{"id":2360,"date":"2020-04-06T04:01:47","date_gmt":"2020-04-06T04:01:47","guid":{"rendered":"http:\/\/kusuaks7\/?p=1965"},"modified":"2023-12-20T13:13:03","modified_gmt":"2023-12-20T13:13:03","slug":"blockchain-the-networked-ecosystem-is-the-business","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/fintech\/blockchain-the-networked-ecosystem-is-the-business\/","title":{"rendered":"Blockchain – the Networked Ecosystem is the Business"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tA few weeks ago I attended two back-to-back blockchain events in Toronto, – the\u00a0Blockchain Research Institute<\/a>\u00a0All-Member Summit followed by the inaugural\u00a0Blockchain Revolution Global<\/a>\u00a0conference.\u00a0\u00a0Both events included a number of excellent\u00a0talks and panels.\u00a0\u00a0One of the presentations I particularly enjoyed was Scaling Blockchain for the Enterprise: Emerging Business Models, by IBM\u2019s\u00a0Andrew Martin<\/a>\u00a0and\u00a0Smitha Soman<\/a>.\u00a0\u00a0Their presentation was based on their recently published report\u00a0Building your blockchain advantage<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tSince it first came to light a decade ago as the public, distributed ledger for the\u00a0Bitcoin<\/a>\u00a0cryptocurrency,\u00a0people have struggled to understand what\u00a0blockchain<\/a>\u00a0is all about and what it\u2019s truly good for.\u00a0\u00a0This is not unusual for potentially transformative technologies in their early stages, as was the case with the Internet, and is still the case with AI.\u00a0\u00a0The key question is whether blockchain has the potential to become a truly transformative technology over time.\u00a0\u00a0With few exceptions,\u00a0the answer is positive<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe essence of blockchain, notes the\u00a0report<\/a>, is that the unit of competition is\u00a0the networked ecosystem<\/em>, no longer a single enterprise.\u00a0\u00a0\u201cAs blockchain adoption continues to gather momentum, organizations must approach their blockchain strategies with the same rigor and commitment as any other new and transformative strategies.\u00a0\u00a0They can\u2019t just fall back on prototypes alone.\u00a0\u00a0They need to build a robust business case for blockchain that includes a fair incentive model to attract all the partners required for the success of their networks.\u201d\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tBased on the analysis of over 25 blockchain networks in various stages of production across multiple industries and geographies, the report recommends that a company\u2019s blockchain journey should evolve along three distinct stages: in search of value, – establishing a minimum value ecosystem;\u00a0\u00a0getting to scale – creating value for an overall industry; and designing for new markets, – creating entirely new markets and business models.\u00a0\u00a0Let me briefly discuss each of these stages.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tIn search of value\u00a0<\/strong>– From \u201cThe Network is the Computer\u201d to \u201cThe Ecosystem is the Business\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\u201cThe Network is the Computer\u201d was the motto of\u00a0Sun Microsystems<\/a>, – now part of Oracle.\u00a0\u00a0It was used to illustrate that in the Internet age, networked systems and applications were far more powerful than any single computer.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nBlockchain is now taking the power of networked ecosystems to the next level.\u00a0\u00a0\u201cBecause the unit of competition is the network – and no longer a single enterprise – the business case for the network and how it will grow matters as much as, if not more, than the product or service itself.\u00a0\u00a0We\u2019ve observed that organizations that launch their journeys by first designing and testing minimally viable ecosystems (MVE), rather than minimum viable products (MVP), have a greater chance to be successful.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tWhen first organizing a blockchain, designing an MVE that equitably incentivizes all participating network members is a key challenge.\u00a0\u00a0To do so, it\u2019s important to pick relatively simple-to-understand and implement use cases that can help incentivize members to join and remain in the network.\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tFor example, e-mail and the Web played a crucial role in the mainstream adoption of the Internet in the early-to-mid 1990s.\u00a0\u00a0Everybody could easily appreciate the ability to easily communicate with anyone, or to access information anywhere in the world.\u00a0\u00a0While relatively mundane in nature, e-mail and the Web turned out to be unexpectedly useful in business and\/or everyday life.\u00a0\u00a0Many other applications later followed across a variety of industries.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tSupply chain applications are now playing such a role in the mainstream,\u00a0commercial adoption of blockchains<\/a>.\u00a0\u00a0The infrastructures, processes and ecosystems of supply chains are significantly less complex than those in financial services, healthcare, music, and other industries\u00a0\u00a0\u00a0Their objectives are relatively straightforward: increase the speed, security and accuracy of financial and commercial settlements; track the supply chain lifecycle of any component or product; and securely protect all the transactions and data moving through the supply chain.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tBlockchains\u2019 ability to record all transactions flowing through a supply chain creates an immutable record of a product\u2019s origin, with the potential for full transparency and traceability from source to store.\u00a0\u00a0A number of\u00a0blockchain applications<\/a>\u00a0are already in or near production, including\u00a0TradeLens<\/a>\u00a0for the shipping industry and Walmart\u2019s\u00a0food supply chain<\/a>.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tGenerally, members of a blockchain ecosystem will see three main kinds of benefits: cost reductions, revenue growth, and smaller working capital.