University of Arkansas

Walton College

The Sam M. Walton College of Business

Episode 32: Mary Lacity Explains Her Take on the Impact Blockchain Will Have on the Future of Business

August 07, 2019  |  By Matt Waller

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Mary Lacity is a Walton Professor of Information Systems and Director of the Blockchain Center of Excellence at the Sam M. Walton College of Business. In addition to this, Mary serves as an Editorial Board Member for The British Blockchain Association and a Senior Editor for MIS Quarterly Executive. Mary's passion is educating and challenging students and professionals about emerging blockchain technology.

Episode Transcript

[music]

00:02 Matt Waller: Hi, I'm Matt Waller, dean of the Walton College. Welcome to Be EPIC, the podcast where we explore excellence, professionalism, innovation and collegiality, and what those values mean in business, education and your life today. My guest today is Professor Mary Lacity, Director of our Blockchain Center of Excellence at the Walton College. Mary literally wrote the book on the importance of blockchain for the future of business. It's called Blockchain for Business. But that's only one of the reasons she is acknowledged as a leader in blockchain. Mary's passion is educating and challenging students and future leaders about emerging blockchain technology, which uses a crowd of independent computers to secure a permanent record of transactions. Blockchain, while still in its infancy, is already impacting financial models and supply chains. It is probably best known for its association with cryptocurrencies such as bitcoin. But Professor Lacity is exploring ways it can produce a healthier, more secure world, and how companies and startups can benefit from it.

01:18 Matt Waller: Mary, in layman's terms...

01:20 Mary Lacity: Yes. [chuckle]

01:21 Matt Waller: What is blockchain?

01:23 Mary Lacity: Okay... [chuckle] Alright, well, there's a couple of ways we could talk about it. We can pretend we're talking to my mother. How do I explain it to her?

01:30 Matt Waller: Okay.

01:31 Mary Lacity: So, one of the things I say it's a completely different way to design a computer application. So, right now, before blockchains, you can think every company... One company, one application. One company, one ERP system. One company, one sale system. One comp... You know, whatever it is, every company had their arms around one application. What a blockchain application is, it's a shared application, so across companies, it's one application that is shared. And that gives you some real benefits, so you have one shared version of data, so everybody agrees on the sequencing and the transaction validity, and you also have to share power. So it's the whole idea of sharing a blockchain application, rather than just having one company's internal system.

02:22 Matt Waller: When blockchains are talked about, many times I hear people talking about cryptography, as well.

02:28 Mary Lacity: Yes.

02:28 Matt Waller: How does that fit in?

02:29 Mary Lacity: To understand the blockchain landscape, is really made up of two completely different types of components. I like to think of the soundtrack of blockchain from West Side Story. Do you remember The Sharks and The Jets, like "To-doo-do-do-do... " Remember that song. So, the blockchain landscape is really made up of what I call the "Hoodies," which is the permissionless, cypherpunk, public blockchains, open source, and what I call the "Suits," the enterprise blockchains, which are looking at more sustaining and more adaptive types of versions of blockchain applications. And they are really two different worlds, they really don't merge right now. So, the Blockchain Center of Excellence is very much, right now, in the suit category. If you look at our executive advisory board members, they have pesky things, like regulations and compliance, so their blockchain applications look very different than the blockchain applications in the hoodie world. That said, one of our goals for the next year, for the Blockchain Center of Excellence, is to get more engaged in the hoodie world, because I think a lot of our students are interested in that, and a good little metric for that is our last blockchain conference. Much of our program was in the suit world, but we did engage some of the hoodie world, and that's where our students went. When they had a choice, where could they go participate and learn that? That's the place they went to look.

03:46 Matt Waller: The conference is great, and I heard great things about it, but you also have a hackathon.

03:52 Mary Lacity: The real mission of the Blockchain Center of Excellence is to really excel at both research and educational blockchain technologies. And one of the things that I think is really special about what we've done here at the University of Arkansas... In fact, IBM calls it "The Arkansas model" around the world, we've really integrated our business executives in our curriculum. So, in the fall we have a hackathon, we've done it for two years already, and we have students that work on use cases that are pitched to them by our executive advisory board members. And typically, you don't get much done in a week-long hackathon, but these become the course-long projects in our student's curriculum. And they stay engaged with our executive advisory board members, they serve as subject matter experts on their projects.

04:34 Mary Lacity: And then, the last day of class, they are invited back, the executive advisory board members are back, to see the proof of concepts that they developed. One of the use cases was actually from the governor's office, so instead of asking the governor to come back to campus to hear the student presentations, he invited our students to come see him at the capitol. So we took 10 of our students in December, to present their proof of concept for the state, which was a blockchain application for birth certificates. So think about how that could be integrated with like the Department of Motor Vehicles, or when you get married, or any other kind of legal transactions that happen that you need to have a state identification for.

05:11 Matt Waller: You know, a lot of people in Northwest Arkansas, a lot of companies here seem to have interest in blockchain. Why do you think that is?

