Blockchain has captured the interest of organizations across industries globally. Its inherent framework that allows for greater transparency, increased security, enhanced traceability, higher efficiency and faster speed, has the potential to disrupt and transform traditional business models.
Talk to any CIO or innovation leader in a fairly decent size organization, and Blockchain will definitely be on his/her PoC list even if not among the top #3 priorities yet. Supply chain management, accounting, smart contracts, quality assurance, peer-to-peer global transactions are some of the use cases that have found early traction in these early projects.
Yet, one hasn’t witnessed mainstream enterprise projects of a truly transformative scale. This is not surprising considering Gartner’s 2018 CIO Survey indicates that only 1% of CIOs have invested and deployed Blockchain and 8% CIOs are in short-term planning or active experimentation with the technology with another 14% having it in their medium to long term planning. Almost 43% have Blockchain on their radar but no action planned to investigate or develop it.
Leaving the banking sector aside, the technology’s understanding and awareness around its workings and possible use cases in other sectors is still fairly low. Organizations are struggling with identifying use cases that are both relevant and practical. This extends to the regulators also across industries who are still in the process of understanding the technology and its impact on the businesses and consumers in their respective sectors.
While all major analysts and consultants have been unfailingly pitching Blockchain in their list of top technology trends, what then could be the reasons for this tempered and toned down on- ground adoption reality?
Here I’m highlighting the two fundamental issues impeding the technology’s fast track growth despite its revolutionary capabilities.
Bringing the Industry Together: Blockchain is an ecosystem game. Therefore, it works best and creates the greatest value and opportunity when the entire ecosystem comes together. This success factor of the technology is also its biggest challenge as it requires organisations within an industry to work together for maximized impact. However, bringing multiple organizations together, including competitors, to work on a common platform can be a logistical nightmare. Most of the developments happening today are individual Blockchains created by different organizations. As stated in a Deloitte report on Blockchain, this defeats the purpose of distributed ledgers, fails to harness network effects and can be less efficient than current approaches.
How to Address It:
To address this challenge, Deloitte in its report on key Blockchain challenges urges leaders to ask and answer the following questions:
- What problems or opportunities does my organization share with others in the sector?
- Will a blockchain approach still leave a marketplace in which we can compete?
- What are the bottlenecks that might prevent us from working together?
- How can we take a lead in bringing the community together?
- How many organizations would be needed to create a critical mass?
- What are the common standards we require?
Cultural Shift: It is estimated that blockchain requires almost 80% change in business processes with the technology component being only 20%. Therefore, what this means is the need for a huge shift in business models and traditional ways of doing things. Foremost change is the shift in trust and authority from a centralized figure to a decentralized network, which in turn means loss of control. Organizations will be required to un-learn and re-learn a number of things to be able to leverage the opportunities that Blockchain presents.
How to Address It:
To address this challenge Deloitte in its report advises leaders to consider where they can pilot new blockchain approaches on the edges of the business and to check whether those most affected by the blockchain implementations are supportive or not. It also asks the leaders to figure out what areas of their business are likely to be most disrupted.
(Image Courtesy: Dailyreckoning.com)