This article was originally published on American Express
Successful company leaders in the 21st century fear becoming obsolete. High-profile examples from the past 30 years drive those fears. As an industry, video rental stores are perhaps the most famous example: People once thought these chains too big to fail, but the industry didn’t foresee mail-order rentals and video streaming services as serious competitors to retail business. As a result, brick-and-mortar video retailers have faced a cascade of setbacks that led to bankruptcy for at least one former giant.
Today, blockchain is the technology that’s changing business as we know it. While many companies fear obsolescence, their apprehension about embracing change and emerging technologies may make that fear a self-fulfilling prophecy. We are on the brink of the next technological transformation—now is the time to embrace change and safeguard your business.
Why Companies Need to Adopt Blockchain Today
Fear of change is far more damaging than the fear of becoming obsolete. Although film and photography companies were quicker than video rental services to join the digital revolution, for example, some companies’ business models struggled to adapt fast enough to thrive in a digital world. Though prominent brands haven’t all disappeared, some have filed bankruptcy and shifted focus to providing services to corporate markets.
Failures like these haven’t just stoked fear for today’s companies, but they’ve also sparked the realization that companies need to be more open to adopting emerging technologies. In a 2018 survey conducted by PwC, 84% of 600 executives from 15 territories say their companies are involved with blockchain to some degree.
As the world embraces blockchain as an immutable data source and identity management system, consumers will start demanding that all companies provide the same privacy-based data systems. Blockchain is built to meet that demand, and a company’s decision to build a network now or join one later is crucial to its long-term ability to be a leader in the new market.
4 Excuses for Avoiding Blockchain
If you’ve hesitated to adopt blockchain, you’re not alone. Every business leader has his or her own unique concerns, but the following reservations are the most common.
1. Blockchain enterprise platforms are too immature.
As online video streaming was 15 years ago, blockchain is still an emerging technology. It will go through many iterations as it’s tested against market vulnerabilities. According to a 2019 Gartner report, up to 90% of current implementations will have to be replaced within 18 months to keep up with those iterations.
It’s true that early blockchain platforms had to converge and mature before they could be adopted enterprise-wide. Today, however, leading enterprise platforms are in a good state for prototyping business cases and evaluating revenue models with the launch of minimally viable blockchain ecosystems. If companies have realistic expectations about what blockchain can offer them in time, they shouldn’t be apprehensive about making blockchain part of their strategies now.
2. Blockchain is only for large consortiums.
Because blockchain’s greatest value lies in bringing entire supply chains together, the technology works best when it’s applied across a large consortium of businesses. For companies that aren’t part of or at the head of such a consortium, blockchain technology might seem like a luxury without much benefit.
However, there are many use cases for which blockchain is bringing tremendous value to ecosystems of all sizes. For example, several companies now use IBM’s blockchain to streamline the procurement of contingent labor to reduce overhead in labor management. Such benefits are huge for smaller business networks.
3. Blockchain has no revenue potential.
You may see blockchain’s immediate benefits yet doubt its long-term potential. But blockchain isn’t just a new solution to integrate into existing systems. It’s a platform that reduces fundamental data-sharing costs, automates mundane tasks, manages smart contracts and makes room for new revenue-boosting business models.
As the world embraces blockchain as an immutable data source and identity management system, consumers will start demanding that all companies provide the same privacy-based data systems.
Once a blockchain network is populated with members, those new models can be operated on top of it, with early adopters guiding that operation. Many project managers have difficulty visualizing this in the beginning, but a strategic consultant can help companies create a road map for planning and governing the growing network.
4. The entire company culture will have to shift.
One of the biggest reservations that companies have about adopting blockchain is that doing so will require an entirely new way of thinking. Current enterprise resource planning systems may restrict data within company firewalls, while blockchain requires a more open-minded approach. This kind of enterprise-wide cultural shift can take time.
However, the time investment is worth it. In some systems, entities throughout the blockchain ecosystem can submit queries about consumers’ and other businesses’ digital IDs to authenticate transactions. Once companies adopt it, they can substantially reduce the time and money they spend on record keeping and authentication procedures while facilitating adherence to regulatory requirements.
Those who hesitate to adopt blockchain may miss out on becoming network builders and reaping the benefits that come with leading a consortium. They may be left scrambling to join an already thriving network once doing so becomes absolutely necessary.