Blockchain: The New Era of Collaboration
As published in the Brazilian Harvard Business Review, May 2018. Article in Portuguese at the end of this post.
In the course of organizational history there were multiple waves of transformation by which companies and markets have gone through. Many of those transformation efforts happened under the fixed mindset, where the “pizza” has a pre-determined size and the one with the largest slice wins. These transformations generally tackled inwards. Methodologies such as downsizing, re-engineering, process transformation, etc., were used to transform companies inside out aiming to capitalize on their competitive advantages and capture that largest slice. In that manner all processes and systems were re-imagined, redesigned and implemented to solve the operational, organizational and technical issues within the companies.
In a VUCA world (Volatile, Uncertain, Complex and Ambiguous) the relationships between clients, vendors and competitors change every second, as do the trust relationships between them. In an environment with these characteristics sustaining a fixed mindset or advance to a growth mindset can determine the difference between vanishing and the real transformation of the companies. As such, the so-called incumbent, market leading, companies need to reinvent themselves continuously, without losing the capacity to sustain their core businesses, quickly advancing towards their digital reinvention.
While operating under the growth mindset, those challenges put forth by the VUCA world demand intense and extended collaboration between clients, vendors and even competitors in order to open up new possibilities for reinvention, and create new challenges to put that collaboration under sustainable execution.
Collaborate intensely without giving up competitive advantage? Only with Blockchain
But how to collaborate intensely without giving up native competitive advantages of their own businesses and market positioning, and still allow the relationships to be ever more efficient, reliable and agile? In this space lie the biggest benefits of adopting Blockchain based solutions.
Blockchain is also known as the technology behind cryptocurrencies such as Bitcoin, Ether, Ripple, among many others, but its use as the de facto transactional conduit goes way beyond those.
In the case of the challenges posed by the VUCA world, though, Blockchain reigns supreme
Blockchain, by concept and by design, is a technology that allows – and even asks – for the formation of collaborative partnerships “out the door” among a network of participants, in one or more markets, and even across multiple geographies. This characteristic is sustained by four main pillars:
- Shared Ledger: an append-only data base where transactions between participants are recorded, replicated and shared among them;
- Smart Contracts: describe and execute the business rules that govern a transaction between participants. It is the programmable part of the Blockchain and allows for the automation of shared processes;
- Privacy: even though all participants share the ledger, the data is protected by cryptography in ways that allow participants to only access the specific data they are meant to see;
- Consensus: transactions are certified by relevant participants through a consensus process and, once validated, its data cannot be modified or erased.
That said, not every problem that COULD be solved with Blockchain SHOULD be solved with Blockchain, specifically because the benefits brought by Blockchain based solutions are broader and more relevant when applied BETWEEN participants. Other, more traditional technologies, can be used to solve more hermetic, self-constrained problems within the companies, with less complexity. In the case of the challenges posed by the VUCA world, though, Blockchain reigns supreme.
To identify problems that have characteristics suitable to be solved, improved or reinvented with the use of Blockchain it is necessary to identify within the current business processes, among others:
- If there is, and what is the business network around the problem;
- How many companies take part in this business network and what are their roles in the business process;
- What validations or additional automation would benefit the business process’ KPIs;
- What data in this business relationship serve the purpose of auditability and/or traceability;
- What type of reconciliations or dispute resolution currently burden the process.
Even if these and other characteristics are identified it is critical that a project with such complexity is kicked off with a controlled scope, limited participants, and grows as the use of the technology and the governance process of the network mature.
Usually these cases are quickly identified by business people that are dissatisfied with the current state of their processes and have already tried other technologies to no success.
In processes where it is necessary to track goods or parts throughout an extended supply chain, with multiple different participants (raw material producers, factories, distributors, retailers, etc.) recover the information between fragmented and diverse systems and processes is a long and expensive task. Powered by Blockchain this process takes just a few seconds. *
In trade transactions where financial risk management is performed in isolation by the involved parties, the transactional costs are high, and prevent smaller companies from benefitting of a wider client network. With Blockchain the processes are much more transparent, reducing the costs associated with risk mitigation. **
The many pages of document required to release a container form a carrier ship demand multiple signatures from multiple different agents (customs, clients, vendors, inspectors, etc.) and can cause a demurrage effect, potentially reversing the business case of a whole ship. With Blockchain these processes and signatures can be made digitally, with complete transparency across the involved agents, virtually eliminating the risk of demurrage. ***
I get it. Now what?
By leaning onto the IBM Blockchain Services and Platform it is possible for companies to design their Blockchain adoption journey from the definition of their strategy – identifying and prioritizing impacted KPIs and higher potential use cases (better bang for buck) –, selecting and executing a first project using agile methodology to create an MVP that allows for scaling of Smart Contracts, integrations, organizational changes, definition and management of the network governance, and incorporation of new participant members for the ecosystems, potentially creating a completely new business model.
Blockchain is no longer just a promise, and reaping its benefits is a matter of giving the first step to a new era of collaboration between organizations.
Agree? Disagree? Leave your comments!
Portuguese version also featured in Blockmaster.
Real life examples of Blockchain at work:
** we.trade
*** TradeLens
Director, Products & Solutions SME/Wholesale | New Business Development Leader
6yGoing beyond the buzzwords...great article, Magaldi!
Engenheira, Palestrante, Fundadora da Elas Programam | LinkedIn Top Voice & LinkedIn Creator | TOP 50 CREATORS · FEMALE EMPOWERMENT | Mestra em Engenharia Elétrica | Especialista em Comunicação Quântica |
6yLiliane Tie Arazawa, MBA, PMP® e Marcela Ribeiro Gonçalves, antes de vocês me chamarem para o lado bom da força, Maurício Magaldi já tinha plantado uma sementinha. Tem Blockchain e colaboração no mesmo artigo. Gosto? Sim ou claro que sim?