Building New Business Models with Blockchain
According to the latest findings from Cutter's blockchain adoption survey, the main benefit organizations seek to achieve from using the technology is the ability to create new business models — particularly by exploiting blockchain's capabilities for optimizing contract management, financial transaction management, and identity management.
These survey findings are awesome — not just for their useful stats regarding blockchain adoption and issues, but because they really get you thinking about what a technology like blockchain has to offer.
To be sure, many organizations will initially use blockchain to improve existing applications and processes, which is typical with any emerging information technology. However, I think we are poised to see some exciting new applications we never would have thought of before blockchain came along, and which will have the potential to upset some industries.
Probably the best recommendation I can give right now is for organizations to view blockchain as an enabler or “enhancer” of several different promising technologies that are experiencing adoption in the enterprise. These include cloud-based services, big data analytics, the Internet of Things (IoT), AI (e.g., rules, cognitive and machine learning), and, of course, mobile and social.
Organizations should examine how they can employ blockchain as a mechanism to make it more practical to utilize these technologies, and apply them in ways that allow for more openness and transparency, as well as creating trust that will also serve to enforce security and privacy among the various stakeholders in transactions and processes. And think beyond the usual fintech scenarios to environments like supply chains, digital marketplaces, insurance, non-traditional trading (e.g., art, games, sports), manufacturing, retail, construction, facilities management, transportation, government, and so on.
Smart contracts — self-executing and self-enforcing programs consisting of business rules and digital contracts encoding the terms of agreement among participants pertaining to the business taking place on the blockchain network — are seen as particularly attractive because they can improve business efficiency due to their ability to allow different participants on the blockchain to conduct business with each other while reducing or eliminating the need for middlemen or intermediaries (e.g., banks and trading companies).
This ability to limit the reliance on middlemen has the potential not only to optimize transactions and processes in existing business environments but also to lead to the development of new, industry-disrupting models and applications. We are seeing signs of this already.
For example, Arcade City is a ride-sharing service similar to Uber or Lyft. But instead of having a centralized organization that acts as an intermediary between the drivers and riders — and which sets the prices for rides and how much drivers can earn, and so forth — Arcade City takes a blockchain approach (using the Ethereum blockchain platform) where the drivers and riders can agree to their own rates. Drivers can also accept payments on their own. They pay a monthly fee to use the Arcade City service app (see Figure 1).
Figure 1 — Arcade City App in Austin, Texas.
It is also not too difficult to envision a blockchain-based service that would similarly enable people looking to rent out accommodations to deal directly with those seeking a place to stay. Thus, if I want to rent a cottage on the West Coast of Ireland this summer, I can deal directly with Ian who has such a place to let — all without needing to go through a centralized “middleman” like AirBnB.
Of course, there may be various reasons why a blockchain-based peer-to-peer ride-sharing or accommodation-sharing business may not be able to compete with an “established” company like Uber, Lyft, or AirBnB. On the other hand, this is a pretty interesting proposition, because it means that businesses like AirBnB, Uber, and Lyft — which are major industry disruptors in their own right, and which have only been around for 10 years or so — could find themselves facing serious competition by leaner, more streamlined companies.
These are fairly obvious examples of how blockchain-based companies could have an impact on established industries, but I think they help spark the imagination for what might be possible.
I also believe the IoT offers a lot of opportunities for employing blockchain. The IoT provides the ability to make almost any product — ranging from consumer electronics, luggage, ovens, cars, recreational vehicles, and even houses and apartments to shipping containers and complex industrial machinery — like generators, milling machines, and earth-moving equipment — a connected one.
More on Blockchain
If you registered for Guest access, only select content is available. Please contact us for access to a specific article.
Using blockchain, an organization can capture all sorts of information regarding the connected product and its associated user (e.g., end user and/or business) and have it “follow” the product around and provide continual updates via sensors and the IoT network. Information like warranties, usage and service stats, exceptions, violations, defaults, and so on, would be available to those stakeholders (and only those stakeholders) associated with the product or service. I think we are going to see some very innovative IoT-blockchain scenarios. And it's happening now. For example, I have heard that in Sweden they are considering building blockchains for every flat and house so that there will be an entire overview of the mortgages and securities and so on associated with a building.
The bottom line is that although organizations will initially want to use blockchain to optimize existing applications/processes, they should also be thinking about new business models that could potentially change their industries. Even if your company does not foresee developing such applications itself in the near future, you should be considering how some existing player or startup could come along with a competing blockchain-based service.
Finally, I'd like to hear your opinion on blockchain's potential — especially the likelihood that it could shake up entire industries or lead to new business models and opportunities. You can comment at the link below, email me at firstname.lastname@example.org, or call +1 510 356 7299 with your comments.
This issue focuses on key topics of interest for financial services organizations, namely equity crowdfunding, legacy systems migration, robo-advisors, test outsourcing, and refining the reconciliation process.
This Advisor presents an overview of improving Agile techniques and practices by using design thinking within the Agile space and describes three techniques from design thinking methodologies that tend to yield benefits to Agile practitioners.
The existence of a digital backbone in an organization means that anyone aspiring and planning to transform different parts of the enterprise can leverage the digital backbone in a consistent and sustainable way, ensuring that each transformation effort connects and leverages a common platform. Digital transformation leaders are starting to realize that a powerful digital services backbone to facilitate rapid innovation and responsiveness is key to successfully executing on a digital strategy.
