Don’t Get Blockchain? You’re Asking the Wrong Questions
Blockchain and other distributed ledger technologies (DLT) are moving from misunderstood and marginalised disruptors to becoming a strategic priority. Troy Norcross, co-Founder of Blockchain Rookies and long-time Upstart associate argues that those who are not exploring blockchain risk of having their business model disrupted by startups or collaborative enterprises.
Blockchain is coming - like it or not.
First, follow the money. Investment into blockchain technology is expected to exceed $3Tn by 2030. Some 53% of CIO’s surveyed are investigating how Blockchain technology will impact their supply chains. Both Amazon and Microsoft are announcing Blockchain as a Service (BaaS) offerings aimed at the enterprise clients. Like cloud computing and AI, this is happening at speed and scale.
Many people make comparisons between Blockchain in 2019 and the Internet in 1999. There is a significant investment - driven by unsustainable hype. The industry is destined to plummet into Gartner’s hype cycle “trough of despair”.
As a business leader (not a technology leader) within an enterprise, how can you know how to mitigate the risk of outside disruption from blockchain and DLT?
Here are some scenarios within supply chain management where Blockchain technology is showing incremental business value.
Food Safety - The IBM Food Trust is probably the best-known blockchain project currently in production. In October 2018 Walmart mandated that all of its suppliers of green leafy vegetables be integrated into the IBM Food Trust blockchain.
This provides supply chain transparency in near real time in case of a “food event” (such as the catalyst for the project.; Romaine lettuce containing E. Coli bacteria) By having data readily available on the blockchain, businesses know exactly which products to pull from the shelves in order to protect the public. Walmart was the first to use the IBM Food Trust, but now the project has expanded to include Carrefour, Tyson, Nestle, Unilever and even Walmart’s biggest competitor Kroger.
The system is designed to provide transparency for all types of food, not just green leafy vegetables. Carrefour has been experimenting with tracing chicken on the blockchain for some time now.
There are other great examples of blockchain in production including:
Asset Tracking - A recent announcement from GE Engines and Microsoft
Trade Finance - JP Morgan has implemented their own cryptocurrency, the JPM coin
Establishing Provenance - Everledger has built technology to trace and record information for high-value assets including diamonds and more on their platform.
The common thread is that all of these implementations require collaboration with multiple stakeholders. There is no single benefactor.
The solutions solve problems at an industry level rather than at the company level.
A significant portion of the IBM Food Trust project is digital transformation. If everyone along the supply chain has not converted their business to digitally record the data, it won’t matter if there is a blockchain or not.
A rising tide lifts all boats. And a well-implemented blockchain project benefits each of the participants and stakeholders in a relevant way. When you eliminate intermediaries such as bankers and brokers from industry, the value gets redistributed to the remaining members of the supply chain.
When a cross-industry blockchain project demonstrates a commitment to end consumers such as improved food safety, the entire industry benefits from an increase in consumer trust. When high-value product manufacturers, distributors, wholesalers, retailers, regulators and consumers work together to use blockchain to reduce counterfeit products entering the supply chain, the value of the entire market is protected and increased.
So Now What?
If you’re looking to understand how to approach this new technology, don’t start with the question, “How can I make money from Blockchain?” - Start with “how can we use blockchain to solve problems for all participants in our industry?”
Current business model and strategic partnership thinking don’t work for Blockchain.
It may look like the impact of Blockchain and DLT is further away than, for example, AI or data science, which are already finding enterprise applications today. However, disruptive tech can be applied at speed, and barriers to adoption are lower than ever before. But with forecasts for blockchain adoption predicting its wholesale adoption, it may be time to think again. Here are three things you can do now.
Get educated: Although the majority of the content online is heavily technical, there are some good business-focused resources. At Blockchain Rookies we aim to simplify, but there are other great resources including great content from Blockchain Beard Guy Kris Bennet - at Blockchain Training Alliance.
Get involved: Now is the time to investigate where there are consortia, working groups or strategic partnerships forming around industry problems with blockchain technology playing a key role in the solution. The risk of not getting involved now is that in the future you may be forced to connect your infrastructure to someone else’s blockchain platform.
Get prepared: If you’re not ready to unleash the power of DLT, you can at least identify the systems and data sets you will need to potentially integrate with an external blockchain.
Recognise Reality - Cloud tech and shared data streams will be the norm - there is no going back. In diabetes care and management there are now ecosystems building where patients, device makers, pharma, insurers and health providers are sharing data. In a business where M&A is the prevailing motor of growth (see ResMed’s $225m acquisition of connected inhaler startup Propeller Health) maybe smart money invests in interacting with, rather than owning the disruptive services.
With emerging disruptive technologies, there’s always a balancing act between doing nothing and in doing the wrong thing. That balance is now moving against doing nothing - which in itself could very quickly prove to be the wrong thing.