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Understanding Blockchain & Why This is So Crucial For Future Leaders

 

For most people, the term Blockchain is still somewhat of a mystery. As the foundational technology behind Bitcoin and other cryptocurrencies, it floats around like an omnipresent buzzword that is still so hard to grasp. Meanwhile, fans, experts and influential ambassadors like Elon Musk are praising it as an innovation with the power to revolutionize not only the way we pay and store value, but also how we share information. And chances are they’re on the right track. As we are advancing further into the digital age, Blockchain and other Distributed Ledger Technologies (DLT) have emerged as the most promising solutions to serve as the basis for future data-driven businesses and applications. To get a better grip on the innovative concept, we asked our academic leaders and lecturers at the TUM School of Management to shine a light on Blockchain and explain why understanding this technology will be essential for enterprises and their managers.

In terms of value, data is the new oil

For our lecturer Michael Reuter, CEO and Co-Founder of Datarella – a Munich based company that specializes in developing Blockchain solutions for enterprises – teaching the concept must start with emphasizing the power of data: “Google, Facebook and other platforms store all user data on centralized servers owned and managed by themselves. The companies can – technically – decide about their use, whether they share it for commercial, legal or other reasons.” Due to privacy laws established in Europe and other democratic regions, however, data sovereignty lies with its owner. To enable data to be handled in compliance with the law and regulations, a secure, data protection-compliant infrastructure for exchange must be in place. According to Reuter, that is where Blockchain or Distributed Ledger Technology comes into play: “It enables a decentralized storage and handling of data through a network of computers. Without the need for a third party organization assigned to handle the data management and build a register, Blockchain provides the foundational layer of this infrastructure as a safer, more efficient, more resilient and more sustainable alternative to conventional data management approaches. Ultimately, this will enable data-driven business models that are needed to make data the new oil,” Reuter explains.

Besides cryptocurrencies, experts are looking at supply chains for use cases

Technically speaking, wherever you have a database, you could now also use a Blockchain. But for most of them, especially in first world nations, there is already an established centralized option in place. Here, changing the system not only comes with a technical challenge, but also an ethical one. “You would choose to put your trust in machines that are programmed not to make mistakes, instead of trusting an institution run by people”, Prof. Dr. Florian Matthes explains, who holds the chair for Software Engineering for Business Information Systems at Technische Universität München.

Looking at global supply chains, however, the benefits of using a Blockchain are disarming. “Normally, when organizations interact, it requires a lot of messages to be sent around. Imagine having ten parties involved in a specific shipment who all require constantly updated information about the location of the ship – let’s say in the Suez Canal. Instead of constantly sending around messages to keep all parties informed, the idea of a Blockchain is to make the exact location and limitless other important data transparent to all parties at any time in one decentralized database,” Prof. Matthes states, who is also a lecturer for the “Certified Blockchain & Distributed Ledger Technology Manager” course at the Technical University of Munich. “In general, using a Blockchain makes a lot of sense for managing supply chains because people could benefit from transparency and more information about the products and properties that are in transit. Combined with identification systems that are currently developed for IoT, this new form of autonomous tracking and tracing could really become a game-changer,” he adds.

A Blockchain takeover is only a matter of time

Accordingly, the software engineering expert is convinced: Understanding this new technology and evaluating use cases will be crucial for managers and executives going forward. “Right now, Blockchain is still a niche technology with a very huge disruptive potential. But that will soon change. Powerful companies like Tesla are already strengthening the system by allowing people to pay with Bitcoin, Facebook is on the verge of launching its own cryptocurrency called “Diem” (formerly known as Libra) and China is heavily investing and issuing its own solution. If that trend continues, other companies and governments will follow to remain competitive. Taking these developments into account, I expect it will only be a matter of five to ten years before Blockchain becomes mainstream – maybe even less.”

The time to get educated is now

It’s high time for future leaders to get familiar with the technology and evaluate use cases for their industry of choice. That’s why we at TUM School of Management are offering our students the opportunity to learn about trends and technologies that are revolutionizing the way we live and work. “The Executive MBA program allows students to tailor their curriculum to fit their specific interests by choosing two elective modules from a selection of available courses,” Prof. Dr. Jürgen Ernstberger, Professor for Financial Accounting at the Technical University of Munich and Academic Director of the Blockchain Certificate Program, explains. “Last year, the “Certified Blockchain & Distributed Ledger Technology Manager” course was added to this selection. With the module, we bring together experts from practice and academia to deliver hands-on knowledge from an interdisciplinary perspective. Ultimately, we want to enable our participants to design their own Blockchain projects and become thought-leaders in this important area of digital transformation.”

In addition to imparting the technical knowledge needed to fully grasp the concept, our lecturers are determined to illuminate the topic in a holistic way. “Even more important than technical skills is the ability to assess which Blockchain could or should be used for which use case, and getting familiar with its feature set,” Michael Reuter says. “Learning about the organizational, economic and regulatory aspects of Blockchain technology is essential for managers – and will be even more going forward.”

Are you ready to become a Blockchain expert yourself and empower businesses to take the next step in their digital journey? Make sure to register for our “Certified Blockchain & Distributed Ledger Technology Manager” course at the TUM School of Management and learn how to evaluate its potential or implement it in your work environment.

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