Citation:
Abstract:
Distributed ledger technologies — collectively known as blockchain — have burst onto the business scene, accompanied by a significant amount of hype.1 They are widely expected to disrupt existing industries and lead to the creation of new types of companies.
Some of the excitement may indeed be warranted, but only if organizations focus on how these technologies can be used to support their strategy. Without that lens, companies risk making large investments in initiatives that don’t create meaningful value.
However, with careful planning, businesses can use blockchain to gain an edge over rivals in a number of ways. It can provide a foundation for powerful applications that will streamline core operations. Distributed ledger technologies can lower transaction costs and make intellectual property ownership and payments more transparent, seamless, and automated. But companies should resist jumping on the bandwagon until they first understand what specific problems they can solve with blockchain — and for whom. How will it help them reach new customers? How can it improve efficiency or transparency in their supply chains? And most important, what will blockchain enable them to do that competitors and new entrants can’t do? Answering these sorts of practical, targeted questions will allow businesses to cut through the hype and create a blockchain strategy that makes sense for them.
To begin, it’s critical to understand the basic uses and functionalities of blockchains, which tend to get lost in the buzz. So we will provide a quick primer on digital ledgers before discussing how companies should build powerful problem-solving applications that are uniquely configured to their own strategies.