blockchain is one of the things I’m deeply interested in. How would it be possible to use the technology underneath the Bitcoin for the greater good of enterprise development? In other words: how could the blockchain be used to reinforce what is was meant to disrupt? It’s a challenging, daunting and often haunting task as most companies are not that inclined to collaborate, share business processes, contribute resources to uncertain outcomes, etc.

People like Andy Martin from IBM contribute a great deal to a better understanding on how to craft / envision a business model & case for a blockchain ecosystem. He was talking about it in a recent podcast. While he was describing the “incentive model”, how to reward the different actors in a fair way, I kept thinking. In a blink, I realised that apart from the incentive system, the selected parties had to be curated as well. Malcolm Gladwell eloquently describes it in “ The Tipping Point” with the “Law of the Few”.

The Law of the Few

Gladwell argues in his book that large social movements (like wearing special shoes, smoking and even suicide) are driven to a tipping point by some individuals with very specific characteristics. He describes three types of people required to get to a tipping point.

• The salesman : salesmen are always up to date with novelties and roam around presenting what they have found. Don’t see it as a commercial driver, it’s someone who’s sharing his insights, someone who’s willing to help you. I bet most of you have a colleague who has like thousands of gadgets to make his/her life easier, and who actively promotes these things. It’s the kind of person you want as net promotor: salesmen will tell about their findings to their friends, friends of friends and even complete strangers on the airplane. They have the power to persuade people.
• The maven : mavens are knowledgeable. Not just “they’re up to date”, but with a vast knowledge over an impossible number of things. They seem to have a solution for every problem, usually because they ran into it already and solved it. Furthermore, mavens are extremely eager to share their knowledge. When you’re stuck somewhere or looking for something new, you wish a maven is nearby to come with an out of the box solution you would never had thought of.
• The connectors : The connectors know apparently everyone. And everyone knows them. They have friends, but next to that they manage to maintain an astonishing network of loose ties. They seem to know someone everywhere, you’re never just with two with a connector at your side. Apart from knowing all kind of people, connectors don’t hesitate to do the dirty work: they create relations between people as they have a hunch it might lead to something good. Across industries, lifestyles, religions, whatever, they manage to bridge differences and unite people.

Incentive models in a blockchain business model

Listening to Andy and the different incentive models he explained, I realised it isn’t enough to just think about the models. Andy mentions three different models : to bring the new digital business to the market, to conquer the market (as the network effects play and everyone should be involved), to feed the edge where innovation happens). Furthermore, the model must aim to be fair. The 31th participant must have the same benefits in joining the network as the 1st participant had.

When designing the incentive model to bring it to the market, one should also consider who the salesmen companies are. Which enterprises have the ability to push new blockchain based business models into the market? If you know who they are, it will become a bit easier to define an incentive model to drive market entry. You can talk with people in these companies, do research on their strategy. What makes them tick?

When designing the incentive model to foster continuous innovation, it would help to know who the maven companies are. Who’s willing to bring in new solutions, who’s eager to combine all sorts of knowledge into something new? What could make these companies, once identified, join the blockchain ecosystem?

Last but not least, when designing the incentives for market adoption, which are the connecting companies? Andy mentions the port of Amsterdam (I assume he meant Antwerp, of course) as a hub for Tradelens. They’re connected to so many possible participants… what would make them jump in. Talk with them, make sure there is a match.

Conclusion

Gladwell states that the involvement of the three types of people will eventually create a tipping point, a point of no return. For a blockchain ecosystem this is equally important. Due to its peer to peer context, it works better with more peers and optimal with all peers. Thus, the incentives designed should create a quick acceleration towards the tipping point.

The purpose of the blockchain business model is of course to onboard all required participants. Nevertheless, this doesn’t have to happen straight away. The question is how to engage all participants? And how to onboard frictionless and fast, to grow to a market dominance.

Finding and interacting with the companies able to create a commercial “social movement”, should be one of the first tasks of the Governance. Yeah, we’re talking about private permissioned ledgers here, so there is some centralization. Insofar Malcolm Gladwell is correct with his Law of the Few, finding the right companies straight away would actually be the catalyst needed to onboard the entire market.

Originally published at https://www.linkedin.com.