I think it is interesting when trends collide – or co-exist – or co-emerge. I like to be very near the point of impact and try to understand what might be the outcome of such a collision. One of these points of impact is what will come out from the development of blockchains in the context of customer experience (the product of an interaction between an organization and a customer over the duration of the relationship).I am not an expert at all of blockchains and so my curiosity rushed me to the collision site to see what’s going on. At first glance, this looks to be like a very interesting species of digitalization, and not just a flaming wreck.
It is of particular interest because my preferred interpretation of Ultimate Customer Experience encompasses not only customer touchpoints, but has also a strong ‘data-driven’ context and I have a strong belief is that technology will increasingly enrich customer experience by means of empowerment, enablement and cross-application. Customer Experience should not be coincidental, it is a discipline which should be one of the key priorities of any business with an ultimate goal of improving the engagement of the Customer in the relationship.
The World Economic Forum issues blockchains as the (virtual) embodiment of one of six prevailing megatrends: The Sharing Economy and Distributed Trust. It is widely studied, but it is still in an emerging phase of broader application. It is possibly as much of a disruptive phenomenon as the Internet in its early childhood – who could have imagined that by its adolescence, the Internet would have so holistically changed our lives?
“Blockchain is based on the Bitcoin protocol, but it is Blockchain itself that is the interesting thing, not really Bitcoin” – Janne Vihervuori
So what is a blockchain? It is a peer-to-peer software technology/concept/paradigm that protects the integrity of a digital piece of information by means of globally distributed computing network. In other words, it is a globally distributed database that maintains an eternally growing list-of-records (batches of valid transactions – “Blocks”) secured from tampering and revision.
The merit of invention can be attributed to a couple of sources, but commonly Satoshi Nakamoto (a possible alias) is named as the father by creating the digital cryptocurrency a.k.a. bitcoin in 2008-2009. While there is some debate whether the blockchain is an economic or a computer science innovation, the outcome will surely have wide-spread economic implications. It can be used for other crypto-currencies, online signature services, voting systems to name a few.
From a Customer Experience perspective, the block chain is surely a game changer of disruptive proportions also beyond financial institutions. By design, as there are no intermediaries it changes the business equation radically by removing cost, removing time and enabling limitless global collaboration. This will give birth to a plethora of possible applications which benefit from these advantages.
The magnitude of new opportunity Blockchain can present is akin to that of software, although you might see it just as a new paradigm. For decades software has helped support the customer relationship by means of not only helping manage the various touchpoints (interactions), but also by enriching the experience with valuable assets such as information, analytics, insight and automation. Software helps both seller and buyer excel in their respective roles. Software can provide the seller with competitive advantage starting from customer acquisition throughout the relationship by means of differentiation (efficiency, accuracy, perceived & actual value etc.). Software solutions have developed immensely over time and now blockchain just might amplify development by a factor of a hundred.
“Sort of the ultimate Tamagotchi, the blockchain is a globally distributed nest egg” – Don Tapscott
So how could/will blockchains turbo-charge customer experience? And to whose benefit, the sellers’ or the buyers’? As cost and time are nulled from a large part of the business equation, real-time, secure direct payments at zero transaction cost will be possible without traditional third parties involved. Sellers will benefit from flash cash-flow and buyers will appreciate payment cost advantages. Blockchains can enable true, transparent and real-time notary (i.e. proof of delivery/payment/content/origin/etc.) and e.g. efficient dispute handling.
Customers generally appreciate “easy business” and blockchains can support this by further automating business processes, ensuring transaction consistency and reducing overhead steps which save time, money, sweat and tears. Especially in the world of digital assets (files, documents audio/video, currency), blockchains can prove to be particularly efficient. As the transaction cost can be radically reduced, consumption which would require micro-transactions can change consumer patterns radically. Overall the entertainment industry is expected to be in forefront of blockchain beneficiaries.
An interesting area is smart contracts. Neither the technological nor the logical fundament is really very new, but applied to global scale, blockchains can make things happen. Smart contracts are based on a computerized transaction protocol that executes the terms of a contract. In practice they are programmable contracts that execute payouts between two parties once certain criteria have been met, without involving a middleman. These contracts are secured in the blockchain as “self-executing contractual states”, which eliminate the risk of relying on others to follow through on their commitments.
“Major corporations are scrambling to stay relevant as agile startups and internet companies with the flexibility to incorporate new technologies that resonate quickly with both new and existing users become the major players in today’s business landscape” – Pat Bakey
Spending a little more time on looking at how blockchains can be exploited to benefit customer experience will surely unearth all kinds of use cases in different business process areas and in all customer touch-points. When designing the digital customer experience IT architecture, it is important to factor in blockchains at least on a future roadmap. The discipline of blockchain analytics is interesting to follow also – analyzing the data blockchains produce and recognizing patterns, calculating predictions, big-data exploitation, real-time insight can reveal yet unknown opportunities.
While there are firm believers in blockchains, there is also an abundance of scepticism towards them. Blockchains will need to prove that they can live-up to enterprise requirements in areas such as scaleability, speed, security, operability or privacy. Skeptics also expect Silkroad to curb the development as general society fears abuse and crime to nest in blockchains.
I would take the blockchain “hype” seriously. And based on a fairly recent survey by the Global Agenda Council of the Future of Software and Society, almost 70% of the 800 executives and experts reviwed expect blockchains to have reached a tipping point by 2025.
Luckily, there were no casualties in this collision between blockchains and customer experience. I will keep my eyes peeled though – the bang was loud enough and with all this smoke and flames, I am sure that something will emerge from this wreck. I am curious to hear from you how you see the implications of the blockchain phenomenon and its power of innovation beyond the finance industry and whether there are true advantages for other businesses and industries. And how will the customer benefit from this in real life.