Babbitt column | Development opportunities for distributed business organizations

Industrial production has spawned modern enterprises, achieving economies of scale and improving product quality. Unlike traditional, self-employed, old-fashioned production methods, modern companies separate ownership and management. Under the management's convening, organization and management, the relevant production factors such as capital, technology, talents, materials, etc. are efficiently combined to manufacture and provide cheap products or services, and strive for customer and market share.

This is a management-centered, modern enterprise organization that is funded by shareholders (or principals) and then handed over to management (or agents) to control and manage various production factors, in the absence or failure of corporate governance. Under the circumstance, there have always been related "proxy" problems and shortcomings. For example, the management of the bad sense of the mind may falsify the public, seize or abuse the enterprise resources or tamper with the company's information, make false accounts to cover up the loss or overestimate the profits for personal gain, etc., thereby damaging the shareholders and The interests of other producers of production factors. For example, Enron and WorldCom's management of whitewashed accounting accounts deceive shareholders and subprime mortgage crisis investment bank management distorted the quality of housing mortgage-backed bonds misleading investors.

Blockchain is the new evolution of the information society. Its characteristics – "non-central, distributed, self-organizing" has the potential to subvert or improve existing commercial civilization, corporate organizational forms and business models. Distributed means that any person or provider of various production factors is a completely peer-to-peer relationship as a node on the blockchain network. This self-organization leads the business model to gradually move toward the network platform. On the platform, you cannot decide the business model of others. From a complete pyramid, a management-centered company structure to the platform, and finally to the ecology. A group of strangers or providers of various production factors are interconnected through a network platform, which helps to promote and motivate individuals' autonomy, enthusiasm and innovation. More importantly, the platform can pass the technology, and its governance mechanism is designed with a set of consensus game theory. That is, the blockchain network replaces a central authority with an encrypted mathematical algorithm to authenticate and confirm the rights, and eliminates subjective factors. Make objective and fair decisions, let the nodes conduct peer-to-peer transactions, no need for middlemen or centers, that is, there may be organizations without management, and they are conscious of the need to face the problem of “agents”. The cost of trust between nodes can be reduced to zero. The characteristics of blockchain information that cannot be tampered with are also aware that no one can make false news for personal gain. The blockchain is a major change in the construction of a “civilian” production relationship. It carries a new pattern of benefits and a distribution mechanism, which may be a paradigm shift for existing production relations and corporate governance structures.

However, the platform-based business model is not necessarily "decentralized" as Bitcoin operates. Such as the current technology-driven giants – Uber, Airbnb, Alibaba, Facebook, Microsoft and Microsoft Office, are "open" platform organizations, But it is not a “non-centralized” shared economic management method, because the operators of these centralized platforms master the game rules and user data, extract or deprive profits, and become the monopoly power of the industry. This in turn kills innovation and makes the Internet less interesting and vibrant. Centralization has also caused wider social concerns, even tensions in the situation, false news between the Internet, social conflicts and frictions, infringement of user privacy, and even abandoning the most basic legal and moral bottom line, using network influence to mislead users To interfere with national government elections. These problems will only intensify in the next few years, but they will not break the ground and bring unprecedented opportunities for the third phase of Internet development.

"Web 3.0": The third phase of Internet development entered the era of encrypted networks

From the 1980s to the beginning of the 21st century, it was the first stage of Internet development. At this time, Internet services were defined and maintained by academic researchers and international standards organizations not belonging to anyone. During this period, many individuals and organizations have gained insights into the follow-up direction and started to work on it. Many Internet companies including Yahoo, Google, Amazon, Facebook, LinkedIn and YouTube have grown up and accumulated. A lot of network resources. At this stage, the importance of a centralized platform like AOL is declining.

From the beginning of the 21st century to the present, it is the second stage of Internet development. Because it has created faster software and services than the earlier open protocols, many of the above-mentioned technology-driven giants have emerged, and the explosive growth of smartphones has accelerated. With this trend, APP applications have become the mainstream of Internet usage. This has caused many Internet users to migrate from the original open service to these more complex "centralized" services, bringing the above-mentioned social tension and friction.

In order to alleviate the tension and friction in these social situations, the shared platform economy of “decentralized” point-to-point direct transactions, such as the Beenest shared housing platform, has also led to the third stage of Internet development entering the era of encrypted networks. This era will be the mainstream of Internet use with blockchain and smart contracts. The Beenest team aims to build a smart contract-driven shared economy agreement and is currently building the world's first zero commission decentralized shared housing platform, with homeowners and tenants using blockchain platforms such as the Ethereum Smart Contracts Platform ERC20. The currency directly rents a house transaction for the payment instrument to increase the utilization rate of the house assets. In layman's terms, Beenest is similar to Airbnb without a middleman collecting commissions. The application of blockchain distributed ledger technology encourages community participants to promote the management and operation of the platform is decentralized, and the application of intelligent contract auto-compliance to respect government and community city regulations, thereby taking into account Pratt & Whitney, compliance and compliance With efficiency.

In the third phase of the development of the Internet, as the development and application scenarios of distributed ledger technology and decentralized blockchain technology continue to extend to all aspects of business and life, more and more scholars and managers are beginning to explore non-centers. Citizen co-creation smart city solution for Open Source. Only the decentralized sharing of asset use rights – just like the above-mentioned Bestest shared housing platform, can form a true sharing economy, and only decentralized citizens can create a truly smart city.

The decentralized open source approach will also give local innovation more room. It is well known that large or multinational companies can easily stifle local small businesses and try to challenge their innovative entrepreneurial projects. The decentralized open source approach provides start-ups with the possibility of asymmetric competition and opens up the blue ocean of new business. For example, Singapore's small country, local passenger transport companies, can open up and form a local passenger transport ecosystem based on blockchain applications, and then form a regional urban agglomeration ecosystem, and even a global local passenger transport ecosystem. This can not only retain the characteristics of local small businesses, but also the operating model and efficiency of the large enterprise ecosystem. Perhaps the future challenge for multinational companies is based on the ecosystem of the blockchain. A group of highly efficient ants can challenge an elephant! Another example is the Barcelona city government, in order to achieve the goal of decentralization, and even announced that it will reduce and gradually stop using Microsoft's operating system and office software.

We believe that distributed, decentralized and open source organizations will help (1) get rid of the dependence of monopoly and oligopolistic enterprises in urban governance and life; (2) Promote innovation and inclusive society, and realize the true sense of the general (3) Ensuring the security of important data and information infrastructures that are closely related to smart cities; and (4) realizing the sharing of assets to ensure transparency, fairness and fairness in smart cities. Singapore has the preconditions to lead the “decentralized” management and operations, becoming the world's first truly “non-centralized” technology user.

This article was originally published in the South China Morning Post on April 12, 2019.


Li Guoquan (Professor of Financial Technology and Blockchain, Singapore New Social Science University)

Bai Shizhen (Visiting Professor, National University of Singapore)

Yan Li (Senior Lecturer and Director of Senior Management Education, Department of Strategy, Nanyang Business School, Nanyang Technological University)