When any new technology is being adopted or being pegged as a cult trend that “you must follow”, the common fear for most companies is missing out on it. Right now, blockchain is one of those technologies causing a stir among enterprises.
The promise of blockchain, whether it’s used for cryptocurrencies or for its versatility as a ledger, is its potential to allow enterprises to cross boundaries, with both trust and transparency. Lucky for us, most of the organizations testing blockchain today are also sharing their outcomes and progress, not keeping them from public knowledge, but it can still be difficult to know where to start.
The following information should act as a guide or road map for the most practical and impactful route to blockchain adoption, and how to avoid the dangers of jumping on the hype train.
Tips for Launching a Blockchain Project
When first setting up the project, get people onboard early and recruit trustworthy experts to educate your business and technical decision makers.
You can then shortlist the use cases and the technologies they will follow, as well as investigating the current experiments being run by academics or industry — wherever possible, this should also be those use cases being executed by a competitor.
If the project execution is not immediate, it’s recommended to start observing other less complex, encapsulated solutions and their implementation, which can help with proof cases and hypotheses. There is always a lot of experimentation going on and use cases will often be filtered down to the most impactful ones based on blockchain.
Approaching the Project Execution Phase
Once the groundwork has been laid, you can define if the organization wants to be an early adopter — by which it can leverage the first mover advantage, but at the same time embrace the risk — or a follower.
You can then move on to identify the problems that the company aims to address. Some of these might be information asymmetry, lack of transparency, or fragmented information that causes cost increase, process inefficiencies, or informal or illegal behavior.
Finally, define the success you envision based on your business case, but take note that if your project or initiative is executed on a shorter cycle than the adoption process or business cycles, or you define boundaries, you will need to infer its wider impact on the entire ecosystem.
Wrapping up After the Project Execution
Once the project has been executed, organize a “lessons learned” activity with the project teams and the stakeholders. This will allow you to take that knowledge to the next level on future blockchain projects.
The company should also share its best practices (technical, business, environmental) for these types of initiatives, and then go on to look for more use cases to follow or to test even further.
Remember, Blockchain is NOT a one-size-fits-all solution
Regardless of all the promises that blockchain enthusiasts want to be true, there are some checkpoints to be taken into account when analyzing the possible use or adoption of blockchain technology:
- Its application provides a new perspective and an innovative solution that no other technology has been able to offer before.
- It contributes to be an alternative solution to another known technology, which may involve higher complexity and risk, compared to a more mature technology.
- Blockchain technology, in fact, turns out to be a (or even the) suitable solution to address a specific problem.
Most of the factors listed below are common for any new technologies. However, the fact that blockchain technology involves solutions such as cryptocurrency and distributed ledger capabilities, means that it drives an inherent addition of risks to most use cases.
- External Factors: These are non-related to the solution, per se, as they are present in the environment in which the solution is encapsulated. For example, if a blockchain project includes access to existing financial products and services, it needs to be aligned with the existing ecosystem that will most likely be very dynamic.
- Internal Factors: These are inherent to the organizations involved in the project and to their activities in terms of business and technical readiness to adopt a blockchain solution.
Some factors might even cross boundaries:
- Regulatory Factors: To avoid any risks related to changes or updates to specific regulations, it is advisable to vouch for a use case that will not require (at least in the short term) a change in normativity.
- Technology Capability: The maturity level (or lack of it) of blockchain technology may have consequences in the ability to integrate and implement it. For example, because of the scarcity of blockchain experts, the level of understanding of the technology may vary, affecting the capabilities of different team members as well as the working culture of it.
- Business and Functional Capabilities: Information technology-related business capability might no longer be, by itself, a perfect fit to match the functional goals of blockchain initiatives. Thus, complementary capabilities may be required, such as security. In fact, some public blockchain implementations already present scalability problems (e.g. Bitcoin) as well as high transaction costs.
- Sustainability Capabilities: This is related to the capability of an organization or company to implement a blockchain solution—as any other solution–through its lifecycle (Create-Deliver-Maintain-Update-Decommission), to be able to scale it, as well as to define and update the related business model.
- Risk Management Capability: The ability of the participating organizations to mitigate, transfer, or to accept a risk. For some organizations, this is a business-as-usual practice, while others might even consider this a fundamental part of the blockchain initiative.
- Ability to Measure Impact: You might be able to measure the effective impact if you are dealing with an encapsulated environment. Otherwise, it may be really challenging to infer the impact of the ecosystem within an experiment and its hypothesis, and with a control and treatment group to compare, for instance, efficiencies for resources and costs.
While taking these factors into account, remember that, if the rest of the ecosystem — even the competition — is not ready to join, then blockchain adoption will always move at the pace of the slowest party, so there should be no immediate rush to jump onto the hype train before your company is ready.
If you’re looking for more information about blockchain, check out our blockchain primer, or read how the Santiago Stock Exchange boldly stepped into LatAm’s first major blockchain deal last year.