I often ask enterprise executives who are investing in blockchain initiatives to share their perspective on “why now?” Our understanding of how to drive business value from blockchains is nascent, there are no established best practices to follow, and it’s expensive to be a pioneer. So why not just wait until a clearer path emerges?
The prevailing response is that this technology is likely to play a role in shaping the way an industry behaves, and those that want to influence that future need to be involved now. Mary Lacity, Director of the Blockchain Center of Excellence for the University of Arkansas, puts it starkly: “You get to be a part of architecting the future instead of being victimized by it.”
“You can’t stop the waves, but you can learn to surf.”– Jon Kabat-Zinn
“Blockchain is an ecosystem-shaping technology,” explains Claus Jensen, who is the Chief Digital Officer and Head of Technology at Memorial Sloan Cancer Center. “So if you are in early, you get to shape the ecosystem according to what you believe is right.” Jensen points out how blockchains hold the potential to connect, for the first time, the flow of information that today is fragmented across multiple parties. “This is an important transition. Over the next three years, we will shape the flow of information for the healthcare system of the next three decades. My hope and belief is that blockchain will become the information backbone of our industry. And I think we’ll see this in many industries where information and business processes are disconnected from one organization to another.” Jensen continues, “Being an active part of this transition has great value.”
“At some point, new data standards and protocols for your industry will be defined,” says Kim Harrington, who heads the Blockchain Center of Excellence for Bayer. “If you are not a part of defining it, it could just happen to you. I believe every organization should be participating at some level. That doesn’t mean you have to be doing blockchain development yourself, but it’s important to at least understand and be part of the discussion.”
In many industries, leaders are moving together to make significant investments in pioneering blockchain initiatives that could benefit their entire ecosystem. Frank Yiannas, the Deputy Commissioner for Food Policy and Response at the FDA, has been working to leverage blockchain technology to improve safety in the food ecosystem. He explains why: “Fundamentally, blockchains can create a new model of shared value through distributed trust and distributed information. Everyone can get better and smarter by working together.” Why move now? “I don’t believe these new ways of working are going away,” answers Yiannas. “There will be a lot of disintermediation, and you don’t want to be left out. You are better off showing up to the dance early than when it’s almost over and too late.”
Could Social Forces Spur Demand?
Yiannas points out that a lot of the problems that blockchain is being targeted to solve—lack of transparency and traceability, for example—are driving a quest for solutions from more than a few visionary leaders, big companies, or regulators. “The reality is that consumers are demanding these things—and ultimately, consumers are the bosses.” It is possible that leaders will actively leverage blockchain-driven features to demonstrate these values and as a marketing tool (we are already seeing companies like Bumble Bee Foods using a blockchain and QR codes to give consumers visibility to the origin of their fish, and Nestle experimenting with blockchain technology to trace the ingredients used in Gerber baby food, for example).
Moves like these could set a new bar for transparency—and ultimately an expectation for it, creating pressure for other businesses to follow along. Over the past few decades, technology has developed a well-worn pattern of swiftly and continually resetting customers’ expectations. Today’s consumer’s type, swipe, and click their way to nearly anything they desire, nearly anywhere they are—and this has set an expectation of responsiveness and availability that has become ingrained in our culture. Like the internet, mobile, and social before them, the new things blockchains make possible will ultimately influence new consumer behaviors and a new kind of standard expectation. Even if your business is not planning to leverage blockchain technology right now, your customers will expect a relationship with you based on what they will be exposed to elsewhere.
Move Now . . . Or Wait To See If The Canary Survives The Coal Mine?
Timing is a very complex decision, and executives have to balance difficult calculations about industry pressures, regulatory uncertainty, and their own company’s risk profile. What may make sense for the industry overall may have a very different payoff for an individual player, and so these decisions require a high fidelity understanding of the opportunity in blockchains, even as that shifts. “There are basically three choices,” explains Lacity. “Decide to lead development. Passively participate with a lot of ecosystem partners. Or join after others have done the development. Each will yield different kinds of value.” Harrington says, “There are certainly varying levels of ways to get involved, from leading technology development to contributing to the codebases, to just staying engaged with your industry and the consortiums that are being formed.”
But making smart decisions about timing does requires investment. The landscape is moving fast, and for an enterprise to “spend money to dig into this technology so you can become smart at the negotiating table is a worthwhile investment,” says Olga Mack, a CEO, lawyer, and author who has advised a range of Fortune 500 companies on blockchains. “These are R&D dollars. It can help you be smarter when you acquire, partner, invest or collaborate with your industry.”
Blockchains Are More About Business Than Technology Strategy
As blockchain technology itself evolves, executives are finding that their biggest battles shift from getting the technology to function to figure out where, when, and how to leverage it in their business. Jensen, who has led technology organizations across multiple industries explains, “This will shape the way business is done for decades to come. That’s a really hard concept to get across, and it may surprise you coming from a technologist, but this is so much more than a technology. What we are really talking about here is actually a new business construct.”