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How blockchain tech could help keep Elon Musk accountable
At Twitter and elsewhere, Musk’s personal predilections have trumped his company’s overall goals. The blockchain could provide valuable external governance.
The story of Elon Musk’s on-again, off-again, on-again deal with Twitter reads like a novel. A brilliant scientist launches numerous companies that succeed to the point of being sold to large corporations, or to the public, for a lot of money. One of these companies, a showcase venture that redefines space travel, remains private. Our scientist enjoys the ride, but his impulsive behavior becomes a distraction. A master of innovation, he creates new industries, but when he announces that he will acquire Twitter, then questions how it counts its users, he sends conflicting messages to the investment community. From day to day, the markets can only guess his next move. Will he negotiate a lower price to calm his concern, or will he walk away from a deal that has landed in court because of his actions?
In the latest chapter, after buying Twitter at the price he originally proposed, Musk fires nearly half of its employees. He then realizes that some of the engineers he sacked are crucial to rolling out a new subscription service, so he tries to hire them back. The new service supposedly verifies the identity of anyone willing to pay $8 a month, but a flood of impersonators (including a fake LeBron James) forces Musk to shut down the service.
Having navigated these plot points, our protagonist reaches a crucial juncture. Will Twitter survive under his leadership? If so, will he continue to innovate?
Accounting statements measure a company’s performance by tracking events in its financial systems. Those events tell a story about the company, as do the actions of its leaders. Musk’s actions have been difficult to measure, and his behavior toward Twitter has been unpredictable. The moral of this story is that innovation needs governance.
We can divide the context for a company’s activities into three layers of abstraction:
Enterprise: High-level organizational goals and the events that target them.
Technology: Events involving innovation and process transformation.
Personal: The behavior of individual actors within the enterprise.
Like the stack of technologies that governs the Internet, these layers form a narrative stack. At the top, enterprise narratives shape strategies that evolve as new technologies emerge during the company’s lifecycle. Personal narratives influence the acceptance of those technologies, or the resistance to them. When the layers of this stack run in sync, the company will flourish, but when they are out of sync or in conflict, its long-term health will suffer.
THE KODAK NARRATIVE
The history of Eastman Kodak offers a case in point. Founded in 1888, the company made photography affordable to the average American. The Kodak brand became synonymous with storytelling through pictures. At the height of its business, an electronic billboard in Grand Central Station displayed giant images of families enjoying their Kodak moment: the Great American Story, writ large.
By 1976, Kodak had 90% of all film sales and 85% of all camera sales in the United States. During this period, one of its research engineers invented the digital camera, but the company waited two decades to invest significant capital in digital imaging. By that time, its core market had been permanently disrupted by Fujifilm, a more agile competitor whose narrative stack ran in sync.
The personal narrative of Kodak’s leadership could not envision a world in which film was no longer dominant. Despite the technology narrative that had fostered innovation, the behavior of its executives diminished its enterprise narrative. Kodak no longer told the Great American Story.
For years, Elon Musk published his personal narrative on Twitter, telegraphing the enterprise narrative of his companies, and eventually his campaign to acquire Twitter itself. Because one of his companies (Tesla) is publicly traded, he has been subject to certain rules of behavior, but his use of Twitter has caused problems. In April, a federal judge ruled that his 2018 tweets about having secured financing to take Tesla private were misleading. Tesla shareholders had sued to block his “public campaign to present a contradictory and false narrative.”
GOVERNANCE BY BLOCKCHAIN
The governance of any dispute benefits from data shared by the parties involved. Anyone can use data to argue for or against a position, but governance thrives when a system of record exists outside the influence of a particular actor.
That’s where blockchains come in. Blockchain networks host shared systems of record: permanent archives of data that may support a leader’s decisions, or call them into question. As blockchain technology reinforces the narrative stack at many companies, there may be more Kodak moments. Leaders will continue to influence enterprise strategy, but they are likely to encounter automated frameworks of governance that make them more accountable. Strategists will still plan the future, but their decisions will incorporate decentralized data to a greater degree.
The narrative stack uses streams of data from verifiable sources. Accounting firms have already built prototype blockchain systems that provide a single source of truth for companies and their business partners. Smart contracts verify the data and enforce rules of governance, if there is a consensus to accept those rules.
ALL THE LAYERS
Some might argue that the narrative stack should categorize events according to the traditionally defined areas of marketing, finance, and operations. Because data drives the narrative stack, these categories remain significant, but the events themselves happen on all three layers. In the case of marketing, events flow through enterprise systems of record that track product, advertising, and other activities. A marketing executive whose personal narrative prioritizes developments in technology will make positive contributions to the enterprise narrative. The relevant data exist on all three layers.
Strategy is the process of planning to achieve a goal. Narrative strategy plans a campaign of action based on the stories of an organization, its present and future problems, and the context in which those problems can be solved. The framework for narrative strategy depicts those problems as internal conflicts between members of an organization, and external conflicts between an organization and other entities in its ecosystem.
Conventional strategy attempts to resolve conflict by inducing decisions that lead to actions. Narrative strategy depicts those actions as events driven by circumstantial and motivational factors. Past events help to predict future actions.
The top-down structure of the narrative stack puts the enterprise layer above the personal. A CEO’s behavior may drive particular events, but the general expectation is that those events relate to the enterprise as a whole. Elon Musk’s personal narrative appears to do the opposite, running above the enterprise narrative of his companies.
Despite his focus on Twitter, Musk managed to disrupt cryptocurrency markets by promoting Dogecoin, and by toying with the idea of accepting Bitcoin as payment for Tesla vehicles. Rather than enhancing his technology narrative, these events distracted from the core values of his companies. Since the Twitter acquisition, he has hinted at turning it into a payments platform, which would reprise the narrative he created as a cofounder of Paypal. Monetizing a social media network would be quite a different story.
In the modern enterprise, strategy should be governed by the awareness that technology touches every aspect of a business led by individuals. Narrative connectivity keeps an organization agile, enabling rapid response to changes in the marketplace. As blockchain technology matures, narrative strategy will guide leaders of business and government. In the future, Elon Musk may well pursue another Twitter—but with any luck, he’ll do it with better oversight.
