Give me trust
Part 2 of trust trilogy
In part 1 of the Trust Trilogy, I took a sweeping view of the evolution of trust and what it means today for all of us. I tried to establish the unique and powerful nature of blockchain as a ‘controllable trust interface’ and touched lightly upon what it means for businesses. In part 2, I plan to go further down the road where businesses and blockchain meet.
First, they ignore you. Then they laugh at you. Then they attack you. Then you win.
I have seen the above quoted on multiple occasions. Its popularity attests to the fact that it represents an interesting and, often, predictable pattern among people and businesses when faced with something unfamiliar.
Once upon a time, the cloud was viewed as a highly-risky thing. Businesses were wary of offloading their data to ‘up-there’ or ‘out-there’. It didn’t help either that this new technology, itself an evolution from mainframe to virtualization to grid computing, was called ‘cloud’. Today, the public cloud is a staggering $170 bn plus industry and counting.
What’s holding us back?
Much has changed since the Bitcoin white paper was introduced to the world. It has gone from a fringe movement to being considered a store of value to now being an institutional asset class.
As for blockchain, this is where things get really interesting. Once ignored in favor of its superstar app Bitcoin to being lightly acknowledged as a possible solution to data security and privacy, it is now being seriously explored as a world-changing technology. Companies are coming together in consortia to explore how blockchain can streamline processes, remove intermediaries, and make systems more secure and transparent. Governments are exploring it to provide its citizens with the kind of trust they should have provided by default. But notwithstanding the multitude of experiments, there’s been scant real-world adoption.
In a recent PWC survey of 600 executives, 84 percent indicated their organizations have at least some involvement with blockchain technology. What’s even more promising is Gartner’s forecast that blockchain will generate an annual business value of more than US$3 trillion by 2030. It goes on to say that there’s every possibility that by 2030, 10 to 20 percent of global economic infrastructure will be running on blockchain-based systems. So why is that we are still at a trivial 1% adoption rate?
If there’s one thing that’s holding enterprises back, it’s a view of the way things should be based on how they have always been. Paradoxically, for a technology that engenders trust, its adoption is hindered by a lack of trust. The PWC study puts it eloquently:
It is perhaps ironic that a technology meant to bring consensus hits a stumbling block on the early need to design rules and standards.
I am not surprised. Trust, as I have shown in part 1, has been part of our social capital since time immemorial. Forcing a radically different technology that ‘engineers’ trust to fit into the conventional way we view trust simply won’t work. Adopting blockchain and reaping its full benefits requires a higher order thinking. It calls for a mind-shift that views collaboration as a norm. In this new way of thinking, the world of business no longer becomes a zero-sum game, it becomes a playground of possibilities.
An idea whose time has come
Imagine a typical automotive supply chain. It’s massive, complex, and comprises a maze of participants, namely, OEMs, warehouses, assembly plants, dealers, customers, and, connecting those dots, logistics providers.
Traditionally, silos of data and heterogeneity of IT systems have resulted in a lot of inefficiencies such as manual records-matching and delayed coordination in matching supply with demand resulting in waste. When combined with the twin power of IoT and blockchain, real-time updates to all participants become possible because they all can access a single view of the state of the supply chain. With data transparency, the result is a more nimble and less wasteful supply chain. Add machine learning to the mix, and the supply chain becomes intelligent, predictive, and rich with insights. But nothing of this would be possible without the first step: a blockchain-enabled single source of truth.
If you think this scenario is far out, you only have to look at MOBI, a consortium that aims to transform the entire mobility services value chain using blockchain and other distributed ledger technologies. MOBI is setting standards and APIs for data sharing that will positively impact everything from vehicle identity and data tracking to ride sharing as well as the mobility ecosystem commerce. What’s admirable is that the consortium has already brought into its fold members that account for 70 percent of global car production along with 30 other partners.
Competition and beyond
Not so long ago ‘coopetition’ was a buzzword in corporate circles. With roots in game theory, the neologism introduced the basic premise that traditional competitors could cooperate ‘to reach a higher value creation compared to the value created without interaction and struggle to achieve competitive advantage’. Then there are examples of coopetition such as those among Citroën, Peugeot, and Toyota to develop a city car; Apple, IBM, and Motorola to develop microprocessors; and Samsung and Sony to establish joint manufacturing and technological capabilities. In each of these cases, sharing of technology and resources resulted in reduced costs and superior products even while the companies were competing fiercely in other markets. As expected, there are not too many examples of this seemingly paradoxical way of doing business. I believe it will become a lot more common, and it goes back to the issue of mindset.
Given that there is some strategic agreement between two organizations on the value of coopetition, what those organizations will need is a strong set of tools. There’s simply no partnership without sharing and transparency. But with the fundamentally trust-inducing nature of a blockchain, companies might just find the idea of coopetition a lot more achievable and less risky.
From the examples that I have seen, coopetition has largely been confined to a few players. But thanks to the automated manner in which trust can be achieved via blockchain, I see the pool of participants growing much larger.
Larger ecosystems, larger markets, richer insights, these and more are possible with a simple mind shift. And that’s the topic of the final part of the Trust Trilogy. Stay tuned.