What you need to change to have a high-performance blockchain
Eleven years after the first transaction, rolling out blockchain is still fraught with difficulties. At the same time, there has been an uptick in interest since the outbreak of Covid-19, since blockchain provides solutions to the failures laid bare by the crisis.
Based on The Real Business of Blockchain: How Leaders Can Create Value in a New Digital Age by David Furlonger and Christophe Uzureau (Harvard Business Review Press, October 2019).
It’s true that the technology is complex, immature, and not 100 percent secure, so it may be wise not to jump right in. But the real problem is that blockchain requires a shift in your thinking: it’s not just a technology, it’s a means of reinventing industries, securing and cutting out faulty processes, and accessing new sources of value creation. If blockchain requires a new mental model, the question to ask yourself is, “How much am I willing to change to roll out the technology?”
#0. Change without changing: centralized blockchain
Maybe you’ve already set up a blockchain. But is it a real blockchain? Many systems are only “blockchain-inspired,” which only fulfill three of the five required criteria. In other words, they’re not decentralized or monetized. These trial runs do have advantages: they can be used to develop skills internally, start the shift toward a “real” blockchain, limit the risks of a still-immature technology, and allow immediate benefits from productivity gains and improved data. But 85 percent of these centralized blockchains don’t add any more value than a traditional database – and, in some cases, less.
There are also pitfalls involved with these interim solutions: they don’t tune into the blockchain mindset, and they encourage the preservation of the status quo since their impact is limited to a handful of gridlocked internal processes. What’s more, they allow you to imagine you’re already utilizing blockchain, preventing you from going one better and leveraging the technology to its fullest. You also run the risk of losing out to your competitors.
#1. Decentralize and take a chance on a blockchain consortium (the first mental model shift)
Excerpt from Business Digest N°310, October 2020