Top 6 Guiding Principles to Blockchain for Business Adoption
Jun 19, 2020
Over the past several years, enterprise blockchain for business has seen noticeable attention from organizations outside of the cryptocurrency community. Gartner predicts that the business value added by blockchain will surge to exceed $3.1 trillion by 2030. In a recent Gartner Press Release nearly 40% of those surveyed globally have blockchain solutions in production. The benefits of blockchain continue to intensify the interest in enterprise blockchain for business. Savvy business owners can earn a share of the fortunes associated with these trends by following our top six enterprise blockchain adoption guiding principles.
People are learning that blockchain is changing the rules, and they need to get involved. As the technology matures, the blockchain platforms are becoming more reliable with improved security, privacy, and scalability. However, there are still more growing pains to overcome. To help address difficulties with communication and interoperability, InterWork Alliance was recently launched by an impressive group of organizations to standardize the interchange of tokenized value across use cases and networks. The establishment of decentralized governance is another challenge for enterprise blockchain consortiums, which are experimenting with various models to address the problem. Furthermore, laws throughout the world impacting blockchain deployments are inconsistent and in flux. According to the World Economic Forum, regulatory changes represent by far the most significant hurdle for blockchain innovators, as these changes are forcing early adopters to rework their implementations.
Experienced blockchain consulting companies, such as Chainyard, have successfully navigated through the complex journey of blockchain for business adoption and have deployed several solutions into production providing blockchain benefits to dozens of clients. Trust Your Supplier from IBM and Chainyard is one such example; It provides a trusted digital passport for suppliers to work with buyers in the network. The network already has more than two dozen Fortune 500 companies as buyers, numerous verifiers, many business networks providers, and thousands of suppliers.
To avoid the need for redesigning their blockchain solutions, and to overcome the numerous challenges and realize the benefits of blockchain, enterprise blockchain for business adopters can follow these top six guiding principles:
- Decide whether to join a consortium, or start your own: For any company seeking to capitalize on blockchain’s potential, the very 1st decision to make is to either join an existing blockchain consortium or start a new one. More than 50 consortiums have been formed globally, with a majority of them in financial services, logistics, and healthcare. Participating in a good consortium is a lower-risk strategy that will cut down on capital costs, minimize operating fees, and provide a stable and consistent governance environment. The decision to join an existing blockchain consortium has to be based on more than simply the fear of missing out or to learn what competitors are doing. Consideration should be given to how the consortium goals match yours, who else is participating in the consortium, the governance model of the consortium, and the business value you can reap from the business model of the consortium.
- Establish a strong business model and develop a POC to accelerate stakeholder buy-In: A Proof of Concept (POC) is used to demonstrate the feasibility of the solution, verify key concepts, and validate blockchain benefits. According to Gartner’s Market Guide for Blockchain Consulting, 9 out of 10 blockchain initiatives will fail because the business problem is not identified at the start. While PoC demonstrates the technical feasibility, a strong business model demonstrates the return on investment and the business value that the network will provide to each member in the network. Transparency during this process among all stakeholders is important to maintaining trust and it is critical to design the POC such that it can be easily upgraded to a Minimum Viable Product (MVP).
- Build a small core consortium team early: The blockchain for business consortium should include a group of stakeholders that are representative of all the ecosystem roles including vendors, partners, and competitors as well. Maintain agility for the pilot by identifying and engaging just a subset of core participants up front – while being fully transparent with all members. The transparency builds trust, allows for additional feedback to improve the solution, and drives future adoption. The core blockchain consortium team will focus on refining business models, go-to-market strategies, and pricing models while defining feature road maps.
- Engage specialists who are experienced and stay up-to-date on the latest blockchain developments: Blockchain projects require end-to-end considerations on strategy, assess benefits of blockchain, technology, platform selection, data privacy, security, integrations, regulations, and governance. It is a complex journey where blockchain experts can make the difference between success or failure. Successful project leaders will engage blockchain platform certified consultants with proven experience in deploying production networks.
- Don’t underestimate the legal challenges of getting all contracts in place: Building a blockchain business consortium involves many hurdles – and some of the biggest are legal ones. Establishing agreeable technical roles and business responsibilities across enterprises can be a sizable undertaking. The lack of industry standards and novelty of risk considerations can elongate this process. We recommend starting with a standardized MoU, and refining further during development of contracts as clarity is obtained.
- Leverage a decentralized governance model that is representative of all stakeholder roles: Once you cross the MVP chasm, it is time to ensure you have a representative governance body (founding members) and develop a supporting governance model. A good governance model with a representative governance body is a key indicator of a well-defined consortium. Founding members contribute their expertise to the roadmap and will leverage their relations to influence additional members to join the consortium. Identification and recruitment of these stakeholders to the governance body to represent the ecosystem is critical to success.
It is highly anticipated that blockchain technology will be a part of most businesses in the next five years. Some pioneering companies will be leaders, creating their own networks, and starting consortiums. Many more will be followers. Enterprises cannot afford to ignore this shift in business models due to distributed ledger technology. There is a myriad of decisions required of enterprises to navigate the fast-changing technology, and leveraging these guiding principles will facilitate a smooth journey.
To learn more about Chainyard’s consulting services and executive workshops, email – [email protected].