Strategy and Blockchain
Raising only the potential problems that blockchain could solve is a very restricted approach to its impact on the business strategy. This innovation goes much further, since it is capable of highlighting new opportunities, which requires a different mind set. Let’s examine three generic areas in which the blockchain’s impact can be categorized:
The diversity of the problems forces you to think and understand the different applications in which this technology could have an impact:
- Productivity: More throughput?
- Time delays: Faster clearing? Faster settlements?
- Cost savings: Back-office? Customer service?
- Quality: Less errors? More satisfaction?
- Efficiency: Faster processing? Compliance/Reporting enablement?
- Risk: Less fraud? Less exposure?”
- Outcomes: Growth in revenues? Increased profits?
Although the above is not a list of “problems” in the pure sense of the word, it is a list of fundamental business parameters that any organization wishes to streamline. The blockchain is an invisible enabler that does not change much to the externally visible parts of a business.
They are more difficult to establish because that requires applying innovation, being creative, and making profound changes. These objectives are more difficult to achieve and it takes time to reach them. But, in fact, blockchain is about 80% business process changes, and 20% technology implementation.
Creating new opportunities includes entering new markets and/or providing new services, which now, with this technology, become feasible. It requires being imaginative and opening up to new possibilities, in addition to a deep understanding of what the blockchain is strongly suited for.
These new opportunities could also develop in three areas: inside the organization, collaborating with other organizations, or in totally new areas, unrelated to current internal processes.
- Inside: Can you attract a new segment of customers?
- Outside: Can you enter a new market outside of our core?
- Collaborative: With whom and in what areas could you collaborate?
It is a matter here of applying the blockchain’s capabilities from the ground-up. Knowing them well will lead you to discover new ideas for your business. It is easier to learn about the chain of blocks than that someone who masters the technology understands the nature of your business.
Here’s a list of generic capabilities that the blockchain enables:
- Sharing a distributed ledger
- Running smart contracts on the blockchain
- Ensuring that contractual conditions are undeniably met
- Implementing digital identity and digital signatures
- Embedding trust rules inside transactions
- Creating/Issuing digital assets
- Verifying authenticity of data/ownership/documents/assets
- Rethinking intermediaries and new flows of value
- Reconciling accounts and finalizing financial settlements
- Decentralized governance and new legal frameworks
- Bundling or unbundling services
- Providing escrow or custodial services
- Enabling smart things to transact securely”
The blockchain provides a new paradigm. You can start by running smart contracts on a blockchain, and ask yourself what it can enable and how you can tie it back to your business.
The reformulation of the strategy based on the application of blockchain should lead you to simultaneously consider the three areas: the resolution of problems, the discovery of opportunities and the application of their capabilities.