This article was originally published on the Harvard Business Review France website as an expert column. The co-authors are Eric Seulliet, Patrick Duvaut, andDaniel Shavit. It has been updated to include advancements in mentioned projects

Blockchain technology is a powerful lever for the development for open-innovation

Blockchain is a transparent and secure information storage and transmission technology that operates without a central node or control organ. By extension, a Blockchain is a database that contains the history of all exchanges made between its users since its creation. This database is secure and distributed: it is shared by its various users, without intermediaries, which allows everyone to check the validity of the chain.

Although its first applications were limited to the Fintech sector, Blockchain is nowadays finding new uses in many sectors: energy, health, logistics, intellectual property, etc. As regards intangible capital, one area seems particularly promising for Blockchain, that of co-creation and open innovation.

The limits of co-creation

A certain reluctance to use open innovation tools due to the lack of confidence that contributors may have in the current platforms for co-creation and open innovation, particularly as regards their personal data. The difficulty of making contributions traceable: not being able to assign parentage to contributions inevitably creates frustration or even discouragement among participants. Not to mention that if participants create value, it would be equitable for them to receive fair compensation for their contributions.

The promises of the Blockchain

It therefore seems necessary to objectify and record individual contributions to the collective work. The functionalities at the heart of Blockchain technology should provide solutions:

• By eliminating intermediaries and trusted third parties, a public Blockchain makes every individual a nodal point in the relevant socio-economic ecosystem. In this peer-to-peer network, everyone can freely express themselves and act, and all contributors are identified with certainty.
• By tracing the contributions of each one, the Blockchain makes it possible to « render onto Caesar what is Caesar’s ». This recognition of individual merits is an important lever to stimulate participation and commitment. The transparency of the Blockchain fosters trusting relationships and removes obstacles and reticence to the involvement of network members. This sense of belonging to a democratic community stimulates people’s involvement, interaction, exchange and willingness to act together.

The Blockchain has a number of mechanisms and tools that should prove particularly relevant in co-creation processes:

Notarization. Traceability derives from the very properties of Blockchain, which is to this date be immutable and incorruptible. Once information is recorded in the database by consensus, it is entered immutably in the database. This is of crucial importance when dealing with identities, for example: contracts, diplomas, ideas and facts can be permanently recorded. MIT has therefore begun to issue the diplomas it issues on the blockchain using an open-source tool. At the same time, the French start-up BCDiploma offers to authenticate diplomas by storing them directly on the Blockchain. This electronic notarisation system thus provides access to the history and nature of all transactions. It provides information on the sender and receiver, as well as the nature of the information transmitted. By translating this example into the field of open innovation and co-creation, the Blockchain can be a powerful lever for tracing the origin and course of creative ideas and contributions of individual members of a collective, allowing the contributions of each co-creator to be recognized – or even rewarded.

The tokens. These tokens are digital currencies that can be exchanged between members of a Blockchain, either for entertainment purposes or to materialize the value of transactions carried out there. Tokens thus facilitate the setting up of an incentive scheme within a community of co-creators whose contributions, once evaluated, are rewarded by dedicated « tokens ». This is the nudge theory of Richard H. Thaler, Nobel Prize winner in economics 2017. By creating favourable conditions and relying on cryptoeconomic theories, we can hope to stimulate innovation: by favouring certain types of research, by opening up « reverse funding » where the researcher would be rewarded « on discovery », by introducing incentives for innovations coming from multiple actors, etc. In this way, we are able to encourage innovation.

Peer review. Any type of transaction can be recorded in the Blockchain, including votes. Enough to prioritize and value individual contributions based on their collective evaluation (by a large audience or by the experts who are entitled to do so). There is no doubt that a voting mechanism would encourage emulation among contributors. It would stimulate collective intelligence and creative effervescence. One can imagine that this mechanism could be applied everywhere: on social networks but also in companies and even in certain societal spheres, thus reinventing a new form of democracy.

Smart contracts. These computer codes are self-executing at a precise moment when certain predefined conditions are met. Some co-creation processes can thus be automated, making them smoother, faster and more reliable.

A lever to stimulate open innovation

In terms of blockchain-based co-creation, it is possible to imagine several levels of individual involvement: – a simple editorial participation on the model of Wikipedia, but with an incentive remuneration: in the case of the Steem platform – the Blockchain counterpart of Reddit – each content curator receives a fraction of the benefits, depending on the level of sharing of the content in question. In the same vein, the Wespr start-up is a decentralised publishing house and bookstore, which allows writers to bet on writers who receive advances linked to the volume of excerpts read by readers. An occasional contribution to a project: for example, the OuiShare collective values the contributions of its members to its projects in order to reinforce the community feeling and increase the involvement of each one. This was done with the Backfeed project which in turn became DAOstack. DAOstack currently has the goal of making available in a simple interface the tools to establish governance mechanisms among participants willing to enter into co-opetition or cooperation in a decentralized fashion through Blockchain. And in turn will offer a library for web developers to come up with their own governance modules and thus new ways of attaining collective intelligence. On another level of co-creation: for example, the Matryx company offers a system of scientific challenges with reward for researchers according to the quality of their contributions.

Blockchain can thus be a lever of co-creation at multiple levels and in many domains. There is therefore nothing to prevent it from initiating new systems and behaviour.

A solution to the current limitations of open innovation and co-creation would be to offer a platform of trust for collaborative innovation to various actors (companies, start-ups, entrepreneurs and intrapreneurs, researchers, inventors, etc.). This one would have classic functionalities (secure registration, social network to exchange, possibility of launching challenges and grouping together to solve them, matching between suppliers and innovation seekers, etc.). Above all, this new generation platform could be totally innovative thanks to Blockchain. This would provide a « nudge » function, allowing the various actors to control their personal data, to be properly attributed their contributions and, in so doing, to be recognized and even rewarded in a fair and equitable manner.