If you have been exploring blockchains and distributed ledger technology (DLT), you know it’s a noisy and confusing space. As with any early tech, very smart people disagree about what the future will look like. Fueled by open source tools, innovation has dispersed and accelerated to a pace at which no organization on their own can keep up. Throw in a steep learning curve, and it’s really hard to know if you are making the right move. So what can you do?
Facing Uncertainty? Ask Better Questions
To better navigate through these unknowns, ask tough, thoughtful questions. But where to start? I asked leaders working at the front lines of this technology to share one question that they’d like to see more executives ask in 2020.
I talked to CEOs and blockchain leads at some of the largest consortiums and consulting firms, founders who’ve achieved momentum at blockchain-native startups, analysts, and venture capitalists. The result is a hit list of key questions that every executive thinking about blockchains should review.
It’s No Longer Just About You
Avivah Litan runs the research agenda for blockchain at Gartner. The question she shared with me goes directly to a tender spot executives face when they finally understand what’s required to be successful on a blockchain project:
“Are we ready to give up control?”
Avivah clarifies, “The biggest issues, again and again, are more about people and organization than technology. We’re seeing that organizations often aren’t ready to make necessary changes to their business, governance, and funding models—they aren’t ready to relinquish authority. You must ask yourself: ‘Am I really ready to be an equal partner within my ecosystem rather than a controlling entity?’ This is what you will need to do to get to the real value of blockchain.”
Lata Varghese, who heads the blockchain and DLT practice for professional services firm Cognizant, explains that organizations need to explore how a project delivers value to everyone that participates. Her question is:
“Will this particular blockchain project return value for all organizations within the network?”
Varghese elaborates, “Just as ‘user-centric design’ is critical in any digital platform, ‘partner-centric design’ is critical for blockchain platforms—as is a viable ecosystem incentive structure.” This foundation of collaboration and mutual benefit, she explains, is too often overlooked.
Second Mover Advantage Can Be Found . . . If You Listen
Jeremy Gardner co-founded Augur, a blockchain project which in 2015 held one of the first high-earning ICOs, and briefly reached a market cap of over $1 billion. He pushes entrepreneurs to ask:
“Have we learned all we can from the past?”
Gardner continues, “I see a lot of proof of concepts that did not pan out in 2015 and 2016 being tested and implemented today—and the teams that are doing it seem to be unaware of past attempts.”
But what about established enterprises—what can they learn from others? Brian Behlendorf is the Executive Director of Hyperledger, one of the largest blockchain collaborations (it has over 200 members). He explains that execs often err by thinking their problems are unique. This means they don’t take the time to learn from others or evaluate if they could build on what others have already created. Behlendorf encourages executives to ask:
“Have we reached out to the other companies in our industry—even our top competitors—to jointly research options?”
Behlendorf emphasizes the value of developing blockchain networks that cover the widest possible audiences—and doing everything you can to make it easy for other industry partners to join in.
Zero In On What And Who Matters
The head of blockchain and DLT for the World Economic Forum, Sheila Warren, shared a question that appears simple, but is surprising difficult to answer thoroughly:
“How will the deployment of a blockchain help solve our problem or achieve our goal?”
Warren highlights the importance of also asking yourself who else needs to be engaged as you evaluate whether a blockchain will add value, whether that’s a user segment, partner, or competitor.
David E. Rutter, the founder and CEO of R3, an enterprise blockchain firm which works with over 300 companies, encourages executives to look for opportunity in market level friction:
“How could we use blockchain to connect with other parts of our market—to find efficiencies that go beyond our firm to a market level?”
Rutter emphasized how blockchain can be used to extend efficiency beyond the walls of an organization without adding new intermediaries or upturning the market’s existing structure.
Paul Veradittakit, a partner at Pantera Capital, a California-based investment firm focused exclusively on blockchain tech and crypto assets, pushes execs to thoughtfully answer a question that at surface level appears basic:
“Why is a blockchain crucial for this use case?”
