Beyond the hype : Delivering on the Blockchain’s Potential.

I attended the techUK Financial Services & Payments Programme and a seminar on exploring the Blockchain’s potential and demystifying the hype. The positioning of this session was very much along the lines of Blockchain has the potential to revolutionise the delivery of financial services and payments.  From disintermediating banks from the payments process by way of a decentralised system of exchange to facilitating the development of ‘smart contract’ applications the distributed consensus ledger (DCL) technology has in some parts been described as the enabler of the internet of value.

The session with an exceptional panel of Keith Saxton, Simon Bailey Director of Payments and Transaction Banking at CGI, Dave Birch, Director of Consult Hyperion and author of Identity is the New Money and Richard Brown ‘on the blockchain nobody knows you are a fridge’ the leading authority on cryptocurrencies in IBM covered how the technology industry can support, what are the implications and is there a direction of travel.

For me, as someone who has come late to this world but sees the incredible disruptive potential, the takeaways were the Blockchain isn’t a magic unicorn. That ability to make the make the virtual world more like the real world is its transformative effective and the usecase challenge hasn’t been solved. 

When it comes to choosing these I’m with the panelist in that the way forward is to do as is often prescribed, have a go and explore. The base technology you choose will have much depend on your objectives and whether this is an individual or organisational ask.  Whether you go for a Bitcoin or Ripple like offering is up for grabs as they offer different things and come with points of view and how much you see the world changing, with one working within the context of current financial structures and one looking to work outside it.

Disruptive journey ahead of us.

I also related to the idea that the disruption of the Blockchain is more likely to come from a solution for dishwasher warranties rather than an attempt to overthrow governments.  The real strength of its disruption is the ability to offer a vehicle to protect and reward the digital and creative industries.  Whilst we started in the world of payments and financial services, the thought of applying a blockchain concept coupled with a Kobalt type offering really does have incredible potential to disrupt the Music and Media content ecosystems. Just the start of the art of the possible, the journey will be bumpy, take longer and be more costly but the genie is out of the bottle. All this and we were supposed to be beyond the hype.

The increasing value of going digital

More than accounting

Last July Mckinsey published a useful little paper on the changing relationship of intangible and tangible assets of digital capital and how what was once a small minority of business activity are becoming the rule in the digital economy.

The view being, we can see the rising importance of this shift in the recent copyright battles between Internet and consumer-electronics companies and in the major spending on patent portfolios.  Measuring the full impact of digital capital requires a new set of management and financial lenses that incorporates your intangible assets such as your designs, business models and brands.

This is echoed by the work that BCG have done and called out in my Digital Diamond Hunting post, digital capital has become a major contributing factor in global economic growth. In some economies such as the UK, Sweden and Japan spending on intangibles represents two-thirds of digital capital’s total value.

According to BCG the digital economy is being driven, too, by small – medium-sized businesses’ fast adoption of online commerce. These companies are the backbone of the UK and they've taken to the internet economy, creating a virtuous circle: more choice for consumers, more cash in the marketplace and more promotion of the internet as the way to reach and engage.

Not all rosy

UK startups, have blazed a trail, but for the larger FTSE 100 enterprises things aren’t as rosy. With a market cap of over £1tn and employing an estimated 6.5m people and only four chief technology officers sitting on their boards, an indication of the low priority attached to digital strategy.

With FTSE 100 companies far behind the public, small businesses, startups and even governments in the digital race, there is growing demand for them to be held to account. With various stakeholders considering some form of Digital Performance ranking indicator to showcase this as a key business metric, where companies with at least ten percent of revenues online will be championed. 

Want a playbook and fresh approach?

For the laggards a useful methodology to consider is Max Kreijn’s Open Activation work on how to evolve from enterprise to startup?"  He’s done some fresh work and introduces 7 of the many findings from the research that consolidates the method of Open Activation. Collectively they provide an initial guide to how a large enterprise can begin thinking, acting, and succeeding like a digital startup.

Check it out, as the importance of digital intangibles continues to grow, we are increasingly going to see the need for these types of fresh approaches where the Digital Davids transform the Enterprise Goliaths.

Digital diamond hunting

Last night I spent the evening at Wayra in London one of Telefonica's thirteen academies set up to offer an alternative to Silicon Valley and to unearth the disruptive digital diamonds of the day. 

Telefonica provide early stage investment to digital start-ups together with office space in their purpose built, 'state-of-the-art' Academy. Throw in the community, access and exposure to a network of mentors and you've got early site of some game changing offerings. 

Not everything you touch is gold

With the growing number of technology incubators, Google's is just around the corner, Tech city a stone's throw away and the various catapults and campuses it is becoming an increasingly challenging choice for the start-up to determine the best option. They offer an excellent vehicle to fast track you and your start-up but as with all partner selection it’s always worthwhile doing your homework so your choice best fits your objectives and direction of travel.

After the razzmatazz intro which felt more like the unveiling of a premiership footballer, with the host calling out similar stats to those concluded in the recent Connected World report, we got into the pitches of the current cohort.  They represented a wide variety of high growth industry sectors including security, quantified self, e-learning, music and health.

With the now ubiquitous pechakuchesque format the 17 companies had 5 minutes to cover all the bases and give us their ask.

Show me the money! Show me something!

The current intake had only been together under the Wayra banner for less than 12 weeks and were generating revenue and closing deals. I was surprised by the number that didn't offer a working demo to bring the product or service to life.  This will be on the roadmap but if you’re asking for cash from a potential client or investor, be it for a smartphone app or for an enterprise solution the default starting position has to be a demo that brings the offering to life.

Gems in the gaps

If I had to pick a star of the future my shout outs are; dattch’s dating service for lesbian and bisexual and bi-curious women, surprisingly there wasn't a dedicated offering for this group before, and ensygnia's Onescan mobile payments offering.

Riding the wave

According to the Boston Consulting Group’s 2012 report, ‘The Connected World’, the Internet economy's contribution to the UK GDP is at 8.3 per cent, higher than any other G20 nations. The report forecasts that this share will surge to 12.4 per cent by 2016.

By then, almost a quarter of sales in the UK are expected to take place online - more than double the percentage of the projected closest competitor, Germany.  In early 2010 there were 200 technology companies based in east London, by January this year this had exploded to 1300.

High return global races

Great results for the UK and whilst they are reported as best in class this is not just a London or GB based phenomenon. The creation of technology based innovative digital businesses is a global race that corporations, governments, investors, incubators and entrepreneurs are all placing their bets on.  With projected annual growth rates of 8 per cent for the next five years, these are some serious numbers.

Picking the right wave

With all this happening it could be argued that there isn't a better time to be a start-up to ride the wave as if you need help it’s out there.  The challenge for the entrepreneur with this all this activity is picking the right set and most appropriate support to ride it from. This isn't easy as even the support networks are becoming global.

Getting the fundamentals right

The Internet economy is a global game with highly competitive rules, but it comes down to doing all the fundamentals brilliantly and getting the right support in the right place at the right time. The winners will be those that view the Internet as a compliment to, not a cannibal of traditional ways of competing.