5 Ways Blockchain Startups Can Appeal to Enterprises


Though enterprises see the appeal of using blockchain, companies often don’t want to take on the challenge of working with their business partners to create a new blockchain solution. Last year, 74% of organizations in a global blockchain survey said they felt compelled to use a blockchain network to improve cross-enterprise efficiency, yet only 34% had taken steps to deploy one.

Most organizations would rather skip the risk, even if it means paying for the privilege of using a blockchain network created by another company. The blockchain company then has created an enormous opportunity for tech startups to do the work, convene the right parties, and build out blockchain networks that enhance cross-enterprise efficiency for them.

The Value in a Ready-to-Use Blockchain Network

Over the past decade, lean startup methods, cloud platforms, and DevOps practices have transformed how startups move from concept to minimum viable product and then scale up. These innovations also allowed startups to create solutions that enterprises can readily implement and use more rapidly.

Startups that offer blockchain solutions benefit from all this knowledge, but they also face several new challenges. To build a network that reaches critical mass and generates significant returns, a startup has to convince other enterprises that its blockchain can provide the security, scalability, and resilience they expect.

That means making it clear to enterprises how integrating the blockchain network will benefit them, as well as addressing the concerns that have prevented those organizations from it until now. If that’s the position you’re in, here’s how to approach that conversation:

1. Address decentralization head-on.

When startups create a blockchain network, they need to benefit from their investment and risk without retaining control over the blockchain solution they have built. That’s because controlling the solution makes it just another software-as-a-service product, as opposed to an exact decentralized blockchain solution.

The first thing startups must do, then, is separate ownership from control. Ownership vs. Control can be difficult in the beginning of the business, when fewer parties are involved. However, it’s possible to start with centralized control and clearly define when that control will be moved to a governing body made up of a mix of users with different interests.

2. Prioritize rules for data and logic.

A well-designed governing body has the incentive to improve the network, grow the network, and create a fair return for all users. Fair return is only possible, though, if the network has rules for data management, code management, and node control as early as possible. It can only grow if everyone understands who owns and can analyze what data, and who can authorize changes in business rules and data logic.

Once data is provided, it’s difficult to change the rules on how it can be used, so startups must carefully consider foundational data policies as early as possible. Even if governance is more centralized at first, all of the network’s users should have some input in designing initial policies to meet their needs and expectations.

3. Grow faster with trusted third parties.

The core value of blockchain is the ability to identify high-value problems and solve them by bringing together the right parties. In that same vein, blockchain-based startups shouldn’t hesitate to consider what areas of their operations can be handled by new types of service providers who can help with many aspects of governance, blockchain network operations, smart contract creation, and auditing.

Allowing experienced third parties to handle these tasks gives startups more freedom to focus on users. That means more time to implement improvements and grow the network in ways that benefit everyone on it. Startups can prove that, unlike prior solutions, a well-governed blockchain network truly operates in the interest of its users.

4. Focus on boosting efficiency.

Blockchain technology offers a significant boost to productivity. Today’s enterprises mostly operate on software purchased from major vendors like SAP, Oracle, or Microsoft. When they work with business partners that have different systems, those systems don’t always agree on details like order fulfillment status and special pricing rules. When the details don’t agree with each other — the result is time wasted having to resolve exceptions.

Blockchain technology allows enterprises to radically simplify how they operate together. Using shared logic and data across the entire network eliminates the potential for variations and disputes. This feature alone makes transactions more efficient and delivers significant cost savings for every enterprise involved.

5. Shift value by eliminating intermediaries.

While their reservations about blockchain sometimes hinder enterprises, they may also be hemmed into specific ways of doing things because of a lack of transparency or trust. In those cases, they may rely on a third party — a marketplace provider, for example — to overcome some of these issues.

Bold startups are taking on that status quo and offering new solutions built on blockchain that use a decentralized approach, eliminating the need for intermediaries. The unparalleled transparency and trust that blockchain provides are creating new flexibility in how the business operates. The operations lead to value shifting from intermediaries to enterprises — and the customers who buy their products and services.

While blockchain startups have more challenges to face than more conventional companies, those that can navigate this new area and allow enterprises to be early adopters of this emergent technology will have a stake in some of the most valuable and long-lived business networks ever to be established.

Alex Rosen

Vice President of Business Development at Chainyard

Alex Rosen is vice president of business development at blockchain consulting company Chainyard, which delivers production solutions for pain points in a variety of industries.

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