Smart Contracts, Remote Teams, and the Influence of Blockchain

The Current State of Affairs

More and more companies are outsourcing their digital innovation projects, opting to partner with remote teams overseas that can outcompete the local market. That said, when working with distributed teams, some fundamental aspects of the working relationship may also change. Regardless of the risk of entrusting a long-distance party with product development – no matter how high the talent level is – it’s still important to reduce the business risk as much as possible the same way it is at home.

Systems still Operate in a Centralized Fashion, Mostly

In most agreements in this space today, parties engage in transactions with one another through a centralized broker or central system, and these are often external. In doing this, each party trusts the central system rather than each other. Although the practice is majorly tried and true, placing the trust on a third party to execute the business is inherently risky because it makes both main parties dependent on the third, not to mention it could also be unnecessarily costly.

Enter smart contracts.

Smart Contracts are a Blockchain underpinned software that stores the negotiating terms, contract verification, and subsequent execution of the agreed terms. These contracts are executed on top of the Blockchain using platforms like Ethereum, designed so that “applications run exactly as programmed without any possibility of downtime, censorship, fraud, or third party interference.”

In general, smart contracts offer a new way to remove trust issues and decrease costs by removing the need for a third party when fulfilling contract terms. Decentralizing the process using a smart contract makes it more secure, more cost effective, and faster.

Smart Contracts work and are executed entirely by triggers within the code, so there’s no human interaction during the execution process. This removes the need for the third party involved in more traditional contracts, saving time and money and reducing the overall risk of one side not holding up their end of the deal.

How does a Smart Contract help with remote teams?

For everyone involved in a remote work agreement, smart contracts enable easy transactions safeguarded by knowledge that the Blockchain technology authenticates them independently. For smart contract users, this means that when an agreed deliverable arrives and verified, the contracted supplier is paid automatically by the self-executing smart contract. In this way, the contract will also save time as suppliers won’t have to chase up payment of invoices for services since these are automatically completed via the smart contract.

Fortunately, the same thing applies when payment is confirmed for a product. That product can be transferred automatically to the buyer and its delivery information would be logged within the Blockchain. This provides a complete and incorruptible record of transactions logged on the Blockchain, all in chronological order.

Aside from the increased level of trust, smart contracts also give those involved:

  • More autonomy: There’s no need to involve a third party, and once everything is set up there is no need to jump back in to complete anything.
  • Safety and backup: Cryptography removes the risk of being hacked and as your documents are duplicated throughout each part of the chain, there’s no risk that they’ll get lost.
  • Accuracy: Decreased human interaction with the process removes errors that can arise from manual input. There is a complete and accurate record of everything that has happened within the contract so all components can be tracked.

The upshot

Smart Contacts remove the middleman, lower costs, and make the overall process of remote working agreements more efficient and safe. Expect smart contracts to play a big role in the future of work, as well as other areas as the technology matures.

How successful CIOs navigate the Innovation Process

‘Innovation is the process of pushing a new concept toward its implementation in the society with the objective of creating value. Uncertainty is the key unavoidable aspect of innovation.’ – Innovation Intelligence (2015)

Innovation, by nature, is risky business. The costs of getting innovation wrong and the resulting failure are well-documented by the countless tales of time lost and money wasted. So why does this continue to be an issue for entrepreneurs and corporations alike? What is missing that causes history to repeat itself, keeping good ideas from breaking through?

The biggest cause of innovation project failure

According to the elite software development companies in the Digital Knights network of approved tech teams, projects fail for a variety of different reasons, yet they all fall under one common theme: There is a fundamental misunderstanding and/or disregard of the innovation process.

Regardless of how stressful or time-sensitive the situation for product development may be, the innovation cycle doesn’t change. Each step requires proper attention for things to work; it doesn’t matter if there’s a first-time innovator or a serial entrepreneur behind the scenes, disrespecting the process and cutting corners will always incur consequences down the road.

The digital innovation cycle for product development

Innovation Process 2

The innovation process can be broken down into three phases of differing durations and comparable importance: Discovery, Validation, and Traction & Growth.
‘The Cycle can be thought of both as a sequence, moving from one of the segments clockwise through to the next, or as standalone segments that apply a focus to the collaboration efforts of members.’ – European Alliance for Innovation

Phase 1 – Discovery

Getting ready to build a product

This ideation stage covers all the market research, business planning, and product details necessary for developing a prototype or blueprint that provides a clear picture from start to finish. There is no sense in taking any action beyond brainstorming until there is a product idea with proper market validation and a viable business model. Successful products must solve real problems, and they must provide solutions that people will actually use. The existing market for the product must also be big enough to accommodate a new player, or the product must be significantly more appealing and useful than what’s already out there. Once all the proper planning is in place, the last prerequisite is to round up the initial resources or capital to build what’s necessary to get from phase one to phase two.

