Let me start by saying you can never get blockchain right—you have to get your business case right to make practical use of the technology.
For many people, blockchain today is what artificial intelligence (AI) was a few years ago: a technology they’ve heard a lot about yet struggle to understand the real benefits of. Even as the CTO of a company actively developing blockchain technology, it can be difficult for me to wrap my head around the myriad aspects of distributed-ledger systems (DLS) and the enormous jargon that surrounds them.
And just like AI, there is no doubt blockchain will play a larger and larger role in business processes as companies and engineers discover new ways to utilize its power.
Global commerce has waited for technology like this that can run efficiently for ages. Indeed, I would argue distributed ledgers in their different avatars will become the de facto standard for all transactions that need an ecosystem or consortium to execute successfully (and that comprises probably 99% of all transactions).
So, what does this mean? That we all need to go out and become experts in Ethereum, HyperLedger, Corda or something new that came out yesterday? No, that’s not likely. But what every business person can and should be doing today is thinking through how they can prepare their organizations to adopt blockchain into their processes.
The Value Of Blockchain
Let’s back up for a moment to consider what value blockchain will deliver. As we’re already seeing, distributed ledger technology extends well beyond the Bitcoin-type cryptocurrency uses that has grabbed the most headlines, both good and bad.
Blockchain provides a way to take the rules enshrined in contracts and turn them into executable instructions to fully automate transactions (financial and otherwise) without human intervention and (here is the crucial bit) be fully trusted by all participants in the transaction. That means previously intractable business challenges where transparency and privacy rules are very clear, and the cost of trusted brokers (who can sometimes break that trust or be compromised by governments or hackers) is very high, can be solved deterministically and elegantly.
Getting Blockchain Right
As with any technology, blockchain will only work if people actually use it; and perhaps more so than with other tools, blockchain requires extensive change management within an organization.
Martha Bennett, VP and principal analyst at Forrester Research, put it perfectly in a recent blog post: “It’s the non-tech challenges that are ultimately the make-or-break of a blockchain initiative. We’ve seen initiatives go nowhere because network participants couldn’t agree on what data to share or on what legal basis to cooperate with.”
“DLT projects are 80% business, and there are no shortcuts,” she writes.
So how does one prepare their organization for blockchain? Here are some suggestions:
1. Start with a business case and vet it mercilessly. Most projects that look like good candidates for applying blockchain really don’t need it; they can be more easily realized with a centralized, distributed database (I know — it is an oxymoron, but you know what I mean). If you think you’ve ID’d a blockchain use case, vet it with the practitioners of your business, then vet it again with a small proof of concept (mockups and user stories are good). Apply this test, and be honest:
- Why can’t you do it by storing data in a database that is accessible to all members? Databases are more powerful than blockchain when it comes to visibility, access and storage.
- What problem in the business case will you solve by using the technology?
- Is it practical to solve it this way?
- Will people agree to share the data that is needed for the business case?
Then start small. If you want to enforce compliance issues in your supply chain that might be 10 or 20 suppliers long, try it out with three. Not only will this help you understand your own learning curve to the technology, but it will give you data points to bring to other participants when you roll it out to a wider audience.
2. Market it right. The key to successfully adopting any technology when you are an early adopter is to ensure that it is marketed right. Tell a story: How much money will you earn or save? How much time? Explain why. Be dramatic —people need to see the dream behind the application. Remember, blockchain can never be sold to one person or organization; rather, it is all about a community (a small set of suppliers or the entire world, but always a community), so marketing it is absolutely critical. This also means that the business case has to be solid, not just cool.
Then think about what data people would be willing to share and the degree of transparency in the business.
3. Remember: Blockchain can’t solve everything. Another way in which blockchain reminds me of AI is that people sometimes think of it like magic: Any problem will go away if we just apply blockchain to it. So even with a convincing business case that you have vetted, go for concrete, well-defined use cases with a very pragmatic approach to what you can achieve. Leave the unnecessary stuff out. Every blockchain project needs to convince a community, and the tighter and simpler the message, the more realizable it will be.
Once you are convinced it will work for you, scale-out the proof of concept into a larger pilot and then put it in the field.
More Sustainable, More Ethical, More Autonomous
I started this article by comparing blockchain to AI, but the fact is AI paired with blockchain can transform the world! As we’ll see blockchain applied to real-life business challenges in the years to come, we will no doubt see setbacks and missteps. But I am certain that the tools will make the world more sustainable, fairer and more ethical.