Blockchain for Enterprises: Adoption Challenges and The Way Forward

Across the world, there is a huge boom in investments in the blockchain space in industries not just limited to financial services but with “farther-ranging blockchain use-cases”, for example, e-commerce, media, health care, identity, and the Internet of Things.

A Deloitte study titled “Evolution of blockchain technology” investigates blockchain projects on the open-source software development platform GitHub and found that, on average, more than 8,600 new blockchain projects are started on GitHub every year. So, whilst everybody wants to become part of this revolutionary bandwagon, as this is a new, fast-moving development, which is not completely explored yet but which could potentially have profoundly disrupting effects on a host of stakeholders (business, government, finance, consumers, citizens, media etc. )

There are a few challenges that the researchers, developers and the industrialists need to ponder upon:
Lack of Regulations
Scalability and Performance Issues
Lack of Standardization and Higher Cost

Over the last several decades, as humans, we have seen ‘trust’ in each other perish. The traditional way of organizing ourselves in this world has been to have the many trusting a single authority, where the authority potentially had a single supervisor. In many areas, be it banking, government, construction, or schools, we have seen this model fail through some very basic human traits like greed and power. It has been a difficult lesson to learn that absolute power corrupts absolutely.

Blockchain has piqued interests because it has introduced a novel concept of decentralizing trust and providing power to those who own the asset. And of course, it’s transformative, because the fact that you can now replace a lot of bureaucracy with the mechanisms of trust with this nearly free and electronic mechanism; urges the business models to change. It is a paradox that to achieve trust in a system involving humans and engaging with other humans, we needed a trustless mechanism.

It is essential that business leaders scrutinise the strategic implications of the decentralisation enabled by blockchain, and that they respond effectively to the technological disruption caused by blockchain. Business leaders need to design organisational structures effectively and put mechanisms or design principles in place to ensure that decentralisation does not challenge areas of governance. E.g. adopting models like polyarchy.

In addition to incorporating the principle of polyarchy into their organisational design, business leaders can also take a dynamic capabilities approach and leverage crowdsourcing opportunities to prepare their business strategy in the face of decentralisation.

Leveraging crowdsourcing
To lay the foundation for decentralisation, these companies may infuse their organisational design with the principle of polyarchy, ensuring that inclusivity, proactive behaviour, and creativity is recruited and nurtured in their talent pool. Companies who wish to develop dynamic capabilities already have much of what they need at their disposal — creativity, information, knowledge, experience, capability, and adaptability. That which they do not yet have access to can be supplemented by the insight of external stakeholders through crowdsourcing, in collaboration with existing employees.

Some of the implementation challenges faced by enterprises are :

a) Interoperability

b) Integration with legacy networks

c) Skillsets and cost challenges

Gartner recently released a report which states that by the year 2012, 90 per cent of blockchain implementation projects needs to be replaced to remain competitive and ward off obsolescence. “Blockchain platforms are emerging platforms and, at this point, nearly indistinguishable in some cases from core blockchain technology,” said Adrian Lee, senior research director at Gartner. “Many CIOs overestimate the capabilities and short-term benefits of blockchain as a technology to help them achieve their business goals, thus creating unrealistic expectations when assessing offerings from blockchain platform vendors and service providers.”

There is a growing need for blockchain platforms which are interoperable and integrate seamlessly with legacy networks. In the absence of an industry-wide consensus on product and core application requirements, blockchain thought leaders believe that there will not be a single dominant platform in the near future and it will lead to the emergence of a multi-platform world of blockchains.