Give Them A Reason To Join In
Accenture’s global blockchain lead David Treat emphasized how important it is to return enough value to enough stakeholders to achieve network effects (which are core to blockchain and DLT success). Treat shared this question:
“What will motivate stakeholders to participate?”
Treat points out that it’s key to determine the “minimal viable ecosystem” that will generate enough value for stakeholders. He explained that value can be measured not only by gaining operational efficiency (which may be shared among all participants) but also from building a foundation to support the development of innovative products and services in the future.
Form An Opinion: Private Or Public?
One of the perennial blockchain debates is whether to go private or public. This echoes the early days of cloud, when it was terribly uncomfortable for corporations to leverage a public cloud—but over time and as the tech matured, the vast majority migrated at least some applications. How can you challenge yourself in this debate? Paul Brody, EY’s Global Blockchain Leader, pushes executives to answer this question:
“If this isn’t going on a public blockchain, why not?”
He continues, “Ask what do you need a private blockchain for that you can’t do with a web server. If all the parties in a network can agree on one entity to run a private blockchain, chances are they could have agreed upon a single third party to run a centralized web server.”
Mance Harmon is the CEO and cofounder of Hedera Hashgraph, which raised $124 million to build a blockchain alternative (it uses an approach called directed acyclic graph, or DAG). He shared this question for execs to ask themselves:
“How can we leverage the trust of a public DLT while maintaining the advantages of private DLT networks?”
Mind The Adoption Gap
One of the most difficult calculations to make with any new technology is timing your investment. Moving too early is costly, moving too late is dangerous. Several leaders asked questions that focused on various facets of blockchain adoption.
Patrick Duffy is the President of Blockchain in Transport Alliance (BiTA), a consortium that counts logistics and transportation heavyweights among its more than 200 members. With his question, Duffy emphasizes the importance of working with standards organizations (GS1, ISO, etc.) to make sure you don’t reinvent the wheel when creating blockchain standards:
“What are the most important pieces of data shared across participants in our ecosystem, and if they are standardized, are standards organizations ready for the technology realities of blockchain?”
As the founder and CEO of Blockstack, Muneeb Ali has a front row seat to the kind of applications developers are building with blockchain functionality (Blockstack has been used to launch over 360 decentralized apps). He encourages execs to ask this question:
“If you invest in blockchain technology now, will this put you in a better position than your competitors when it comes to data privacy and reducing overhead? Will it be too late next year?“
Outlier Ventures is a European venture firm dedicated to blockchain technology. CEO Jamie Burke’s question focuses on an critical component of adoption: making new blockchain-driven functionality more accessible to both developers and end users:
“How can we make blockchain understandable and usable for 99% of developers—and invisible to end users?”
Brian Lio, the CEO of blockchain research firm Smith + Crown, notes that 2020 could be the year in which we see some of the first industry-shifting deployments of blockchain technology. He pushes execs to actively think about how the tech could change the way they do business—whether in their core offering or in a system, service, or network they rely on. The question he would like to see more execs asking is:
“What potential applications should we follow closely, so we are better prepared to respond early?”
Lio encourages evaluating opportunities to taking a leading role in building these applications through direct investment or development.
How Could The Shape Of Your Industry Change?
From years researching how adoption and integration of blockchains and DLT will shift the way we do business, my own question encourages execs to start thinking now about long-term impact from a customer view:
“How could others use blockchain functionality to disrupt our relationship with customers, and how they find and use the products and services we offer?”
Over the last decade, upstarts have shown how quickly they can successfully steal market share by focusing attacks on a small slice of the purchasing process (think how Uber starts a customer relationship through the purchase of a single ride, but ultimately accumulated the power to shift the way entire cities move, and even how consumers buy vehicles).
It takes a long time to turn a corporate ship, and so it is never too soon to push for better understanding of the answer to this question. Executives that rapidly form, test, and reform hypotheses even in these early days will be at an advantage as blockchain adoption slowly inches closer.
First Published at 15 Blockchain Questions That Will Make You Look Smart – Forbes