When blockchains become operating imperatives

Tokenised money is here, and further developments and adoption of it are inevitable. If you look for the signs, then the same is true of digital assets of other types, creating new forms of value that are more flexible and programmable than our current financial infrastructure. If you are in financial services in particular, then this is going to impact you sooner rather than later. Blockchain based models will soon become the default in an increasing number of areas, so starting to build capabilities in this area is important.

Roger Martin, of "Playing to Win" fame, recently published a blog post where he articulated the difference between the two types of thing that companies list as strategic goals. In doing so, he draws the line between the items that are obviously correct, and those that are truly distinctive decisions. He calls the first type "operating imperatives", and the second "strategic choices".

Operating imperatives are the things where it would be daft to do anything else. Martin describes them as "the opposite is stupid on its face". These are industry best practice, the kind of thing that makes you (me anyway) roll your eyes when they are described as strategy. These things form a platform of capabilities on which to build.

Strategic choices are things that could be reversed and still form part of a reasonable strategy. In each case there is a deliberate decision not to do the opposite, which a competitor could perfectly well do. The unique combination of these is a genuine strategy - a coherent set of choices that works together to differentiate the business.

If you are making cars, as an example, then safety features and a good phone interface are table stakes. These are operating imperatives, and you would be crazy to build a car without anti-lock brakes or phone connectivity. Choosing to build with electric engines is differentiating - it is still perfectly feasible to build with a diesel or petrol engine.

This framing got me thinking about the impact of disruption on an industry, particularly change driven by a new technology. With a disruptive technology, if it successfully changes an industry, it can become the operating imperative. The technology that was once a distinctive way of doing things becomes the norm. We will see this with cars over the next few decades as we move from fossil fuels to electric; what was once a differentiating choice becomes the dominant technology. If you are a bank, nobody would now suggest not having a phone app, but once (briefly?) this was a valid choice. A new technology starts with disruptors who build their business around it, then it becomes mainstream, then it is a no brainer.

Blockchains are such a technology. If you remember the company cliche catchphrase "every company is an internet company" then you can see how this starts. It begins as something only a few players, or new players, are doing. Then it becomes ubiquitous. What do you mean, you don't have an email address, website, app ...? In a few years time - and these things always happen faster than we expect them to - every company will be a web3 company. Or they may be a metaverse company or a blockchain company, or whatever term we are using then.

In the meantime, building a business model around blockchain capabilities is a strategic choice. The opposite still seems reasonable. But making the choice to incorporate blockchains, and the related choices that give you a coherent strategy, is a way of getting ahead of your field. How you do it will be unique to you, and your competitor could make a different set of strategic choices that also make sense. But if you are in financial services, then not to have blockchain as part of your strategy at this stage is a mistake. That is a "do nothing option", a non choice that will become increasingly untenable. I am not suggesting a full pivot to crypto and tokenisation, but if you don't build the capabilities - strategic, technical, operational - then you will be behind when blockchains move towards the "operating imperatives" column.