Blockchain: the path forward
The journey toward decentralized solutions is just getting started. It now depends on companies how they utilize and leverage blockchain to its full potential. Given the widespread adoption of blockchain, in an interview with CIOReview Kyle Culver, Director, Emerging Technologies, Humana suggests various methods to help companies realize blockchain’s full value.
Change takes time. Will blockchain’s “reservoir of goodwill” dry up before we see its full potential?
Consider that Amazon web services was released in 2006, but after thirteen years, even the most sophisticated of companies are still pondering how to make the most of cloud services. In 2010, IBM Watson demonstrated a powerful blend of new technologies that could win against human contestants at the game show Jeopardy, yet firms are just scratching the surface relative to the full potential of Watsonlike capabilities of natural language processing and machine learning. More recently, the promise of blockchain’s value was received enthusiastically early on by many. Early gains led to the filling of the proverbial reservoir of goodwill, such that firms invested considerable resources toward exploring the emerging idea in hopes of gaining significant returns. The reality is that it will take a long time to bring to fruition production-ready, enterprise grade, value-creating blockchain solutions—with the large network of participants required for success. Furthermore, due to non-technical challenges of establishing governance and incentive modeling, blockchain solutions are likely to take more time to achieve widespread adoption and usefulness than other types of technology advancements. Some are beginning to worry whether the enthusiasm will dwindle and the reservoir of goodwill (and with it, investment) will run dry before we realize blockchain’s full value.
How can we keep the reservoir full?
Recognize the nature of the shift. Blockchain requires a major culture shift. It’s a shift from the familiar centralized entity to a decentralized autonomous organization (DAO)—a long, arduous journey to be sure. The playbook for governing such a decentralized network takes time to write. To keep the journey alive in the meantime, small steps forward are needed to demonstrate viability. One likely step may be operating in a hybrid model that balances the goal of a DAO with the realities of existing laws, regulations and organizational risk tolerance. Additionally, incentive models that motivate the desired behavior among stakeholders while sustaining the underlying blockchain-powered solution is another puzzle to solve, and the solution may vary by use case. These challenges differ dramatically from those faced by other technology advancements because, with blockchain, they are not all technical barriers. Overcoming them requires more than a just group of talented engineers and a dataset. It will take creative, busy savvy minds collaborating. In fact, the mindset of enterprise network participants will need to be changed from "competitors who compete" to "competitors who compete AND collaborate."
Blockchain requires a major culture shift. It’s a shift from the familiar centralized entity to a decentralized autonomous organization (DAO)—a long, arduous journey to be sure
Make use of collaboration. Many of the current blockchain-enabled consortiums and collaborations focus on creating utility functions with the intent of improving business efficiencies. These decentralized utilities provide a tremendous opportunity to transition commoditized work (like many of the routine tasks that all firms in an industry need to do) to a shared platform. By moving this work to the shared platform, a firm can reallocate employees who had toiled on these tasks to work that differentiates the firm, such as creating value-added services and improved experiences. Specifically, a blockchain option changes the dynamics of the frequent build, buy or partner decision, making the partner option more appealing. Partnering using a blockchain could reduce cost, improve speed to market and decrease the risk currently experienced when partnering without decentralized technologies. The opportunity to reduce cost comes from the efficiency of cost averaging to create and operate the utility with embedded governance across the network of participants. Improvements in speed to market come after the road has been paved with the first use case that creates value, demonstrates proper governance and offers an incentive model that is sustainable and equitable for the network. The payoff for building that first road is that it can then be used by a larger group as the network expands; it provides a new avenue for partnering with a large group. Pulling together several different large groups of companies to collaborate on separate use cases is not realistic. However, partnering is a possibility when a decentralized platform – with the appropriate governance and business model – already exists. The risk of this approach is potentially less than with a centralized partnership due to the decentralization and transparency inherit in blockchain.
Embrace learning. Leaning into these consortiums, collaborating and providing leadership is worth the effort as the learnings from these activities expand well beyond the use case(s) on which a consortium is focused. Decentralized solutions provide a new foundation for enabling competition. Those who invest in learning about how to make the most of these offerings will be rewarded. Hands-on experience will inform how to prepare for shifting from the tightly coupled, centralized enterprise systems of today to decentralized blockchain-powered platforms of tomorrow. Leaders must consider how they are investing in and architecting internal centralized systems that already have decentralized competition. As organizations grapple with changes in consumer sentiment and resulting regulatory changes, including privacy regulations like GDPR and CCPA, there is tremendous opportunity to collaborate on approaches for creating a decentralized solution to handle digital identity and consent management. With data being a critical part of our increasingly digital world, it seems that Distributed Ledger Technologies will have a role to play in creating a foundation for new capabilities that enable privacy, democratizing data and providing value efficiently.
Keeping the reservoir full. The expectations at this point for blockchain are small steps forward in solving for governance, incentive models and technical challenges including scalability and stability. Shifting the familiar hyper-competitive culture to one that incudes focused collaboration to create shared value will take time, but the outlook is highly optimistic. There are many blockchain-focused efforts, including Synaptic Health Alliance, Food Trust and DeFi, that are expected to demonstrate continued progress in 2020, providing needed steps forward with live examples of progress. These examples, paired with technology advancements such as zero knowledge proofs, will help to refill the reservoir of goodwill and energize efforts. Focus on small, meaningful steps and stay curious. The journey toward decentralized solutions is just getting started.