By Setrag Khoshafian, Ph.D.

Originally published on COGNITIVE WORLD in 2017, this is a two part post, focusing on the impact of Blockchain on transformations in Organizational Culture. (Part II is referenced below).

The impact on Organizational Culture is one of the most fascinating realities of the digital era. Digital technologies, including Blockchain, are just enablers of cultural trends that are transforming all demographics at an accelerated rate. Culture is always more important and impactful than pure digital technologies, as impressive as the latter are. The potential cultural impacts on individuals as well as organizations are tremendous. In order to succeed and innovate with digitization, transformation best practices should challenge long established cultural norms.

It is interesting to note that one of the most archaic organizational structures that has survived decades if not centuries is the ubiquitous vertical “Org Chart.” It simply does not inspire agility or change – with layers of management exerting control, functioning through power-driven bureaucratic practices and suffocating innovation, if not the very life, of the organization! The digital era fosters challenging the hierarchical and centralized control-driven organizations with alternative more democratic robust models that empower the participants. Blockchain could become an enabler – as we shall see. This is very much a decentralization, peer-to-peer execution, and disintermediation trend – the core competencies of Blockchain.

Globalization Cultural Trends 

The first and indisputable digitization trend is captured in Thomas Friedman’s book The World Is Flat. Now in its third edition for the 21st century, Friedman elegantly describes the Globalization trends that are definitely enabled by technology (what he calls the “platform”) but in their essence are cultural. “Globalization 3.0 is driven by individuals, a much more diverse group of people are going to come to the fore and prosper. Previous eras of globalization were very much shaped and influenced by the powerful and affluent Western countries but Globalization 3.0 is going to be a much more level playing field. Individuals from every corner of the world are going to drive Globalization 3.0 forward. Globalization 3.0 will be more plug-and-play and egalitarian than anything which went before.” This “level-playing” field for countries who were not able to compete with the Western countries a couple of decade ago is a forceful cultural trend enabled through digital technologies. It is a cultural trend because technology alone does not necessarily imply change. Innovation, empowerment and enablement need to be the driving catalysts for change.

Blockchain will further assist and promote globalization trends. Blockchain will increasingly evolve into Valuechains involving various organizations in different countries. We had discussed earlier the impact of Blockchain in Supply Chains, especially those that cross boundaries of countries and even continents. Financial transactions as well as asset tracking and delivery become less bureaucratic and faster to process. 

Enterprise Cultural Trends 

Cultural trends are challenging traditional enterprises. Top-down pyramid and functional unit organization structures are tired and passé. They do not inspire innovation or digital transformation. Jacob Morgan contrasts several emerging organizational models in the Future of Work. Emerging models include flat and holacratic organizations (vs. bureaucracies and hierarchies – and we know how well those functions!). Challenging traditional management around circles for specific projects and objectives is both liberating and transformational.

Employee empowerment has been elusive and hard to achieve within a rigid hierarchical organization. Flattening organizations with increased communication, collaboration and empowerment is an irreversible trend. A digital and agile organization with empowerment can leverage the innovative talents of its employees and improve their morale. The idea of challenging hierarchical structures, removing bosses (or replacing them with “mentors”) has been around for a while. The need to quickly change and adapt in digital enterprises is compelling them to re-consider their rigid structures. It is already happening in several Silicon Valley companies.

Blockchain within enterprises can also promote alternative flat organization patterns. Blockchain is a distributed and decentralized peer-to-peer database. Applications built on Blockchain can allow organizations to execute smart decisions (via Smart Contracts executing on the Blockchain) – such as proposals, recommendations, asset allocations, votes, etc. – involving both employees as well as partners and even customers for the organizations. The flattening is achieved through end-to-end Valuechains, enabled through Blockchain as needed.

Cognitive (aka Knowledge) Worker Cultural Trends

The modern workforce is increasingly becoming cognitive. Repetitive work is increasingly handled through robots: either physical robots (e.g. moving boxes in warehouses) or software robots (through Robotic Process Automation). So demographically the workforce is becoming either AI assisted workers or knowledge workers. The latter category is extremely important as they are the workers who innovate and are the digital experts within the organization. Well, these cognitive workers have certain traits. As elegantly captured in Davenport’s seminal work Thinking for a Living: “One important aspect of knowledge workers is that they don’t like to be told what to do.” This is an important cultural trend. Again it deals with the limitations of the old-fashioned organizational hierarchical structures with power and decisioning concentrated at the upper echelons. 

There is a cultural shift in Work due to automation - with a spectrum of work and worker categories:

• Repetitive Work Automated through Robots and Robotic Automation: increasingly robots are replacing routine predictable and repetitive manual work. These include actual physical robots that can, as well as robotic process via intelligent software on the desktop or on servers. Through Smart Contracts in Blockchain, intelligent IoT or Robotic participants can be allocated work, can collaborate to resolve issues, and even be compensated. 

• AI Assisted Work: Now for more mission critical and higher business value (and typically higher transaction volume) tasks, you have AI-assisted workers that are guided by increasingly intelligent software that leverages business rules, analytics, and machine learning. Increasingly workers are assisted by bot and Intelligent Virtual Assistants with increasingly sophisticated Natural Language Processing capabilities combined with knowledge that is contextual for the task or interaction at hand. Here again AI leveraged within Blockchain can augment human or robotic workers with needed assets or resourced to carry out the task at hand. This could also involve financial transactions.

• Involving Cognitive or Knowledge Workers: A complete digitization strategy needs to also capture, digitize, and automate this knowledge. The cognitive workers need to be involved to solve the difficult challenges. In some cases their expertise is invaluable. No “Artificial” intelligence will be able to replace this category of workers. They innovate and often come up with the policies and procedures in the organization. As noted above – they usually prefer to be autonomous with little or no bureaucratic management. The Blockchain impact here is primarily through elements of innovative Decentralized Autonomous Organization principles and capabilities.

Part II delves into Blockchain Decentralized Autonomous Organizations (DAOs), Blockchain Communities, and some conclusions on the Blockchain approach impacting Organizational Culture.

Read Part II