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 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 only a couple years ago did it become 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. Most understand the basic purpose behind blockchain technology, but the general population doesn’t understand how it works and they also fear its decentralized, unregulated nature. An understanding of these processes would help better see what problems could be solved by the technology.
Organizations that look to implement new technology within their organization must first familiarize stakeholders with the technology. Technology like blockchain must be understood by employees, customers, and board members to see its benefit to the organization and how it will improve current processes or product offerings. Without an understanding, stakeholders will resist change and revert to old systems and processes.
Implementation of blockchain technology would require internal and external coordination between parties. The many uses of blockchain all require interactions between two or more parties to be successful. In reviewing the success of Bitcoin, the cryptocurrency had a limited user base, but has grown over time and has developed into a viable currency. In using blockchain technology internally (within an organization) or externally (among multiple internal and external stakeholders) different parties will need to be able to utilize this technology in order for there to be successful transactions or transfer of information. 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. An example such as this one 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 that examines organizations current systems and processes while also examining 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. Low novelty would include an implementation of bitcoin in a marketplace, and low complexity would include using blockchain technology within an organization.
Bâton Global has guided clients through transformation projects to become more efficient and competitive in their respective industries. Technologies such as blockchain are rather complex and novel, requiring a full analysis of their potential benefits, and a communication plan during implementation helps articulate their effectiveness.