We discussed many insights garnered from blockchain first movers as they have progressed towards commercialization in our previous blog, From insight to action: What have we learned from blockchain first movers, including why they are investing in blockchain and what are the barriers they have had to overcome. We shared that, surprisingly, many organizations are not investing in the technology to disrupt competitors, but rather to optimize existing processes and overcome business frictions within their industry. That being said, some early adopter organizations are finding unique opportunities for business model innovation with blockchain and are investing in the technology to solve complex business problems in creative ways.
More than payments
A few years ago, we found that most people we studied associated blockchain with payments. Whether considering cryptocurrencies that allow direct peer-to-peer payment transactions, such as Bitcoin, or large banks investing in global trade finance, blockchain was still largely viewed as a rail for global payments. As expected, banking and financial markets industries have reaped the benefits of the technology in the area of payments by reducing the need for reconciliation and minimizing errors. As the technology and its use matures, however, organizations in other industries such as government, life sciences, consumer and electronics, are gaining a deeper understanding of how to apply blockchain to their most pressing needs, which stretch far beyond the world of payments.
In industries such as government and life sciences where modernization is slower, for example, blockchain helps to accelerate innovation by encouraging and promoting new ideas and ways to exchange information.
Interestingly enough, the focus of blockchain for these industries has been to empower the individual — to put the patient in control of his or her own data, to enable better voting rights, and in the case of the consumer industry, to spur customer co-creation and engagement. This investment in blockchain to decentralize the control and shift ownership of data back into the hands of the everyday consumer is highly compelling in the age of GDPR and the proliferation of social media. As Don Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World points out, building trusted identity networks is a big step towards a new world, where companies are going to have to negotiate with individuals via smart contracts as to how they can manage and use their data.
Blockchain for new business models
The electronics industry also utilizes blockchain for much more than simply payments and is unique in how it invests in the technology to innovate. Unlike all other early adopters who expect blockchain to help their decision-making by providing better quality of information, the electronics industry does not name imperfect information as a top friction. This is logical considering the nature of the industry — with the multitude of devices and points of engagement along the supply chain, organizations likely have better quality of information for decision-making to begin with. In these product or asset-based industries, we find leaders expect blockchain to open up new business models and efficiency opportunities in operations and supply chain areas. Our study shows 80 percent of trailblazer electronics executives expect blockchain to provide the greatest benefits for asset and inventory management, component provenance, edge computing and digital marketplaces. Digital marketplaces, such as peer-to-peer messaging and transactions, have specifically been identified as a breeding ground for potential innovation, as more than half of these leaders expect blockchain to create the greatest disruption in this area.
Blockchain and beyond
Beyond simply investing in blockchain to solve business problems in new and unexpected ways, we have seen blockchain become a catalyst for organizations to invest in other cutting-edge technologies such as artificial intelligence (AI), radio-frequency identification (RFID) technology, IoT technology, and robotic process automation (RPA) technology. For example, Golden State Foods (GSF) is collaborating with IBM to join the IBM Food Trust blockchain in order to optimize delivery and transport, improve supply chain collaboration, decrease operational costs, and increase traceability and transparency of fresh food — ultimately improving food safety. GSF is not only investing in blockchain technology, however, but also in Watson IoT, which together enables sensor data to be shared with relevant parties in the supply chain through a blockchain smart contract. This marriage of technologies provides exceptional visibility along the entire network.
Spending the time blueprinting how blockchain will solve a business problem or overcome a friction produces an inflection point for these organizations. As they reinvent their processes and overhaul outdated systems, they identify opportunities for other technologies to enhance the overall solution that they may have never considered otherwise.
Take-a-ways for your blockchain journey
Just as we learned in in our previous article that organizations are not solely investing in blockchain to disrupt, we now see that blockchain is being used for much more than just payments. The technology has evolved into a Swiss Army knife of sorts, helping organizations across all industries innovate a myriad of unique solutions. As more organizations begin to implement and progress down their blockchain journeys, we are excited to see the new and exciting ways that blockchain, and other technologies that complement it, could help solve the world’s most complex business problems.
If you are just starting out on your blockchain journey, find out more about how blockchain is making waves in your industry. For those of you who are further along, and are experimenting with blockchain proof of concepts (PoCs) or production pilots, learn more about blockchain strategy, use case selection, network scaling tactics, and more by reading the latest blockchain business model study launched at SIBOS 2018.
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