Creating and implementing a blockchain is not your traditional IT build. There’s no point in re-creating the old world, but with a blockchain at its core. The danger in not recognising this paradigm shift from the outset is that you end up reasserting existing roles, processes and business models. Instead, you need a commitment to a strategy that is suitably transformed from where you are today. And that starts with the business case.
Of our survey respondents, 62% report having a blockchain project underway. This is an impressive sign of progress. But for these companies, as well as those that are still in the research stage or that have yet to dip a toe in the water (the latter two categories encompass 34% of our respondents), getting the business case right can set them up for future success.
Creating a blockchain doesn’t have to mean complete reinvention, but you need to make sure you don’t slip into familiar ways of doing things. New ways of thinking and operating will be required.
Your blockchain project needs to be supported by a strategy. What is the issue you are addressing, and how will blockchain help? How might this same issue be affecting others in your industry?
Make sure you know where blockchain will fit in your business environment, and fine-tune issues along the way. But stay focused on the long-term value: an external shared resource that makes new scale economies possible.
What's stalling blockchain progress
The inverse is also true: failing to start with a clear business case can lead to a stalled project. For that 34% of respondents who report having little to no involvement with blockchain, the top three reasons cited for lack of progress are cost (31%), uncertainty over where to start (24%) and governance issues (14%).
It is reasonable to assume that some of these issues result from a lack of strategic clarity. Before jumping into a blockchain initiative, you need to ask yourself: what am I strategically trying to get done? This starts with pain points that are tested against key criteria, to determine if blockchain is a good fit or if other technologies are better placed. If blockchain is the best solution, it’s time to ask: Which other stakeholders share this pain point? How would we fund such an initiative? How might it be governed?
These are big questions, and they become increasingly complex when third parties come together around a blockchain. Thus, although blockchain may ultimately power expansive networks for frictionless commerce, engendering trust in blockchain has to start small. Here we see a cautionary tale in financial services. In this sector, blockchain has been pitched as a big-ticket solution to big problems. And it very well might be, but the reality is that progress is slow going. Our survey findings reflect this mentality, across industries: of the respondents who report a blockchain project in the pilot stage, 54% say the effort sometimes or often hasn’t justified the result.
To mitigate risk, don’t begin with the big-bang, change-the-world ideas. Instead, try to build confidence in the tech by starting smaller. Consider the insurance claims process: many insurance companies have been looking at putting parts of the process onto a blockchain to avoid costly reconciliation of claims and disbursements. Ideally the whole process would go on the chain, but companies don’t start there. Instead, they start with one part of the process, such as claims management.
A blockchain that incorporates all of the documents generated in a claims process would enable all parties instant access to information, and would give them the ability to monitor and review the process. Therefore, clients, brokers and insurers can reduce delays and costs, and offer greater legal certainty and improved customer service. The success of this initiative would prove the value of a collaborative digitisation effort and the use of blockchain.
When blockchain projects fall short of expectations