Today, there is a need for various organizations to join hands and fight the pandemic battle at hand. These organizations are not limited to healthcare providers and include companies focussing on disruptive technologies such as AI and Blockchain. We are fast approaching the phase where Blockchain moves beyond the hype cycle into mainstream adoption. Lot of companies today are able to comprehend the merits of Blockchain and devise use cases for practical adoption.
In the past, cryptocurrencies and Blockchain was a thing of computer geeks along with money launderers and peddlers on the darknet. This notion has changed over the years with Blockchain catching the attention of mainstream businesses. Blockchain provides a solution which adds value to their existing processes and addresses some of their long-standing challenges.
What makes Blockchain lucrative to invest in for enterprises?
Blockchain can provide empirical proofs which enable disparate organizations to agree upon a single source of truth. This leads to a new interconnected model where businesses can collaborate towards a common goal. This collaboration can result in lowering their innovation and operational costs. This information sharing approach using blockchain can also reduce the time to market while creating new market opportunities.
In spite of the promise, the adoption of Blockchain in various industries has been slow.
What are the major roadblocks for Blockchain adoption?
Lack of technical know-how used to be the key hurdle in the past. Today, the key reason is the need for various organizations to work together more closely than they are comfortable with.The patrons of this technology are also competitors having doubts about a shared future with free information flow between them.
Traditionally, competition has been fostered for many positive reasons. Competition reassures the businesses about their brand being chosen by customers because they might be better than the competitors. Business education tells us to treat everybody in the ecosystem as potential competitors. The ultimate profit potential depends on the collective strength of the competitive forces and using them to prepare against competition.
How is competition adversely affecting Blockchain adoption?
Blockchain as many industry experts describe is a team sport and no single player can win without others cooperating. The partners collaborating on this platform would involve diverse entities within any industry who might even be competitors. Competition, however healthy, can be detrimental in the widespread adoption of Blockchain technology.
Multiple Standards, multiple networks
- Multiple blockchain networks set up by competitors for addressing the same end goal would result in defining multiple data and infrastructure standards. Participating in multiple networks, adhering to multiple standards would become difficult for common partners of these networks. This would result in lower adoption rates.
IP and ownership rights
- In such an ecosystem, there is the fear of losing individuality and control in the market. Bigger organizations will be concerned about not having equal rights and having to follow the one at the helm. For the smaller firms, losing their intellectual property in the pretext of data sharing would be the biggest concern.
- Current regulatory obligations for setting up such a collaborative model is not going to make the adoption any easier.
As more organizations are added to the network, these concerns will amplify and the trust model becomes more vulnerable.
How do we foster a coopetitive environment for Blockchain adoption?
Developing a collaborative mindset
- For the success of a collaborative ecosystem, every organization, big and small, need to agree on treating every partner equal in their own rights. Organizations need to consider collaboration as an opportunity to address a difficult challenge is very essential. To build the trust model, it is key for all organizations to share more information than they feel comfortable about.
- For smaller organizations, collaboration with big firms would help their potential customers associate with them better. For new entrants, sharing the same platform as seasoned ones would help reduce their expenditures such as upfront advertising costs. Blockchain can remove the existing barriers related to economies of scale enabling efficiency of SMEs.
- For seasoned firms, this new collaborative venture will generate a new competitive advantage. It is not anymore about the data each organization possesses, but how they leverage it better than others who now possess the same data. For firms negotiating mergers or acquisitions, blockchain will give immediate access to essential data without having to go through the cumbersome process of getting incomplete siloed information.
Assessment of Long term gains Vs Short time loss
- Gains from this kind of collaborative environment might be slow to begin with. Most firms are concerned about near term benefits because of the budget constraints and often overlook the long term potential. Organizations should consider the higher cost savings in long term due to elimination of redundant processes and data duplication efforts.
- The digital adoption helped businesses reduce information costs in the past, and now Blockchain adoption can help reduce the costs involved with enforcement of multi-party contracts. Automatically executed contracts reduce the requirement for trusting the involved parties. This will open the doors to new and smaller firms, giving them a foothold in an otherwise closed ecosystem where trust is a key barrier for new entrants.
How can the key concerns of collaborative approach be addressed?
A systematic approach with diligent research to understand the merits of technology will help in designing use cases that can really benefit from blockchain for a long time. Blockchain is one of the disruptive technologies of the future and investing in it earlier would give the organizations a lead over their competitors.
A consortium driven by federal or state agencies, or any organization which can drive the message of collaboration better can help drive the adoption. Careful consideration of perils such as impacts of sensitive data disclosure, risk of collaboration falling apart due to conflicting ideas is essential.
Protecting the interests and individuality of the smaller firms would reassure them to join hands with big firms in contributing towards the common goal. Data standardization and infrastructure interoperability have to be considered. Well defined, accountable governance models adhering to antitrust laws will ensure no colluding can happen between competitors in spite of vital data sharing.
These measures would help protect the consumer interest and promote business efficiency while keeping regulatory bodies happy.
In conclusion, companies, competitors or otherwise should adopt collective ownership mindset. They need to adapt to the ecosystem where the “economic pie” is shared equally between all and together they can drive towards greater good.