These initial steps lay the foundation for successful product development and it’s crucial that they are well-thought out. This phase doesn’t need to take more than 2-4 weeks, but it can make the difference between a year-long project’s success or its failure.

Phase 2 – Validation

Getting a product ready for market

Phase two is all about building upon that first blueprint or prototype developed in phase one. It entails hands-on work that focuses on iterating and pivoting in development sprints based on initial market feedback and learnings from the first rounds of tests. This is the phase where huge amounts of manpower are needed, the go-to-market plan is implemented, and the MVP takes shape. The development team will be heavily involved with back and forth movements until the first version of the product is ready for launch.

This phase can take anywhere from 3-6 months (or more) depending on how many pivots or iterations occur. If phase one is done exceptionally well, however, these are kept to a minimum. It’s very important not to rush through this phase because poor decisions will result in lost time and traction. After all, the product that reaches market needs to be functional and convincing in its most rudimentary sense–and still get there quickly. Later on, development of the wishlist of features desired by the wider stakeholder group will get started as the product evolves from phase two to phase three.

Phase 3 – Traction and Growth

Getting ready to scale up

This phase is where scaling happens. The growth cycle can take from one to three years and is all about reaching a point where the product needs only lean, continuous development and maintenance. The MVP will have established a solid codebase and presence in the market, and so it is simply a matter of making small tweaks, improvements, and building new features on the fly. Given there is no limit to the amendments, testing, and features that can be added during this phase, it often extends out past the 3 year mark as long as growth rates are still high. When the product maxes out its growth potential, it’s time to venture out with another idea back at phase one.

How a technical partner fits in

While the business development side of things is critical for developing the theory, it must be put into practice somehow. This means taking the steps to decide who will execute the plan and how. After deciding between risking software development with a pool of freelance coders, recruiting in-house engineers, or partnering with existing tech teams, it’s important to have a shared understanding of the innovation process before getting started.

Phase 1

A good development team has full product lifecycle and industry specific experience to be a strategic partner right from the beginning of the discovery phase. This team will act as an advisor, asking the right questions and suggesting solutions throughout the brainstorming process. Once the idea for the product is deemed viable and complete, it’s critical that the whole team can nail down the proper infrastructure and technical architecture required to develop the product so that it offers the best solution possible. Experienced partners will identify different – and in some cases better – ways to solve the problem than the original proposal. As the appropriate tech stacks and architecture are identified, the wireframes, user journeys, prototypes and mockups can be developed.

Phase 2

The development team is heavily involved in the validation phase of the innovation process, as nothing moves forward without the real, raw development. The hard work really kicks in here with the team implementing UX and dev sprints, usability testing, and quality assurance to ensure the first iterations are not only functional, but available for test in the market. The resulting minimum viable product is the most telling factor as to whether this product will be convincing to the end-user, gain attention in the market, and even attract investment.

Phase 3

The final phase is where the product is improved based on user testing feedback and where development of additional features can begin. As this phase progresses, the development team usually becomes leaner. The majority of the legwork is done and it is now a matter of maintaining and developing the additional features until the minimum viable product reaches its greatest potential.

The Digital Knights Advantage

Innovation Process 1

Getting the innovation cycle started with an experienced, highly talented technical partner is key for developing with speed, confidence, and most of all, successful end results. Tech teams within the Digital Knights approved network are verified for all phases of the product development, and Digital Knights provides several services and benefits to guide and accelerate innovation throughout the entire process.

These include:

Innovation Process Services

To learn how Digital Knights curates teams for a given project, read The must-haves to consider when choosing a tech partner for more information.

Speeding up innovation in a corporate environment

How do you not only make corporate innovation easy, but entrench it into the fabric of your company? Bring the spirit of startups into the corporate world.

The State of Play

In the 21st century market share is ephemeral. Just get in your time machine and go ask Blockbuster. They actually had a chance to buy Netflix – the nimble and disruptive new DVD rental platform founded by Reed Hastings. When Reed proposed that Blockbuster should buy Netflix for $50 million Blockbuster declined. Blockbuster filed for bankruptcy in 2010. Netflix’s market cap is now valued at $19.7 billion.