Can a method like EVM, developed to control projects with well-defined objectives, be applied to control product development initiatives that evolve continuously toward a “moving target”? In an Agile environment, we are faced with the dynamic evolution of a finite boundary of integrated scope, cost, time, and resources; this finiteness — essential for business management and decisions — is the cradle for project management techniques, tools, methods, and frameworks. The EVM method was first developed to help with managing complex R&D projects mostly characterized by an unstable, volatile, and evolving scope. It is therefore no surprise that EVM applies to Agile projects.
It’s a pleasure for me to introduce the first of two special issues of Cutter Business Technology Journal (CBTJ) showcasing the thought leadership and cutting-edge research and development (R&D) being done in State Street Corporation’s Advanced Technology Centres in Europe, the Middle East, and Africa (EMEA) and Asia Pacific (APAC), in partnership with University College Cork (UCC) and Zhejiang University (ZJU), respectively. The articles in this issue represent a small sample of the output from the R&D undertaken in these centers, which combine academic excellence with real industry impact.
Every business must deal with crisis, risk, and compliance challenges. Teams chartered with addressing these challenges are often split across business units and regions, which fragments crisis, risk, and compliance management efforts. Business unit silos and related complexities obscure ecosystem transparency, which in turn constrain an organization’s ability to identify risks, assure compliance, and prevent and disarm crises. Business architecture delivers business ecosystem transparency as a basis for improving a business’s ability to collectively address challenges related to crisis, risk, and compliance.
Organizations are using blockchain to create new business models — exploiting its capabilities for optimizing contract management, financial transaction management, and identity management.
For technology-dependent products, companies, institutions, and even societies, sustainability depends on learning how to manage technical debt. Like most transformations, incorporating new practices into our organizations will likely be an iterative process. We already recognize the problem, and researchers are making progress, albeit mostly on technical issues. This Executive Update proposes a policy-centered approach to the problem. It begins with a principle that can serve as a guide for constructing technical debt management policy, and then shows how to apply that principle to develop nine recommendations that enable organizations to manage technical debt effectively.
Agile methodologies, however popular they are, bring their own sets of “smells” and anti-patterns to the table, sometimes causing irreparable damage to the team. While the sources of these smells are many, one of the primary culprits is the mindset that treats Agile as “yet another methodology,” totally ignoring the cultural aspect. This article throws light on some of the prominent smells that are emerging of late in the Agile world.
If you start changing an organization toward an Agile mindset, there’s no real end. Agile is about creating an organization of continuous learning and the transformation is done when there is nothing new to learn, which will probably be never. This puts an enormous challenge on middle management.
The articles in this issue present perspectives and ideas on business transformation in the digital age. We hope they will inspire and encourage you to visualize the likely future of business in your domain and to explore the opportunities it presents. Finally, we hope their insights will help you identify suitable transformation strategies and plans and, if needed, choose viable collaboration models for partnering with startups and other firms in your digital business efforts.
Beyond buzzwords, what we are seeing is a seismic shift in the role of technology in organizations. Technology is more and more embedded in everything we do as we move into an increasingly hyper-connected digital world, a world in which technology is driving significant social, organizational, and industry change.
In this on-demand webinar, you'll discover the strategic and tactical opportunities made possible by Digital Data Streams and the opportunities for improved customer experience made possible by DDS.
At the Cutter Digital Transformation & Innovation Bootcamp, Cutter Fellow and Harvard Business School Professor Karim Lakhani talked about digitally-driven disruption of traditional business models for value creation and capture, discussing platform models like Facebook and Twitter. To date, Twitter has clearly done a good job “creating value.” But unlike Facebook, it continues to struggle with the capture part of the equation.
Social collaboration is not about technology. It’s about connecting people, and it’s changing the way business is being conducted. Similarly, gamification is not about games. It’s about motivating the personal and professional behaviors that drive business value. Together, social collaboration and gamification help companies reap great benefits — among them, the ability to deepen customer relationships, drive operational efficiencies, and optimize their workforce.
Roadmaps have two key functions in strategy planning. The first is to outline planned architectural changes that will deliver the required strategies; the second is to outline alternative ways to achieve the same results.
Just as recent global events have given us reason to pause and reflect, the pace of technology emergence and disruption is proving to be a source of inspiration and uncertainty. Transitioning to a digital world is front-of-mind for many business executives, yet finding the right path is an ongoing challenge. So we asked Cutter’s team of experts for their insights on some of the technologies, trends, and strategies that will be relevant in 2017 and beyond. In typical Cutter Business Technology Journal fashion, our call produced a wide range of opinions and reflections worthy of consideration as you chart your business technology journey for the new year.
Artificial general intelligence (AGI) is currently emerging as an area where recent developments are likely to have a major impact on the way organizations do business, societies organize themselves, and even on how we address values and ethics.
The fact is that AGI already exists in our daily life. A common example is the GPS systems present in many new cars manufactured today; and let’s not forget the drones being used to deliver pizzas and cars that drive themselves. While automatic pilots have been used in commercial planes for quite some time, what AGI is about to offer to general business and human activity is well beyond what most of us have seen so far.
2017 is going to be a year of strange winners, and perhaps the strangest of all will be a giant leap away from technology and back to solutions that don’t rely on 24/7 connectivity. With the onslaught of major hacks and Facebook embarrassment, the antitech crowd may have its best year in decades.
One of the most prevalent blockchains in the world, Ethereum, is poised to switch from a proof-of-work (POW) algorithm to a proof-of-stake (POS) algorithm, likely in 2017, with the release of the Casper codebase. Why does this matter? Because blockchain technology is becoming increasingly relevant and prevalent in businesses across the globe. It holds great potential to disrupt how businesses perform basic transactions, from payments, to programmable, self-executing contracts, to identity verification.