05:21 Mary Lacity: Well, I think... Because it can really solve business problems, and I think that's the main impetus for it. What's most interesting is... Yeah, I'm here as the Center of Blockchain Excellence, and I'm supposed to be advocating for this technology, but that's never been my interest, or the interest of any of our executive advisory board member firms. There, they are looking to solve problems, "How do I trace food from farm to fork?" Or "How do I trace fish from sea to table?" Or "How do I track an asset all the way through a supply chain?" Those are the types of problems that they're looking at, and blockchain is just one component of their overall solutions. So one of the things that I really see strong use cases in supply chain really involve three technologies. The first is IoT devices. Any kind of sensor, because that means you're gonna get good data. You have to have good data going into a system. So if you have good objective data going in, you could put that data on a blockchain, which we know is secure and immutable, and everyone now trusts the data, and then you wanna run analytics, so that you can do business decisions and get something valuable out of it. So, more and more, our conversations are looking at a marrying of multiple types of technologies, not just blockchains.

06:30 Matt Waller: Now, the blockchain book you wrote is based on your research, and a bunch of interviews you've done, and surveys, and then just your own observations.

06:42 Matt Waller: Was it hard to find people? This is still such a new topic, and your book was published a year ago. I would think it would be hard to find people to interview, was it?

06:53 Mary Lacity: Well, that book actually came out of the research. I was a visiting professor at MIT in the Sloan School of Management, in the Center for Information Systems Research. And I was leading a project on how are enterprises getting ready for a blockchain world. So I sort of had good connections through MIT to start really doing interviews in some of the large banks, because financial services was really the first place looking at the potential value or disruption that blockchain technologies would build. I did about 10 case studies initially, and this was my most telling question. You know, you read about the JP Morgans and the State Streets, and that they're doing all this stuff, but you'd say to them, "How many people inside your organization are devoted to blockchain applications?" And guess what kind of numbers I was getting?

07:39 Mary Lacity: Small. Two, three, four... You get 280,000 employees, so... Then I started saying, "Who is making money? Who is making money in this space? And who is making money in this space where the providers that are investing in it heavily?" So then, we pivoted to like the IBMs, and the Deloittes, and the Capgeminis and the Woopras. And they had lots of use cases across multiple client firms, so I went there. And then, the last little group I really wanted to study was the startups, because we know from Clayton Christensen's theory of disruptive innovation that much of that disruption will probably come from the startup community. So that book's based on interviews in 30 organizations, either traditional incumbents, providers, and the startup community.

08:19 Matt Waller: You are the Director of the Blockchain Center of Excellence, and... But I also know you're very collaborative, and so you've included people from across campus in what you're doing. It's not just in the Information Systems department. What else is going on on campus?

08:36 Mary Lacity: But there's actually a lot going on, but I wouldn't say it's me reaching out and being collaborative, so much. I'd just become aware of what, some of the other initiatives. I mean, there's been research on this campus in blockchains way before I even got here. So, over in the School of Law, Carol Goforth is really one of the... She's an amazing leader in the space of law, and I will be collaborating with her, and that she invited me to come speak at her cryptocurrency and law conference, that she's doing in October of this year.

09:04 Matt Waller: She's doing a conference?

09:05 Mary Lacity: Yeah, she's doing a conference, a full-day conference, I'm excited about that. I'm also trying to get her involved, because one of the things people have reached out, there's some legislation in the State of Arkansas now, to make a smart contract, a legal contract, and that's very controversial. So this will be very interesting. I don't know much about how to write legislation, [chuckle] so they asked me to look at it, and I did. So, some of the other research that's being done on campus is from the School of Agriculture, so I'm actually working with two professors, and the question that we're asking is, "Will consumers pay more money for food that is verified and tracked on a blockchain application?" So, it's a scenario-based experiment, and we're just about in the process of getting an IRB to launch that research soon.

09:52 Matt Waller: And so, I'm presuming that, that they might be willing to pay more, because of the fact that there's more assurance that if this says it's organic, that it is organic, so we know where it came from. I remember I read a statistics or heard a statistic that said there's quite a bit more organic food sold in US, where in the world... Than is produced in the world.

10:13 Mary Lacity: That's true, yes. Yes. The idea of a blockchain application is more than just a certification sticker would be. You'd be able to take your cell phone, put it over the product and then see its entire history. Like what farm it came from, or what part of the ocean it was fished from. But it costs money, so will consumers pay more money for that?

10:32 Matt Waller: Could you see a picture of the fish?

[laughter]

10:36 Mary Lacity: Yeah, absolutely you could. We actually have, right here in Arkansas, Grassroots. Are you familiar with them? They're out of Little Rock.

10:43 Matt Waller: I've heard of it, but I don't know much about it.

10:46 Mary Lacity: So they've built a blockchain application for organic... It's hens or chickens, I'm not quite sure what they do, but you can go in the store today and put your cell phone over it. All you need is a normal cell phone, you don't need any special app, and you just put your phone over the sticker and it says, "Will you... " You know, will you accept the state, you click "Yes" and then it'll show you where it came from, and who had it, and where it was in transit. So we have applications already, today.