\u00a0\u00a0\u201cAs in any digital transformation, identifying areas to take out cost may be the easiest exercise, which could be why most early blockchain efforts have focused on stripping out cost\u2026 Other benefits could include brand uplift from reputably tracking goods on a blockchain, improved reliability – even in industries ripe with fraud – and reducing environmental damage to the communities they serve.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tGetting to scale\u00a0<\/strong>– Collaborating with competitors to create value for the industry\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tThe next step in the evolution of blockchains is the formation of industry networks.\u00a0\u00a0These create value by developing and operating shared industry infrastructures as well as shared processes and applications to be used by all its industry members.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tGovernance is the biggest challenge in creating such industry networks, which requires collaborating with other industry players, including otherwise fierce competitors.\u00a0\u00a0Large organizations are more accustomed to dictating terms to their ecosystem partners than to collaborating with them.\u00a0\u00a0\u201cEven though competitors in an industry utility aren\u2019t giving away what differentiates them, they often fear that they might do so.\u00a0\u00a0This mindset, and the likelihood that few organizations have ever cooperated with their competitors before, makes strong governance a make-it-or- break-it attribute of industry utilities.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tAnother major challenge is the sheer complexity of organizing major industry-wide initiatives.\u00a0\u00a0For example, a\u00a0few years ago, the\u00a0World Economic Forum<\/a>\u00a0published a\u00a0very good report<\/a>\u00a0on how blockchain can help\u00a0reshape<\/a>\u00a0the financial services industry.\u00a0\u00a0The report concluded that blockchain technologies have great potential to drive simplicity and efficiency through the establishment of new financial services infrastructure, processes and business models.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\t\nHowever, the report also warned that transforming the highly complex\u00a0global financial ecosystem<\/a>\u00a0will take considerable investment and time.\u00a0\u00a0It\u00a0\u00a0requires the close collaboration of its various stakeholders, including existing financial institutions, startups, merchants, government regulators, and individuals around the world.\u00a0\u00a0Getting them to work together and pull in the same direction is a major undertaking, given their diverging, competing interests.\u00a0\u00a0Overcoming these challenges will likely delay large-scale, multi-party blockchain implementations.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tSimilarly,\u00a0healthcare<\/a>,\u00a0music<\/a>, and\u00a0government services<\/a>\u00a0can greatly benefit from blockchain technologies, but organizing their large, diverse constituencies will also take considerable time, investment and effort.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tDesigning for new markets\u00a0<\/strong>– Creating entirely new applications, business models and markets\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tFinally, if blockchain is to fulfill its\u00a0promise<\/a>\u00a0and join the Internet and AI as a major 21st century transformative technology, it must lead, over time, to the creation of innovative new applications, companies, industries and markets.\u00a0\u00a0\u201cNew market business models should be audacious,\u201d notes the IBM report.\u00a0\u00a0\u201cWhen designing the network\u2019s path to value, organizations should consider how they can radically shift more power to the consumer or capture the long tail.\u00a0\u00a0Founders of new market networks may seek opportunities to exploit underutilized assets by bringing them into the sharing economy or create new partnerships.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

A few weeks ago I attended two back-to-back blockchain events in Toronto, – the\u00a0Blockchain Research Institute\u00a0All-Member Summit followed by the inaugural\u00a0Blockchain Revolution Global\u00a0conference.\u00a0\u00a0Both events included a number of excellent\u00a0talks and panels.\u00a0\u00a0One of the presentations I particularly enjoyed was Scaling Blockchain for the Enterprise: Emerging Business Models, by IBM\u2019s\u00a0Andrew Martin\u00a0and\u00a0Smitha Soman.\u00a0\u00a0Their presentation was based on their<\/p>\n","protected":false},"author":612,"featured_media":4185,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[192],"tags":[98],"ppma_author":[3320],"class_list":["post-2360","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fintech","tag-blockchain"],"authors":[{"term_id":3320,"user_id":612,"is_guest":0,"slug":"irving-wladawsky-berger","display_name":"Irving Wladawsky-Berger","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","user_url":"","last_name":"Wladawsky-Berger","first_name":"Irving","job_title":"","description":"Irving Wladawsky-Berger, a Guest Columnist at WSJ CIO Journal, is Research Affiliate at MIT Sloan School of Management, Adjunct Professor at Imperial College, London, and Chairman Advisory Board at r4 Technologies."}],"_links":{"self":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/users\/612"}],"replies":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/comments?post=2360"}],"version-history":[{"count":6,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2360\/revisions"}],"predecessor-version":[{"id":35078,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/2360\/revisions\/35078"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media\/4185"}],"wp:attachment":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media?parent=2360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/categories?post=2360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/tags?post=2360"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/ppma_author?post=2360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}