We often perceive businesses as having to outsource tasks to others when the work involved is deemed necessary but of low value. Data entry, compliance checks, accounting and payroll, even customer service might be non-negotiable aspects of running a business, but they aren’t core competencies for many organizations. Outsourcing them allows you to focus on creating value.
Yet increasingly, even complex, value-laden tasks need to be tackled by interacting with other companies. For instance, pharmaceutical researchers may need to have critical data analysis performed by a specialist in the field like Pion. Complexity sometimes requires more resources than what you can draw upon internally.
When you have to share important information with a third party, trust itself becomes the most valuable commodity in the entire operation. As these sorts of business interactions become more commonplace, trust verification looms as a growing concern.
That may explain the buzz over blockchain technology, which promises to settle the issue for everyone. But is it really worth jumping on the bandwagon now?
Imagine trying to collaborate on a spreadsheet before the advent of cloud technology. You’d input data and share it with other users, who might then make modifications of their own. They could exchange this with other collaborators before it rewound its way to you.
If everyone weren’t kept in the loop, likely through one massive email thread, you’d rapidly end up with multiple versions of the original file. And doubtless rack up hours checking for version updates and data accuracy in the process.
This hypothetical scenario illustrates the cost of trust in a simple situation that could happen in any office. Thanks to cloud-based collaborative solutions, that’s not a problem. We can set access control and let the platform do its job in verifying and synchronizing changes.
An imperfect solution
Most people today have at least heard of bitcoin and peer-to-peer networks. Blockchain is the technology that lies under the hood of such cryptocurrencies.
Much like cloud computing enables us to decentralize networks and collaborate effectively, blockchain promises to make sensitive transactions secure and resolve trust. Every transaction in a blockchain is recorded and immutable. People can trace who has done what.
The technology faces several problems, however. Immutability can come into direct conflict with the ‘right to be forgotten’ legislation. Individuals can have their identity traced through this feature of blockchain transactions.
It also means that transactions can’t be reversed, which is bad news for anyone who’s been hacked. And although blockchain is secure, it has proven susceptible to certain hacking strategies. It isn’t foolproof but needs to evolve to beat the threat of hacking continuously.
Finding a business case
Perhaps the biggest problem with blockchain, however, is its combination of hype and mystery. It’s being promised as the definitive solution to trust across interactions between multiple organizations. Yet it’s shrouded in arcana because very few people outside of IT actually know how it works or how best to use it.
What is the business case for using blockchain? If your company needs to verify credentials, create smart contracts, or pay royalties to third parties for intellectual property, for instance, solutions using this technology can provide cost-effective trust.
It can also help create transparency in the supply chain, which is increasingly valuable in jewelry industries. Such improvements to sourcing can also be a boost in logistics efficiency and sustainability efforts.
The mistake you want to avoid is adopting blockchain simply because it’s labeled as ‘the future’ to be innovative or get a leg up on competitors. The one thing you can’t leave in others’ hands is how you create value. Figure out where blockchain fits into that equation before you get caught up in the hype.