How to go from a Blockchain Tourist to a Blockchain Citizen: Beyond the Hype
How to go from a Blockchain Tourist to a Blockchain Citizen: Beyond the Hype
Blockchain tourism amongst businesses has been on the rise for a few years now, as businesses of all shapes and sizes take their first forays into understanding how to properly wield the power of the technology. But it would seem, blockchain tourism has leveled-off. Some would even say, blockchain technologies are over-hyped. Indeed, blockchain fatigue seems to be setting in. So what does it really take to go from a Blockchain Tourist
Blockchains are often solely conflated with cryptocurrency applications like Bitcoin, Ethereum, Ripple, and so on. Of course the cryptocurrency use case is often the most exciting, buzzworthy, and headline grabbing. With an ever-growing market capitalization in excess of $220B (Oct. 1, 2018) and 2000+ cryptocurrencies listed on
But the stark contrast is this: there has yet to be a non-cryptocurrency business case that has seen mass proliferation. And that’s true for both gravity-free start-ups or legacy-laden enterprises (although the context of this article pertains to latter).
At the end of the day, blockchain is a tool — it is not the end-all-be-all, and just with every tool, has a unique set of parameters, situations, and circumstances where it will find itself to be the most effective. Blockchainability (or the ability to blockchain) is important to understand in the context of what makes a viable use case or business case for further exploration. Blockchainability is also especially important considering the reportedly high mortality rate of blockchain projects — recent reports indicate that upwards of 92% of blockchain projects fail. Firmly comprehending blockchainability is indeed the very first step in creating meaningful enterprise-level business cases, but it is also often inherently the very first step (or only step) that organizations seem to be interested in. Blockchainability should not be the first step in understanding how to properly leverage blockchain technology to achieve real business outcomes. The only way to view the use of enterprise-level blockchains is through a strategic lens. In the case of most new and emergent technologies, the adoption in large organizations follows a ‘cart-before-the-horse’ paradigm partly because of large organizational over-heads, internal constraints, system or process-based frictions, legacy environments, and other obstacles in the pathway to real digital transformation. In this way, projects and broad-scaled initiatives often begin without any coherent strategy — and are doomed to fail. It is then by no wonder that 44% of C-suite executives feel that blockchain is blatantly ‘over-hyped’ in 2018, up from 34% in 2016.
Blockchain Hype
Are blockchains really over-hyped? What lends to this pervasive notion that the blockchain limelight is diminishing? When mirroring the traditional Technology Expectation Cycle with the Adoption Cycle, one could argue that blockchain technologies seem to be trending downward after the so-called Peak of Inflated Expectation. This speaks to the core of the problem. The initial expectations of blockchain technologies was tremendous — but the positive outcomes, so far, have been few and far-between aside from cryptocurrencies and altcoins.
Why is this the case? Could it be that the explosive market-value rise of cryptocurrencies like Bitcoin has lent itself over to similar explosive expectations in the enterprise business landscape?
The use of blockchains fundamentally require re-imagining, re-thinking, and re-evaluation of one’s fundamental business domain. In short, successful blockchain adoption actually requires a re-wiring of the business from its foundations.
- Digital transformation (4th Industrial Revolution) is fueled by Platform-based strategies which create resultant ecosystems.
- Ecosystems lend to new business models (transitioning from Trust-as-a-Service to Trust Ecosystems, Trust Economy, and Internet of Value), external value creation, network effects, innovation, and demand-side economies of scale.
Blockchains require the surgical opening-up of a business from the inside-out. That’s what’s needed to adopt blockchain technologies in real businesses. Without these foundations, any blockchain project or initiative is doomed to fail or gain significant enough traction to yield tangible results. So while 74% of large-scale businesses in the 2018 Deloitte’s Global Blockchain Survey said they had a compelling use case of blockchain technologies, and 26% intend on investing real-dollars (between $1-to-$5 million in the coming year), there is no mention of the readiness or willingness of businesses to fundamentally re-invent or re-examine their business models to appropriate leverage the power of the blockchain.
