Why Blockchain-Enabled Digital Ecosystems Are Vital To Your Digital Transformation
Blockchain is being used by leading organizations to aid in the adoption of digital ecosystems. While ecosystems have been in existence in some form or another for quite some time, digital changes all that. Digital ecosystems exceed the sum of their connections; they are complex, adaptive, learning and self-organizing.
Examples such as Uber or Airbnb show that the reinvention of existing business models into platform businesses can be widely successful. Blockchain provides capabilities to bridge these connections while also supporting the fundamental economic principles of a platform business model. This model is so pervasive that it is reflected by the top 10 companies worldwide based on market capitalization.
Blockchain provides compelling new ecosystem capabilities that enable the interaction between people and things that may render existing models either ineffective or obsolete.
What Is A Blockchain-Enabled Digital Ecosystem?
A blockchain-enabled digital ecosystem is a value network that harnesses digital technologies and data decentralization techniques. These ecosystems leverage the unique capabilities of blockchain, such as data self-sovereignty, tamper-resistant data, peer-to-peer data collaboration and distributed governance.
These ecosystems can be complex given the many different facets to them. There are four major aspects to a blockchain-enabled ecosystem. These aspects ensure a separation of duties, such as a governing board-setting policies, and they provide broad oversight to the technical road map, deployment and daily support issues. The following aspects are found in blockchain-enabled ecosystems:
• Governing organization: A group of organizations that sets policies and provides broad oversight into the vision, economics and capability development of the ecosystem.
• Ecosystem operations: The ecosystem platform covers two major areas: ongoing development and technical road maps, along with the evergreen operational support.
• Membership: The environment in which the blockchain ecosystem operates. Participants, observers and other roles exchange value within the ecosystem.
• Blockchain platform: The underlying blockchain infrastructure and required dependencies deployed through any number of means (cloud, on-premises, hybrid, MSP, etc.).
These blockchain-enabled digital ecosystems are being created across most industries. Take GE Aviation’s Digital Group (GEAD). (Full disclosure: GEAD is a Microsoft customer.) Its vision is to provide a blockchain-enabled ecosystem that is collaborative and inclusive to all segments of the aviation industry. This would provide a direct response to supply chain inefficiencies and fraudulent aviation parts and would expose new aviation innovations using insights from newly exposed data.
Aviation experts agree. They also found that using blockchain technologies could cut maintenance, repairs and overhaul costs by about 5% annually, or $3.5 billion.
With over 90 blockchain-enabled ecosystems in various forms of development, we find that each industry is using blockchain in slightly different ways. Within the insurance industry, the RiskStream Collaborative has a vibrant ecosystem of 30 members that expect to accelerate time to market and adoption of insurance products.
Meanwhile, in the pharmaceutical industry, regulations like the Drug Supply Chain Security Act (DSCSA) are driving blockchain-enabled ecosystems like the Pharmaceutical Utility Network (PHuN) to make organizations more complaint.
Building these blockchain-enabled digital ecosystems is hard. Perhaps even harder than understanding the technology is bringing together diverse stakeholders across many companies. Below are some practical recommendations to get started:
1. Demystify blockchain for business and technical leaders. Blockchain is in full hype mode, and there are many misconceptions about what the technology can provide to businesses. Conduct an educational and envisioning workshop with key leaders to show them the potential. Be prepared to articulate blockchain in business terms, where blockchain has driven clear business results.
2. Toss out the abstract buzzwords. Abandon words like “trust system” and “decentralization,” both of which are abstract and completely removed from any sort of value statement that your organization’s leaders would care about. Instead, talk about where blockchain can solve challenges or open new opportunities for your business.
3. Look for new forms of value exchange. Don’t just focus on existing B2B relationships, but balance that with identifying new business models. Remember, value isn’t just monetary; it can include compliance risk, reputation, information and other nonmonetary exchanges. In some cases, these aspects can be equally or more valuable parts of a digital ecosystem.
4. You don’t have to have all the ideas. Gain inspiration from other companies within or outside of your industry. This can be their transformation journey lessons or even adoption of specific use cases that are transferable to your industry.
5. Create a compelling vision. Blockchain ecosystems require a structure and road map that will support and anticipate current and future participant needs.
6. Blockchain is only a component of the ecosystem. The number and density of connections between people, organizations and things are increasing almost exponentially, and while blockchain provides a vital component of a digital ecosystem, there are still other technologies that are vital.
7. Blockchain–enabled digital ecosystems are largely inconstant. Digital ecosystems that use blockchain are often fragmented and complex implementations of different types, which makes them confusing, misleading and difficult to analyze.
8. Be deliberate with a business model. Don’t expect that your ecosystem will have the same motivations, legal considerations, economics and operating model as others. As I noted in my previous article, conduct a business envisioning session that leverages these three ecosystem models.
9. Avoid low value and relevance quick hits. Getting lulled into moving quickly while sacrificing relevance to your business is a big mistake. Building a digital ecosystem requires a clear understanding of how data evolves and what it integrates with across the end-to-end process.
10. Get out of the lab. Executives are quickly mentioning blockchain fatigue from all the proofs of concept (POC) that show the legitimacy of the technology but not the relevance to their business. Have a plan to rapidly move from POC stage to controlled pilot in a represented production environment is essential.
This article originally appeared on forbes.com To read the full article and see the images, click here.
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