Over the last few years, we have worked with hundreds of organizations on their blockchain projects, frequently addressing questions around best practices. In response to this, we began collecting these best practices and insights into what we have titled The Founder’s Handbook. We have observed three business practices, among many other best practices covered in the handbook, which can make or break nearly any blockchain project. We encourage all founders to read through these insights, along with the handbook, and understand how you can leverage each of these within your own blockchain solution.
Blockchain technology is transformative and founders must dream big to meet these expectations. As with most transformative technologies, we tend to see projects fall into one of three categories:
The status quo improvement: These organizations are using blockchain to improve an existing process, typically across an existing ecosystem. Because there are relatively few unknowns — the market already exists, ecosystem members are known, and the improvement can be easily calculated — use cases that fall under this category are typically low-risk. As such, we often see organizations begin their blockchain journey here.
The new market segment: These organizations are using blockchain to expand their business into new market segments. Whether the organization is using blockchain to enter a new region or provide existing services to a new customer segment, blockchain allows these organizations to expand into markets where a lack of knowledge and trust had previously been a barrier to entry.
The industry disruptor: These organizations are using blockchain to disrupt entire industries by creating new ways for individuals and organizations to transact. Disruptive use cases pose the most risk, however, organizations that do not address this opportunity will eventually be disrupted. Even if your first blockchain use case focuses on a status quo improvement or a new market segment, you must have a strategy when it comes to industry disruption.
When crafting the business model for your project, start by articulating the business problems you are attempting to solve. As you begin thinking about how to address these problems, consider which of these categories your project falls under and then challenge yourself to think big, but also think practically about the steps you must take to achieve your vision. While it may make sense to start with a status quo improvement, think about how your roadmap can address new market segments and disruption over time. Questions you should ask yourself include:
What is my short term and long term blockchain strategy?
How does my roadmap help me to incrementally work towards this strategy?
Is it better for me to be a blockchain network founder or to be a joiner of an existing network?
Motivation drives momentum
Blockchain is all about creating shared value. During the initial design phase, it is essential for founders to invite their identified minimum viable ecosystem (MVE) members to participate in discussions around the incentives structure, how the network will operate, and the expected roles and responsibilities of each member. One mistake we see founders make at this stage is leaving key members out of these discussions, resulting in a model that fails to properly motivate and reward one or more member types. As a rule of thumb, your MVE should represent what the solution will look like at scale, including at least one member per each participant type. Questions you should ask yourself include:
Does my MVE accurately represent what the solution will look like at scale?
How should we properly incentivize ecosystem members to participate?
Are there non-monetary motives for members to join the network?
What value does each member receive? What are their costs?
Participation drives value
Blockchain is a team sport. If structured correctly, each additional network member should add additional value. This network effect is critical to a successful blockchain solution. As such, you should work with your MVE to create a firm strategy for how the network will scale and what the ongoing roles, responsibilities and cost structure look like for each additional member. Questions you should ask yourself include:
What value do new members bring and who benefits from that value?
Does this structure differ based upon the membership type?
How are new members on-boarded at each phase of the network?
Next Steps for Founders
If you are new to blockchain and still in the initial education phase of your journey, we recommend you check out our blockchain basics article. If you understand the basics and are wondering what’s next The Founder’s Handbook is a great resource, developed to guide you through each of the key aspects of network formation including how to select a use case, how to create a cross-industry ecosystem, how to build a shared-value business model and how to create a multi-organization governance structure. Once you are ready to start building, try our blockchain developer tools and the IBM Blockchain Platform Starter Plan to help begin your blockchain journey.
Since the publishing of this post, the IBM Blockchain Platform has been officially released.
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