A great deal is being written lately about blockchain and while only a few of the world’s current 10,000+ blockchain-based start-ups are likely to succeed, hype exists for a reason, and the core truth remains that distributed ledger technology has the potential, and probably the destiny, to completely transform how the world records and shares business transactions. Most cited use cases for blockchain come from the financial services industry, but blockchain is beginning to be taken seriously by other sectors as well, such as energy, manufacturing, and especially health care.
We could brainstorm some good use cases where the application of blockchain would yield transformational results in socially oriented Key Performance Indicators (KPIs) however by approaching these challenges in a more structured way, and starting with the more abstract changes that distributed ledgers bring, we can think more systemically; this will improve our ability to use blockchain to creatively and effectively address larger universe of problems.
Systemic Transformations From Blockchain Adoption
When multiple parties in a business network share a single ledger of transactions, the amount of time spent establishing and verifying the details of any transaction can be significantly reduced. In a social context, this would allow charities and NGO’s to deliver goods and services with much greater efficiency.
Getting assistance to the right recipient is one of the biggest challenges of any social enterprise; this can be as true in mature economies as it is in the developing world. A framework for identity management that was flexible enough to work across different countries, processes, and technologies would not only reduce misdirected aid, it would significantly reduce the percentage of budget a charity or NGO would need to spend on compliance.
From blood donations to organ transplants to diamonds to industrial waste, the ability of a social enterprise to accurately identify the source and chain of custody of key material goods is critical. Blockchain by its very nature provides an immutable chain of provenance. By immutable we mean that once a transaction is recorded it cannot be deleted or denied – its record is unchangeable.
By some estimates, as little as 40% of the world’s material aid reaches its intended destination. In some parts of the world, the percentage of monetary aid reaching its final destination is far lower than this. Through the application of the consensus, identity, and provenance capabilities that are native to distributed ledger technology, social enterprises can envision a new operating model. Not only one in which its ability to operate with transparency and efficiency is transformed, but one in which that transparency and efficiency are directly visible in real time to its managers, regulators, donors, and above all, its beneficiaries.
Real-world Use Cases
With a solid understanding of these systemic transformations, it becomes a fairly straightforward exercise to envision very concrete, KPI-driven business cases for a wide variety of social goals. Some quick examples:
Tracking the flow of refugees through conflict zones and porous borders, to ensure they receive the humanitarian aid they need. Also, ensuring that cohesive medical histories follow such refugees in their migrations
Identifying sources, inventories, and locations of tainted foods, faulty components, or toxic waste
Ensuring that material aid such as food or clothing reaches the intended recipients
Real-time tracking of blood or organ donations
In addition to these direct examples, social enterprises would also stand to benefit from adopting some of the core financial services use cases for blockchain:
Cheaper and faster currency remittance
More efficient trade finance, letters of credit, and logistics
Innovations in funding and business models
A distributed ledger, by its very definition, must exist across a network of enterprises and individuals for any of these benefits to be realized which requires that those enterprises and individuals agree on a common standard or protocol for sharing data and modelling transactions. In most cases, the organizational challenges of agreeing such a protocol within a business network will dwarf the technological challenges of implementing that protocol on blockchain. As a result the social enterprises who will be the most likely to succeed with blockchain will be the ones who:
Are the first to agree a protocol with their networks of donors, beneficiaries, and logistics providers
Define those protocols, and the technology needed to use them, in a way that makes it easy and inexpensive for other participants in the business network to adopt them
Have the focus and influence necessary to obtain approval for their transformed business models from the relevant regulators
Note: This article first appeared as a blog post from Russam GMS, an an excellent interim executive sourcing firm. I would highly recommend following their Insights section, which features updates from some very interesting senior business leaders.
You can link to their insights page at: https://russam-gms.co.uk/insights