Governance involves higher level management at a strategic level. The main purpose for the adoption of proper governance frameworks and processes is to maximize value for stakeholders by avoiding legal and compliance setbacks.
At the same time, governance also concerns itself with internal monitoring, evaluation and direction of priorities by an enterprise.
By complying with external legal requirements, and by keeping the internal enterprise practices in check, stakeholders perceive maximum value for their investment by maintaining internal productivity and external compliance in line and therefore avoiding fines and other extraneous costs.
Several texts approach governance of the blockchain, but that’s not what we’re interested in here. In this article, we discuss blockchain as a tool for digital governance.
It’s a whole new research area for business and project managers – and it has immense potential for the new decade!
But first things first. What is digital governance?
As mentioned, governance is a higher level concept. Those in charge of governance, usually the board of directors, CEO, COO, CTO and other “Chief” posts, do not get involved with day to day operation of processes.
Instead, there’s a clear cut separation between governance and management. Governance takes care of the compliance, monitoring, directing and evaluation of the overall business direction. Whereas managers get their hands dirty and actually run the actual operations on a daily basis. You might see a manager cover for an employee and actually go fix a printer with a paper jam. You will not see anyone from governance doing that.
So, while we usually think of the digital crew as the guys who fix the modems and printers, in reality there’s much more involved in running a proper digital operation.
In short, digital governance is the application of governance concepts to Information Technology.
Several frameworks exist for digital governance, among them COBIT, ISO 38500 and IGPMM just to mention a few.
What these frameworks do is offer you an abstract view of the enterprise by establishing very ample process domains, areas and general values. This abstraction is done on purpose so that the framework can be easily adapted to any organization. So instead of establishing that you need one specific management role, the frameworks usually simply state that “process X must be performed”. It then leaves it up to the organization to fill that role with either one person, a group or even a whole new organization within the corporate structure.
It’s beyond the scope of this article to get into details of popular frameworks such as COBIT, but we do recommend you read about them to get a better idea of how advanced these methods have become in recent years.
Enter the blockchain.
Digital governance is all about guaranteeing transparency to stakeholders. Those who are investing in a enterprise want to know what’s happening where, how things are going in general and whether the enterprise is accomplishing or heading in the right direction towards its strategic goals.
Blockchain is the ultimate concept for transparency.
Bitcoin is THE killer app for blockchain technology and it has proven, for over 10 years, that it’s as resilient as any digital technology gets. Hackers and researchers from around the world try to hack Bitcoin 24 hours a day, 7 days a week. And, for over 10 years, Bitcoin has held its own, surviving the most technologically sophisticated attacks ever devised.
How can this powerful tech be leveraged for governance? It turns out the possibilities are endless!
The blockchain can be employed in enterprise logistics. Collaborators carrying proper private keys on a identification device can sign their stage of a completed process and the entire governance structure gains immediate confirmation that a certain process is in the right stage at the right time. Higher level managers can receive aggregate data of these blockchain-confirmed business process stages in real time using traditional Business Intelligence methods. The blockchain simply acts as the process ledger, allowing collaborators in distributed locations to maintain perfect tracking of their processes, while management and governance monitor the correct conduction from a possibly remote location in real time.
A lots of cryptocurrency research has been focused on autonomous organizations.
The end goal is to create a fully decentralized enterprise governed through the blockchain. To this end, several experiments have existed, most notorious among them the “Decentralized Autonomous Organization” of 2016. Though The DAO collapsed due to a smart contract programming failure, the idea was actually very exciting.
The finance of a decentralized organization was entirely managed by a smart contract. Collaborators who need not even know each other commit certain data to the blockchain. When certain conditions are met, whether it’s a date or other trigger, the smart contract releases a payment to the collaborator. Wages are made automatic!
Finance on the blockchain is 100% transparent. Governance can check any transaction if they so wish, but this is usually left to management who present governors with a higher level abstraction.
Using the blockchain, human resources can be hired and discontinued in completely decentralized fashion. A collaborator can be anyone around the globe. As long as the digital deliverables are approved by a manager, this manager can action a method in a smart contract signaling that the deed has been honored.
The smart contract then releases payment previously allocated by a superior. Again, this is 100% transparent and instantly auditable by not only the immediate management but also by the enterprise governing body.
We hope this brief intro to Digital Governance using the blockchain has given you ideas for the future of decentralized work.
Governance using the blockchain is different from blockchain governance.
Using the blockchain, organizations can have full control of all its assets and processes using a time tested and secure data structure.
Blockchain for digital government
JRC Science for Policy Report – European Commission
Blockchain Democracy: Digital Governance in the EU and the US