11:11 Matt Waller: And I know there's another project we've been working on, around smart resumes. Is that what they're called?

11:17 Mary Lacity: Oh, yes. That's right, the credentials. Okay, well, that's a Dave Wengel, and he is the CEO of iDatafy. And he's put together an ecosystem, not just of universities around Arkansas, but also some of the government institutions. And the idea here is, think of LinkedIn, but the fact that all the data on LinkedIn would be certified. So, right now, anyone can go to LinkedIn and create a profile. You can make up that you have certificates and degrees you don't have. And so, what Dave's idea is, a person does not create the start of their own resume, it would be like a university.

11:51 Mary Lacity: And so we've got 20 of our students in this pilot project, and our registrar created their first entries in a smart resume. Says, "Yes, you are a Walton leader." "Yes, you have an undergraduate degree here, from the University of Arkansas." And then, that credential was stored on the iDatafy blockchain, and so it can't be tampered with. The smart resumes project allows people to modify their resumes to add things, but it's very clear to, like, an employer, which part of the resume has been certified by a legitimate third-party, or has been entered by the person themselves. An example of working with the government is, I think pipefitters... I may have this wrong, but it's a technical skill. And, apparently, that also is a credentialing challenge. So, he is partnered with whoever, whoever does these other kinds of technical skills, that they would write that part of the smart resume and certify it.

12:42 Matt Waller: That's so amazing. So, Mary, I know over the past 20-some years you've been primarily teaching graduate students. And this semester, for the first time, you're teaching undergraduates.

12:55 Mary Lacity: Yes.

12:56 Matt Waller: Would you mind telling us about that?

12:58 Mary Lacity: It's been a wonderful experience. So I'm teaching blockchain fundamentals, I have 14 students enrolled in the class. It's listed as an experimental course until our curriculum was finalized. So it'll have a actual home course number in the fall, but I'm very excited to have these 14 students. I'm gonna say half of them are from supply chain. And the other half are primarily information systems. Although I do have one computer science student in the class. It's been really exciting to work with them. I get inspired, every Friday we have class from 9:00-12:00. They have picked projects that they are working on. So the first project they did is they picked a different cryptocurrency and they did deep dives into looking at their white papers, how much money they raised with their ICOs, where they are today. They did an analysis of the good and bad press that came out from those cryptocurrencies. And then the second project they're looking at are business applications. So they picked what they wanted to study and all of them picked startups. They were really interested in learning what the startups were doing.

14:05 Matt Waller: When you're teaching a course like, introduction to marketing or, introduction to human resources management or whatever, you can look at textbooks and tons of syllabi that are out there and it helps you in creating a course, but you have written a book but there's still not a lot of material, is there?

14:25 Mary Lacity: Yeah, well my book has plenty of material. And one of the things that I always, I had done in the classroom is, I'm updating it. So in class, they read the chapter before they come to class and then we talk about what's different in just six months. And so we really discuss a lot about trends and where things are going. So for example, in the book, the book talked a lot about initial coin offerings, as a way to finance startups. That model has completely fallen off in the last year, because the SEC has really stepped in, has come down hard on some of the ICOs. So, now what we're seeing is a pivot back to traditional venture capital. So we have those kinds of discussions. The major message that I'm trying to teach our students is, this really doesn't matter that we're talking about blockchain technologies this year. What we're trying to instill in our students is to become life-long learners. So they're gonna learn this technology this year. And maybe what they're learning in the classroom will be relevant for a year or two, but it's really about getting in the habit of being willing and open to learn something new and to be... And to teach yourself. And I said, "Nobody taught me blockchains, I taught myself." And, whatever we're gonna talk about next year, whether it's quantum computing, that what our employers really want are bright, motivated people that are anxious to always be learning.

15:40 Matt Waller: Well, thank you so much, Mary...

15:41 Mary Lacity: Thank you.

15:41 Matt Waller: For talking to me today.

15:42 Mary Lacity: Thank you for having me.

15:46 Matt Waller: Thanks for listening to today's episode of the, Be EPIC podcast, from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe, and rate us. You can find current and past episodes by searching, beepicpodcast, one word, that's B-E-E-P-I-C podcast. And now, be epic.

Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair and professor of supply chain management. He is also the host for the Be EPIC Podcast for Walton College.

 

Walton College's EPIC values -- Excellence, Professionalism, Innovation and Collegiality -- are the heart of Dean Waller’s podcast. Since the beginning of the series, Waller has interviewed business professionals, industry experts, CEOs and Walton College students to bring listeners first-hand accounts directly from the entrepreneurial world.

 

Waller is an SEC Academic Leadership Fellow and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain,” published by Pearson Education. He is the former co-editor-in-chief of Journal of Business Logistics. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.

 

Waller received an M.S. and Ph.D. from Pennsylvania State University and a B.S.B.A., summa cum laude, from the University of Missouri.





Walton College

Walton College of Business

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