Blockchain innovation: put aside the fear of being first
Fear of being first is becoming a recognised phobia in the modern corporate landscape, where technological change is happening at a dizzying pace, and making the wrong move can end in disaster.
Change represents a terrifying dilemma to corporate executives who are considering updating their technological systems: do they fix only the things their staff are telling them that are outdated and need fixing, or do they completely overhaul the system from the ground up?
Such binary decisions are akin to flipping a coin as there are two sides to any dilemma. Indeed, in his 1962 study Diffusion of Innovators, Everett Rogers – an American communications sociologist – saw essentially two groups: early adopters and late adopters.
Early adopters take the biggest risks: early versions of technology can be riddled with bugs and expensive to implement. But the benefits are usually that the vendor of the technology is keen to display users prominently, so will give them preferential treatment in pricing terms and IT support.
But this fear of being first becomes more prevalent in global commerce as technological change moves ever more-swiftly forward.
What is this fear of being first?
It usually manifests itself in delays in decision making: indeed, some of the biggest decisions made at executive level in the modern corporate world is over a company’s technological response to change.
The biggest fear is that – for whatever reason – you made the wrong decision. If a company employs a chief technical officer (CTO) in charge of a legacy IT system which still does the job, but does it slowly, requiring substantial IT support, and large numbers of staff to operate it – what should his approach be?
He might get many emails and calls every day advising what needs fixing in this system. But he might have other ideas: bin the lot and totally rebuild his company’s technology network.
Here, he’s likely to meet the first resistance from the staff and managers who are most vulnerable to losing their jobs if the legacy system is replaced.
“This can be made doubly hard if the company does not have a ‘digital first’ culture in place,” says Shamus Rae, head of digital disruption at KPMG in a tech strategy report from earlier this year.
“And in many businesses where the majority of what they do is still non-digital, there is an understandable reluctance to change.”
But the CTO is likely to have his own doubts. The questions he’s likely to be asking himself might be: what if this new tech reduces our compatibility with our clients? Or if the costs outweigh the benefits? What if it simply doesn’t work? Or if the technology evolves or develops into something much better next year?
Understandable reservations given the costs of replacing systems or adopting new technology, and blockchain is no different.
Loadstar, the supply chain magazine, reports that in May, Paul Brody, global blockchain leader for EY told members of the Blockchain in Transport Alliance that he’d been involved in the development of a blockchain-based system for a client that met all technological and cost requirements, only to be told that it had decided not to take it.
When asked why, the client simply replied: “We don’t want to be first.”
Rae at KPMG understands this reluctance. He says: “The mere threat of changing how a business operates will be enough for many – from board level downwards – to try to resist embracing digital technologies fully.”
The downside of delay
Delaying decisions on adopting new technologies can come at a terrible price: none displayed more succinctly than mobile phone producer Nokia and its decision to stick doggedly with its increasingly-outdated Symbian smartphone platform when Google’s Android and Apple’s iOS platforms where quickly becoming the industry standards.
Nokia had at one time been the world’s biggest distributor of mobile phones, but weakening sales eventually led to the sale of its mobile business to Microsoft in 2014.
But in terms of blockchain, where new use cases are being developed every month, the potential downsides of not being an early adopter are becoming clearer every week.
Financial services firms are experimenting and developing cross-border payments systems using blockchain that could, very soon, become the industry standard. In this industry the competition is so intense, if you don’t move swiftly, you die.
This could also be true of supply chain or international trade finance – a traditionally dusty world of paperwork-heavy documentation and slow-moving, step-by-step processing.
Blockchain’s distributed ledger technology has the potential to thoroughly disrupt this industry and the winners will be the ones whose ability to reduce the bureaucratic processes by hours or even minutes can reduce delivery times by days or even weeks.
Overcoming the fear of being first
First of all, let’s add a caveat here: there are genuine reasons to fear being the first to move. As noted above, early innovations can be quirky, bug-ridden and expensive to implement. The real fear should be: the fear of getting left behind.
But there should be no reason to fear being among the early adopters. Let’s have a closer look at Everett Rogers’ diffusion of innovations. It’s a simple bell curve with the distribution laid out as below:
As can be seen, the majority of adopters of new technological innovations comes later along the innovation cycle.
These are the ones who have seen the benefits through their rivals and are keen to hop aboard when costs and risks are lower. But this can come at the risk of losing customers to the innovators and early adopters.
Shamus Rae at KPMG believes that if you are going to put digital innovation first, it must be at the heart of everything you do.
“That will probably mean picking apart everything you do now and rebuilding it from scratch,” he adds.
It also means refusing to listen to those voices that tell you, as a chief technical officer, that your new plans will mean job cuts and the installation of expensive new technology.
This is a powerful rallying cry from the anti-digital brigade, says Rae. “Instead, you need to illustrate the value the technology can bring to the business, and how it can help you achieve more for your customers and keep ahead of the competition.”
He concludes: “At the same time, you also need to help your people realise that the bigger threat to their jobs is not the technology, but the failure to adopt it.”
Delay in adopting new technology can be damaging, both in terms of sales and reputation.
But, there are also examples where putting an organisation’s full weight behind a particular technology can also have disastrous consequences, particularly at the early adoption stage as developmental changes and refinements can leave you looking outdated even after you’ve spent millions on something that is ostensibly new and top of the range.
But the blockchain innovators are already out there: the banks have been among the first to test out new trade finance and supply chain management platforms and adopting new cross-border payment systems.
Municipal governments have also been at the heart of blockchain innovation, using distributed ledger technology to test out new systems of voting and managing services.
Other commercial applications are on their way – indeed the patent offices are awash with blockchain patent filings, with companies such as WalMart, Facebook, Ford Motor, IBM and Bank of America among the most active.
These are the innovators and now is the time for those businesses that don’t want to miss the bus to jump on board and become early adopters.
Most companies can confidently put aside their fear of being first – simply because they have already been beaten there.