Will Blockchain Revolutionize Business?
It would seem, since I am a big believer in the power of Blockchain, that my obvious answer to my own question would be YES.
I was at a conference a few weeks ago here in Houston. Not surprisingly, it was Blockchain for Oil and Gas. During the conference, one of the poll questions was “Will Blockchain revolutionize the oil and gas industry?” Obviously, based on the nature of the nature of the conference, and the speakers we had already heard, all the poll answers were YES.
My friend Dorothy leaned over to me to show me she was answering NO…so we had to have a discussion. Dorothy is far more versed in Blockchain than I am, and she trains private detectives and fraud examiners in digital fraud.
Her assertion was that, based on the talks we had heard to that point, Blockchain will only serve to increase efficiencies, lower some costs, get rid of some personnel. Of course, in the realm of oil and gas, minor increases in efficiencies can translate into billions of dollars per year.
However, taking the same processes and making them a little more efficient is not life-altering. For the moment, I agreed with her. The Internet did the same thing several years ago, as did the smart phone, computer, fax, and telephone.
We’ve actually heard this same conversation happening in other industries. Blockchain will be revolutionary…just watch how I can pay my dinner bill with crypto instead of my credit card. Doing the same things you do every day, but with different technology, is not revolutionary!!
I thought about Dorothy’s opinion, and it bothered me over night. Why was I taking so much time to learn a technology that would just make incremental change? Why were there so many conferences, books, talk shows, podcasts, etc?
Finally, as the conference started the next morning, I realized why our thinking was wrong. We were thinking mainly about the speakers to that point, and much of what we had heard more recently. However, we were discounting the origins of Bitcoin and Blockchain, and the early excitement.
I told Dorothy I had been thinking about it, and drew her this picture.
The problem was that the oil and gas industry (like many other industries) had become very comfortable with how it operated, the players, the rules, the payments, taxes, customers, etc. It had taken decades to build an infrastructure to support itself, and we had all become so reliant on that infrastructure.
There is oil (or gas, coal) in the ground, and it needs to be extracted, moved, processed, turned into energy, moved again, and make it to my house so I can turn my lights on. There are so many steps in between, and each one can be made a little better through Blockchain.
Whenever a new technology came about, the industry would simply to try to fit that technology into the current processes and try to make them more efficient. Again, in that industry, those efficiencies amount to billions of dollars per year.
However, what it takes to truly disrupt, to be revolutionary, is to rework the processes. You need to look at the beginning and end, and determine if the new technology can change, or eliminate the current processes.
I then drew her this picture
To me, this is the oil and gas (or energy) industry. There is energy of some sort, and I need to power my house. Someone will figure a way to make that happen in a simpler way, without all the players, regulations, taxes, extra money. They may do it utilizing Blockchain technologies, or AI, or both. I’m not sure how it will work, but that will be revolutionary change.
For a time, technologies like Blockchain and AI will only make incremental changes in business, and in our lives. For them to be revolutionary, we will have to start breaking down all the processes, and look at our businesses at the core of the products or services they provide.
We can then look at the benefits that Blockchain offers — immutability, transparency, privacy, micro-payments, decentralization — and see where those benefits can change the way we offer goods and services, and change the way we manage our lives.
An incremental change is when my CPA and I can both be looking at my books, because all the information is online, stored in the cloud. All it really did was save me a trip to the CPA’s office, and save my time in having to save my bookkeeping file and send it.
A revolutionary change will be when my books do themselves because smart contracts, cryptocurrency, and Blockchain have eliminated the need for me to even bother.
Blockchain, decentralized ledger technologies, AI — they can’t revolutionize business on their own. It will still take creative, thoughtful technologists, entrepreneurs, and business leaders working together to create revolutionary changes.