Strategic Re-Invention
Day-after-day I often have colleagues approach me with respect to new blockchain ideas — and I usually find myself running through a rough mental checklist to determine if a blockchain would even be a suitable tool to use. And there is certainly no shortage of blockchain projects — GitHub estimates the creation of 8000-to-10,000 new blockchain projects every year, with a 20% compound annual growth rate year-over-year by large-scale enterprises.
More-and-more these days, I find myself asking the question: “Does this application even need to be on a blockchain?” or “Do you really need a blockchain?” But I posit that to understand the inherent blockchainability of an enterprise-level use case, one should step back and examine a strategic roadmap first.
Step 1 — Identify the current state of the organization in terms of:
- Business Model
- Operations
- Customer Experience
Step 2 — Create a forward-looking vision and progressive roadmap in which there is a transformation of the current state of the organization to a well-defined aspirational future state:
- Business ModelDigitally Modified Business Model, New Digital Business Model, Digital Globalization
- Operations Process Digitization, Worker Enablement, Performance Management
- Customer ExperienceCustomer Understanding, Top-Line Growth, Integrated Touchpoints
Step 3 — Develop a path in which blockchain technology can be used guide transformation from current state to future state (and then-and-only-then examine blockchainability of particular use cases).
What I’ve actually described above is a simplistic, light-weight, yet prescriptive approach to guide strategic digital transformation, frame thinking about the use of technology (any technology really) in the execution of a business strategy, and using technology for a well-defined purpose and to advance the solving of real business problems. In the case of blockchain, or other new and emergent technologies, many a time solutions are developed in vacuums, silos, without a larger encompassing integration strategy, and without any vision for the future. Examining the blockchainability of a use case precludes that an agreed-upon transformative strategy is in place. And as you can see, determining blockchainability (an activity that many jump to with respect to examining use cases), is an activity that should only occur until a coherent strategy is in place.
These statements may all seem to be trivial statements — we all know that strategy is important, but what’s actually surprising is the lack of enterprise-wide strategies that leverage technologies (tools) to achieve tangible business outcomes. Many companies still operate in the regime of technology-based strategies, not outcome-based forward-vision strategies. A “blockchain strategy” should never be an enterprise-wide strategy — but more often than not — companies adopt these “tool-based” strategies. Strategies should be outcome-based, not “tool-based”. The lack of this strategic focus, or incorrect strategic focus, may be the reason why 92% of blockchain projects fail, and 90% of all projects on GitHub eventually become idle within the first 6 months.
The linkage between strategy and blockchain goes much further. And if there is only one point to take away from this article, to effectively use blockchains, one must absolutely, unequivocally, categorically comprehend the following point:
Blockchain technology inherently propels Platform-based business strategies. Blockchains are Platforms.
(Equivalently, the statement can also be made by replacing the word ‘platform’ with ‘ecosystem’ — which is not just a change of semantics, but serves to illustrate the synergistic nature between blockchain, platforms, and ecosystems — they are indeed interconnected).
Blockchain technology inherently propels Ecosystem-based business strategies. Blockchains are Ecosystems.
Blockchain Tourist to Blockchain Citizen
So then how does one go from Blockchain Tourist to Blockchain Citizen? You only become a Blockchain Citizen with a well-defined roadmap.
There are some questions that can be used to start the discussion internally within your own organization, so start with the following:
- Who are the participants of your business ecosystem today? Include suppliers, vendors, manufacturers, service providers — any and all external touch-points including your competitors and your customers!
- Create a map or visualization (even if its on a whiteboard or simply using pen-and-paper) of the interconnections between the participants in your business ecosystem. Understand the types of transactions that occur, and the value that is exchanged.
- Then ask yourself, how can I rewire the connections between participants. The re-wiring of the end-points within your business ecosystem, more-often-then-not, will be what will yield new and transformative business models, and new means and methods of value capture.
- Once you have this type of understanding, then insert the use of blockchain technologies and ask if the attributes of blockchain (distributed ledger, decentralization, and disintermediation) can be used to support the permanency and sustainability of the re-wired ecosystem.
The blockchain hype isn’t over — we are really, truly just at the beginning.