The Big Mistakes Enterprises Are Making on Blockchain

Arno Laeven is a strategy and innovation consultant at Laeven Consult, and the former blockchain lead for global healthcare giant Philips.

In this CoinDesk opinion piece, Laeven takes aim at the way incumbents and large corporates have so far sought to implement blockchain, arguing that they need to think bigger to maximize the benefits of the technology.

Let's just get it out there: using blockchain in an enterprise environment is like trying to fit a square peg in a round hole.

It's no surprise then, that enterprise blockchain experiments have often resulted in strange and disappointing results. All of this is part of the growing pains of a new technology, one in which the first projects are run by enthusiasts and aren't part of the discussion at a boardroom or even industry level.

And the latter is important as blockchain technology is a foundational technology that can solve some complex issues. Like my good friend Bart Suichies once said: "Blockchain is not the thing, it is the thing that enables the thing".

What does this mean? Well, for most enterprise applications, blockchain is only a small part of a full stack. That's where many projects go wrong.

They start with the question: "What business problem does blockchain technology solve?" In most cases, the answer will be "none", for the simple reason that current problems exist specifically because of the current design and architecture of legacy systems.

Trying to solve that with a blockchain solution will lead nowhere or at best to suboptimal results.

To determine the potential value of blockchain technology, you need to rethink what a decentralized approach means in your business, in your industry, how it affects a value chain and what it enables that was formerly not possible.

Let's apply this to a specific example.

Most people rightfully say that blockchain could enable portability of data across the healthcare system and pave the way for a new approach to electronic health records (EHR).

It's a nice idea, but blockchain is never going to become the new underlying technology of EHRs within the current setup of healthcare IT. This is because the system was built around the healthcare organization and its processes, and was never designed for connecting with other healthcare entities – let alone data from your Fitbit or Philips watch.

The only way a blockchain integration will truly will happen is when we redesign healthcare IT with the patient at the heart of solutions, as that is the central point of the required data. This is what blockchain can enable as a very small but important part of a much larger architecture.

The challenge here is that the discussion needs to be led at a strategic and industry level, rather than in an architecture meeting. It requires a fundamental change in the design of, not only an IT solution, but a complete different view on processes, patients and organizations.

This different view means shifting from a process-centric view to a patient-centric view. It also needs a rethink about the role and value of a particular healthcare provider in the overall healthcare system, alongside a remake of incentive systems.

As such, the most difficult question in an established healthcare system will be where to start. I do believe that some initiatives taken by, for example, Gem in cooperation with Capital One to redefine claims management can lead not only to immediate results, but also the start of a systemic shift.

But you have to understand that Estonia was able to start with a blank slate – a 'luxury' that well established markets in Western Europe and the US don't have. This blank sheet requires the absence of a legacy system and the willingness of a government to enforce a new approach, forming the most fertile ground to build blockchain solutions.

I predict that fundamental innovations using blockchain technology will come first from the Middle East, Africa and Asia.

In the rest of the world, we can wait for that to happen and be taken by surprise, or we can start having a grown-up discussion about blockchain and strategy at the right level in the organization and with others in our industry and politics.

Seems difficult? It is. But even though these days some think otherwise, complex challenges cannot be solved by simple solutions.

Broken lightbulb image via Shutterstock