A Coming Revolution
Decentralized processing via blockchain technology is creating a technological revolution in the way data are handled, manipulated, and monetized. This disruptive technology is finding new applications in everything from heavy industry to social media, from advertising to artificial intelligence.
Blockchain is finding particular use in supply chain management and the juggling of vast amounts of geolocation data, such as that produced by the growing autonomous vehicle industry. Medical records and insurance claim management are other mainstream blockchain applications seeking acceptance.
Basically, there’s no business model you can’t improve with the implementation of blockchain technology. Expect it to become as critical to day-to-day operations over the next decade or so as the internet itself has become.
Despite its immense potential, the blockchain has seen relatively low adoption rates thus far by big-name financial institutions and Fortune 500 companies. This can be seen as an echo of the relatively slow leverage of the internet itself in the late 1990s and smartphone technology in the early 2000s.
Fortunately, this time around, Fortune 500 companies are coming to the realization that the blockchain is a powerful, multipurpose tool, and at least a few market-movers plan to be in the vanguard when it comes to blockchain’s continued use and development. No one wants to be the next digital punchline like Blockbuster, Toys ‘R Us, Tower Records, or Polaroid. The blockchain’s potential to shake up the extant tech industry comes with the promise that so-called digital laggards will be left in the dust.
But this new digital frontier is murky at best and outright baffling at worst. How can a company looking to dive into blockchain technology best get started?
Getting Executive Sponsorship
A key factor in whether any given company’s proprietary blockchain will succeed is executive sponsorship.
This means that the blockchain needs to be treated as a mission-critical part of the business, not a fringe IT issue. Treating the blockchain with the respect it deserves as a proven game-changer will be critical to future success. In other words, the blockchain needs to be handled the same way major marketing or operational strategies should be handled, not as a rubber-stamped line item in the tech budget. The tendency in many big, byzantine operations is to treat its IT wing with a “not broke, don’t fix it” attitude. Blockchain implementation isn’t a server upgrade or behind-the-scenes tech initiative. It’s really a major shift in the way a company handles its day-to-day business, and so it should be handled with the appropriate degree of gravitas.
This means deadly serious financial and operation attention – we’ve seen eight-figure commitments to new blockchain technology. The blockchain’s potential is huge, and managing it appropriately needs to be a top priority.
Finding Qualified Professionals
Sourcing blockchain experts also needs to be at the forefront of any new blockchain strategy. The technology is in its infancy, and there are few experts in the marketplace with real-world implementation experience. Most self-professed experts have limited pilot or proof-of-concept experience. The market simply hasn’t been around long enough to churn out a large stable of professionals with years of in-the-mud blockchain experience.
Due to this dearth of solid professionals, it pays to seek blockchain experts with proven experience. Perhaps the easiest route to follow is bringing on business partners that have already sorted through the considerable amount of chaff out there in the market. For instance, Avasant’s RadarViewTM analyses service providers with proven IT experience at the helm of some of the world’s top blockchain projects. The blockchain represents a brave new frontier – don’t be afraid to ask for help from companies that have already taken the time to scout out the best experts in the field. Remember, this isn’t a patch job on existing technology; it’s a whole new way of handling your business’s information, and it needs to be in the hands of capable professionals to ensure everything flows smoothly.
Building a Solid Roster
The best kind of blockchain implementation teams combines business and IT experience. Don’t skimp on the initial groundwork. Have your team identify multiple potential use cases with a full suite of pilots and proofof-concept plans. The blockchain is powerful and versatile; use that to your advantage. Cast a wide net with your diverse team, so that you can identify the business areas where the blockchain is likely to do the most good. Don’t fear failure. Use “failed” pilots and blockchain initiatives as self-teaching tools. This is one of the benefits of casting a wide initial net. Having multiple concurrent projects running ensures that at least one will turn out to be a success, and it really only takes one great idea or implementation to completely revitalize your business model. Just look at Netflix, which began life as a sort of mail-order Blockbuster. The streaming model eventually dominated the business, despite beginning life as more of a low-cost proof-ofconcept than anything else.
As blockchain acceptance and adoption grows, you’ll likely find that many of your customers, partners, and competitors are experimenting with it, as well. Don’t be afraid to reach out and identify potential synergies. After all, that’s one of the most important concepts surrounding blockchain technology. Information and information processing can be distributed across multiple users and even multiple blockchains. Interoperability is a key concept here. If your project meshes with a client’s project, both partners can reap the rewards of a fully implemented blockchain system. Don’t be threatened by your competitors’ blockchain initiatives, either. Just as a rising tide lifts all ships, any kind of blockchain adoption in your industry is likely to raise the profile and use of your own blockchain – provided, that is, that you went all-in with the executive sponsorship in the first place.
This is worth reiterating; don’t be afraid to look at external blockchain initiatives. The world of crypto is much like the Wild West, with new start-ups and initiatives coming online constantly. Take advantage of this dynamic marketplace to find projects in your niche. Partner with these projects or acquire them, if necessary. Even tech-giant Google is looking for new blockchain initiatives to aggressively acquire and glom onto its core, centralized business. It makes sense from a dollars-and-sense perspective. Although executive sponsorship is crucial, there’s only so much free cash to go around. If someone else has already laid a decent blockchain foundation, there’s no harm in scouting out potential partnerships or smart acquisitions. This also the advantage of knocking out potential competitors while stacking your own deck. Look at the example of Facebook and Instagram. Facebook made that billion-dollar buy of a tiny company with a great image-sharing platform to protect its own image-sharing interests and bring in proprietary tech and talent. While traditional Wall Street executives were befuddled by the buy, tech observers quietly nodded their heads in approval. If only Blockbuster had done the same with the struggling early Netflix.
Invest, Scout, Partner, Acquire
Blockchain’s core tech of distributing information and processing power across multiple users creates a powerful metaphor for its proper use and implementation. Executive buy-in is crucial, and that might have a significant dollar value attached to it. It’s important to make sure you’re bringing in the absolute best professionals that money can buy. The best professionals will need to understand Enterprise IT systems, and have proven track records of blockchain implementation and development beyond start-ups or proofs-of-concept. You don’t have to do everything in-house, however. Look at what other movers and shakers in your field are doing and see if there’s a way to leverage their talents and technology for your own advantage. If a given blockchain project looks promising enough, consider acquiring it both to add to your own growing technological pool and to potentially knock out a competitor. Remember the positive example of Facebook and Instagram, and do your best not to emulate the negative example of Blockbuster and Netflix.
Becoming involved in blockchain is a commitment, and a big one. It involves significant expenditures in time, capital, and labor. However, the potential payoff is well worth the investment.
About the Author
Andy Popov has over 20 years of experience working as a Partner at an international strategy consulting firm, Head of Strategy & Business Development, and as a senior Private Equity/M&A executive in the US, Europe and the Middle East. He has built P&Ls of over $240+ million in revenues, and led international teams across multiple countries. As a consultant, Andy has served clients from a wide range of industries including banking, media, telecommunications, real estate, hospitality, healthcare as well as serving clients in the public sector.