For Corporate Vision by Dominic von Trotha Taylor, CEO of iov42.
2022 is set to be a new year no less uncertain than the last for businesses. From efficiency and supply chain issues to data protection and climate change, the future challenges facing businesses are no small mountains to climb. But each challenge brings with it an opportunity, and necessity, to innovate. Harnessing the power of emerging technologies will help business leaders overcome these obstacles, adapt to unexpected hurdles and ensure that they ultimately stay on top.
One such technology playing an increasing role in the transformation of business is blockchain. Blockchain is one of the best known examples of ‘distributed ledger technology’ (DLT) and is most commonly associated with its use in cryptocurrencies such as Bitcoin. However, blockchain is proving itself a versatile and vital tool across innumerable sectors. And that’s because, at their core, DLTs are about building trust across numerous stakeholders.
Countless business processes revolve around establishing trust – drawn out background checks and credential verification are conducted so you can trust who you’re dealing with; resource-intensive contract management is put in place so you can trust that everyone agrees to the same thing (and sticks to it); paper-based certifications and in-person audits are carried out so you can trust that everything is legal, and so on and so forth. But the rise of blockchain (and other DLTs) is enabling corporate leaders to streamline and digitise such processes, get rid of costly middlemen, and enhance their overall security.
A DLT is a digital system made up of independent computers that record, share, and synchronise transactions. Transaction records are distinguished with unique, unalterable cryptographic signatures that prevent records from being tampered with. This offers an efficient, secure, and reliable alternative to traditional, centralised ledgers, which are vulnerable to fraud and cyber attacks. DLTs that are deployed in a corporate setting are generally referred to as ‘enterprise blockchains.’
So, how exactly can enterprise blockchains empower businesses to remain agile and competitive in a landscape influenced by mounting regulations, shifting geopolitics, and an urgent desire for trust? And what other benefits lie ahead for those ready to innovate?
Accelerating business through automation
As businesses grapple with ever-growing competition and demand, efficiency will be a huge impetus for driving effective results and attracting and retaining clients. Automation is proving increasingly vital to achieving this. Whether it’s internal actions like employee onboarding and regulatory assessment, or external processes like client transactions and product delivery, blockchain-powered automation can help oil the business machinery. Automation in business is nothing new. But as emerging technologies like artificial intelligence and machine learning process increasing amounts of data in the name of business automation, there is growing public interest in how this data is protected and how transparency is being upheld.
This is where blockchain can help. Its provision of immutable trust enables lengthy manual processes to be replaced with more streamlined automated mechanisms that are secured on a transparent, tamper-evident platform. “If…then…” scenarios can be programmed and stored on the blockchain, whereby the fulfillment of predetermined criteria triggers a specific action. Through such protocols, which are sometimes called ‘smart contracts,’ things like product delivery can be executed the moment payment is initiated, or a new employee onboarded immediately upon receipt of all required credentials.
By accelerating business processes in a way that everyone can trust, blockchain-powered automation offers numerous benefits; streamlining one area will ultimately drive efficiency in another. Employees can spend less time on manual administration and invest it in more value-adding activities. A wider, more loyal client base can be built based on proven delivery of results. And money can be saved by eliminating costly, unnecessary delays.
Safeguarding supply chains
Recent high-profile crises, such as the UK fuel shortage and lack of Heavy Goods Vehicle (HGV) drivers, have delivered a stark warning over supply chain efficiency. Remove one cog from the machine and very soon shelves are empty, petrol tanks dry and businesses struggling to survive. But supply chain crises are likely not going anywhere. So, building a trusted infrastructure that is prepared to mitigate against inevitable disruption is key.
Streamlining processes throughout the supply chain should be a top priority, and blockchain can help enable this transition. Transactions can be reliably recorded, assets tracked and product flow automated using blockchain. With product status, location and all relevant actions visible to key players, businesses can easily communicate and collaborate with stakeholders up and down the supply chain.
What’s more, any errors or faults in the system – such as a delay in product dispatch, or the absence of required certification – can be spotted much more quickly. In the timber industry, where an estimated 30% of timber is taken illegally, the use of blockchain is helping minimise losses by making error and corruption more easily identifiable. Timber can be securely tracked on the Timber Chain from forest right through to shelf. In a similar way, other businesses can monitor and safeguard the supply chain using blockchain, to protect product flow and take more immediate, informed action in response to disruption.
Rising to meet sustainability goals
COP26 has left businesses with a huge responsibility to make significant changes in support of increasing sustainability. While it has become a top priority for many companies, translating sustainability pledges into tangible action has proven difficult for many. Blockchain can help business leaders meet their ESG (environmental, social, and governance) commitments, which are no longer simply ‘nice to have’ but absolutely essential.
For a truly sustainable business model to be achieved, every single process within the fabric of the infrastructure must be addressed. That’s no easy feat; too often, corporate interests, misaligned incentives or corruption can prevent the successful implementation of climate action. But by weaving blockchain technology into the existing infrastructure, businesses can lay the foundations for real, effective sustainability at every level.
Accountability is key. Having a shared, incorruptible record of actions and transactions helps to hold individual players to account. Blockchain’s immutability means that any attempted changes or edits to the ledger are also immutably recorded, shining a spotlight on areas of corruption or malpractice, or even just human error. It also helps to highlight those working proactively towards sustainability, enabling businesses to simultaneously correct bad practice and reward the good players.
In practice, these DLT-powered ecosystems can allow us to design globally accessible and fully automated systems, encouraging individuals, companies and governments to take part in sustainable practices – such as regenerative agriculture, carbon offsets and crop insurance.
Instilling vital trust across and between business
An increasingly uncertain business landscape calls for more frequent cooperation and integration. This reliance on outsourcing, coupled with business’ growing responsibility for customer data, is consequently heightening the need for a guaranteed level of trust, data privacy and security.
That is why businesses and even governments are turning to enterprise blockchain to deliver secure, scalable, and trustworthy products and services, such as the European Blockchain Services Infrastructure. And since enterprise blockchain networks tend to be permissioned – meaning they control who can join the network, and, often, what they can do – network operators are identified and known to one another. This is an important feature that ensures transparency and accountability within and between organisations, while supporting governance and regulatory-compliance.
Businesses and governments are going even further to build upon the securities and efficiencies that enterprise blockchains can offer by integrating identities. When coupling secure digital identities with the transparency and traceability provided by blockchain, it becomes clear exactly which activities are being performed by whom, enabling new levels of accountability and efficiency. This provides unprecedented levels of accountability and makes blockchain all that more accessible to organisations that demand high levels of organisational oversight.
Blockchain technology has a huge role to play in laying strong foundations for the future. If the past two years have taught us anything, it’s that you truly never know what lies round the next corner; in short, expect the unexpected. To face the inevitable challenges that lay ahead, corporates must ensure that their underlying infrastructure is fit for purpose. By building back better with blockchain, companies can ensure that they are primed and ready for whatever comes next.