What we can learn from this is that Blockbuster did not have the vision or capability to adapt to the shifting sand beneath their feet. They didn’t realise that things move quickly in the digital world and those who cannot adapt fall from grace spectacularly. With the power of hindsight, it’s obvious that Blockbuster should’ve moved into a more online-centric business model and bring their huge customer base along with them. But they didn’t. In many ways business leaders in the modern era are subject to powerful forces of corporate survival of the fittest, with companies investing in R&D to better anticipate future climes and to avoid pulling a Blockbuster.

The above is a very extreme example, due to the polarity and public nature of Blockbuster and Netflix, but the scenario is hardly uncommon. This has led to the startup within a corporation. Keeping on top of technology and trends is etched firmly in many corporate playbooks nowadays, but how do you reconcile that in an environment where, in theory corporations can access today’s most promising talent pool, have the budget to try and fail, can theoretically out-innovate anyone else, but in practice, deeply ingrained processes, cultures and incentive systems tend to actively suppress innovation that threatens the status quo?

“Skunkworks were emblematic of corporate structures that focused on execution and devalued innovation.”

How Corporations Have Reacted

In the last couple of years, corporate giants such as Coca Cola, General Electric, American Express, MasterCard, and IBM have been tapping into the agility and unbridled creativity of the startup world by hosting innovation contests and funding the ‘best’ for internal startup projects.

Unlike hackathons, which, let’s be honest, are usually just PR exercises with no concrete outcomes, these companies are trying to create continuous innovation, and for the companies who can master it– the art of executing on core products while continually inventing new products and new businesses – they shift from skunkworks style innovation by exception and into innovation by design.

If corporations can pull it off, and infuse entrepreneurial thinking into the the ranks, the prize is talent.

“At least 90% of millennials say they would rather work at a startup than a corporate giant…”

Talent Acquisition

As someone who deals with startups, entrepreneurs, and corporates on a daily basis I can say that in my experience the startups are a younger crowd. Of course, age, wisdom, and experience are virtues and highly sought after commodities in the corporate world, but with that comes a perceived staleness that startups don’t have. Working in startups is hard work but somehow more attractive. Things move fast and there’s a lot of room for bringing your own ideas to the table and actually have a say on how things should be done. It’s not exactly hard to tell that millennials in particular are lured the “feeling of newness” that startups possess.

If corporates can tap into this intangible feeling of newness and manifest startup culture (hard to define, but characterised by creativity, innovation, entrepreneurial thinking), talent follows. Innovative companies like startups attract more talent than corporations, but this can come as compromise. The structured and regimented corporate environment can be attractive to people who want that security, and infusing entrepreneurial vigor means you can have the best of both.

Innovation Hubs > Skunkworks

Of course, it isn’t easy to create a startup within a company (sometimes called an ‘Innovation Hub’), and even then Innovation Hubs within larger corporates are constantly searching for quality & fast-acting boutique dev teams that can execute these MVP products being created. Replicating the haphazard moves of a 3-7 person outfit can be done within an Innovation Hub, better yet with the safety net that these hubs have with the funding from the corporate mothership.

“It’s marrying the stability of established industries with the iterative and agile nature of startups.”

If corporations can nail the startup within a business model, and actively allow the unit to create products that can influence the core offering of your business, then you get continuous innovation and avoid the Skunkworks, which – if we’re honest – are emblematic of corporate structures playing at innovation.

Failure as a Metric

Part of distancing your innovation hub from the Skunkworks model is being able to not only tolerate failure, but to embrace it and to learn from it. Silicon Valley celebrates failure because of how important it is to realise that things need to be piloted in the real world and if they fail they fail. There is no shame in failure, as long as you can call yourself more experienced after the fact. Evaluating things to death and discouraging risk is sure to turn off free radicals of innovation. Innovators must be given the room to fail and try again. It’s essential.

Technical Resources


“The default speed for a startup is breakneck, and it’s how continuous innovation is fostered.”

A startup’s agility from the development side of things is usually down to their methodologies. Corporations are slow, glacial entities. Breaking through the sluggish approval/moremoremore/more/ and committing to one or two week sprints effectively replicates the agility of a startup, and helps you build much more viable products that not only work, but do not miss market windows or become obsolete before they are even finished. The default speed for a startup is breakneck, and it’s now continuous innovation is fostered.

If assembling or outsourcing a tech team to build products your innovation team is coming up with, instill agile principles (or hire teams who already develop within the agile framework) to make sure the speed in which the innovation hub builds is like a legitimate startup or high calibre tech studio.

In summary, successfully creating a startup within a company that actually possesses the key attributes of a startup and can retain them within a rigid corporate environment is hard. Successfully marrying the iterative and agile nature of small companies to the structured and sometimes bureaucratic decision making of corporates means innovation by exception becomes innovation by design.

The Skunkworks is dead, but long live innovation.