By Oscar Roque, AVP, Innovation, Research & Emerging Solutions, Interac Corp.
Many view blockchain as a disruptor, here at Interac we see it as an enabler.
To date, our journey has been an exciting one – exploring and experimenting with blockchain technology, while applying it to new use-cases and problem sets.
With over three decades of building payments ubiquity in the Canadian market offering a real-time, good funds, push payments model, our position in the payments landscape gives us a unique perspective.
Collaboration is a key driver to our success. As a trusted partner to financial institutions, acquirers, retailers, fintechs and regulators, we have learned how integral good governance is.
Good Governance: The Building Blocks of Blockchain
What is good governance? At a high level, it is the successful creation and execution of rule sets, processes, and hierarchies that are designed to manage human interactions and behaviours.
Good governance is absolutely critical in blockchain applications especially since one of the fundamental tenants of blockchain is its ability to weave together multiple industries, creating a new business network that is able to drive new value to the market.
Without a centralized authority or administrator, setting the ‘rules’ within a business network is as complex as it is essential. Founding members and even participants must focus on creating the appropriate governance framework to manage the business network from day one.
As no two groups or systems are alike, there needs to be a shared understanding of common value propositions, organizational core competencies, economic models, and management structures. This will determine the initial success of the business network.
There are two main ways to start a business network, each with a different focus at the onset:
- Speed to market, whereby the business network is formed with a minimum viable ecosystem to quickly build out and iterate on the market value, technology and governance. This provides the benefit of fast-tracking to a commercialized state but with mid to longer term consideration around how new participants are onboarded;
- Scale at market focuses on being more inclusive and working with as many participants as possible in the initial build out. This provides the benefit of launching with a more mature network but at the risk that initial commercialization will take longer than the speed to market approach.
Governance is never ending – regardless of the initial approach, having a relentless focus on expanding the network effect and evolving the governance framework will determine the business network’s long-term viability.
This negotiation can be more challenging and lengthier than you might first assume. Don’t make the mistake of overlooking the softer (human) elements. Being able to negotiate between multiple parties is a core skill and communicating successfully with others may be more central to your success than the technology itself.
Governance today is largely ‘offline’ and manual. With blockchain, there is a tremendous opportunity to digitize governance and increase efficiencies.
Governance as a Service
As organizations look to enshrine governance onto blockchain, it is paramount that it is done right each and every time. As blockchain enables real-time efficiencies, it can also propagate maligned intent resulting in material damages. This is no different than releasing exploitable software into the market and it being maliciously attacked.
There is a path forward. One of due diligence and thoroughness – ‘measure twice, cut once’ as one might say. Coding governance on blockchain will never be a simple task – governance requires meticulousness.
In fact, organizations that have good governance today, albeit functioning ‘offline’, are in the best position to be successful in placing governance on-chain tomorrow.
These organizations have the opportunity to lead, not only by example, but through their advisory expertise a potential new market offering – Governance as a Service.
As governance goes digital, there will be an emerging need for a unique type of persona. A hybrid of both a governance expert and software engineer, the governance scientist will be responsible to ensure good governance frameworks are successfully coded, implemented and evolved on-chain.
Good governance is fundamental to the success of any blockchain system and, likewise, blockchain can offer a natural opportunity for transitioning governance processes on-chain. Not getting it right means you can expect inconsistencies, overlaps, gaps in processes and no means to efficiently deal with bad actors – all things that will ultimately impact the output and efficiency of a blockchain system.
There’s no one-size-fits-all approach to governance in blockchain. But, there is a path forward – finding trusted partners to help negotiate how business networks will work, and being flexible to adapt as you learn what’s working and what’s not, is a good place to start.
