A blockchain is an open ledger that allows transactions between two parties without the need for a third party. Due to this fundamental characteristic, blockchain technology has potential use cases across multiple industries. Why, then, are organizations slow to adopt blockchain technology?
Blockchain technology is considered a foundational technology rather than a disruptive technology due to its potential ability to transform economies and society, in general. Different from disruptive technology such as mobile Internet, cloud computing, and the Internet of Things, blockchain hasn’t exploded as a technology that is being used by most organizations across industries. Following the same timeline as the groundbreaking foundational technology, Transmission Control Protocol (TCP), that precedes blockchain technology, it is expected to take years before it is fully integrated within widespread traditional systems and processes. Why is blockchain technology considered a foundational technology?
Novelty considers how familiar users are with a given technology. Bitcoin was first developed in 2009, but it was only a couple of years ago that it became a more widely-known currency. Blockchain technology began to gain traction during the same time, as tech futurists and others began to see the variety of uses of the technology. However, the general population is still struggling to grasp how blockchain works and if they can trust its decentralized, unregulated nature.
Organizations that are looking to implement new technology within their organization must first
familiarize stakeholders with the technology. When it comes to blockchain, employees, customers, and board members must have a basic understanding of the technology in order for them to appreciate its benefits and how it will improve current processes or product offerings. Without an understanding, stakeholders will resist change and revert to old systems and processes.
Complexity refers to the number and diversity of parties that need to work together to produce value with a given technology. The many uses of blockchain all require interactions between two or more parties to be successful. Bitcoin started out with a limited user base, but the number of users grew over time, allowing it to develop into a viable currency. In order for there to be successful transactions or transfers of information using blockchain, different parties will need to be utilizing the technology, either internally (within an organization) or externally (among multiple internal and external stakeholders). Last year, Wells Fargo and the Commonwealth Bank of Australia made history as they were the first financial institutions to use multiple blockchain applications in a cross-border transaction. This example shows that blockchain is a viable service that can be utilized by organizations in more traditional industries, but it takes cooperation and collaboration from multiple entities.
Blockchain technology is being explored by organizations in all industries to see whether it is a viable technology that can improve processes and efficiencies. In order to determine if blockchain technology can be a game-changer in your organization, a thorough internal and external analysis should be completed, including an examination of your organization's current systems and processes and the potential interactions with external constituents. Those that see blockchain as a viable option should see to implement the technology where “low” novelty or “low” complexity may exist.
Bâton Global has guided clients through transformation projects to become more efficient and competitive in their respective industries. Learn how we can help your organization navigate new innovation such as blockchain here.