A Response to McKinsey’s ‘Blockchain Beyond the Hype’
In the last week, McKinsey released a report called ‘Blockchain Beyond the Hype’ looking specifically at who blockchain is helping right now and who it can can help in the short term. Anna Bennett writes a response to this report noting how closely Gospel’s own strategy for our use of the technology aligns with McKinsey’s key recommendations.
Here at Gospel, we read “Blockchain, beyond the hype” with joy in our hearts. The full report and some fantastic interactive graphics that pertain to specific industry sectors can be found here.
McKinsey’s analysis is – as usual – spot on and highlights the reasons why we have made many of the technical and operational choices we have for our platform, why we are ahead in the market and how the market will evolve. In this blog post, I wanted to highlight some of the key findings from the report and share just how closely aligned with McKinsey’s findings Gospel are and why we can even start to address the few areas that McKinsey has highlighted as ‘yet to mature’.
Can I Benefit by Implementing Blockchain Now?
McKinsey report that the most immediate benefits – achievable now – will be in cost reductions. In fact, they calculate that 70% of the benefit of implementing blockchain technology now is in cost savings achievable from reduced overheads and driving operational efficiencies – removing or reducing the administrative effort of record keeping and transaction reconciliation and removing intermediaries.
We are completely in agreement with this as the first commercial benefit. Short-term value in reducing cost – particularly in overhead costs – is a good thing. The fact that a longer-term by-product is a rationalisation of business models, gives solutions put in place today longevity and means that investment made now is indeed an investment well into the future.
In addition, with Gospel, risk avoidance and security are as important if not more so. These are Gospel benefits however, not blockchain benefits. But combined, they give us total trust and assurance.
McKinsey also make the point that blockchain does not have to be a disintermediator to generate value, a fact that encourages permissioned commercial applications. Again, we concur and believe that far from being a disintermediator, blockchain can be the glue which binds.
How Can I Identify an Ideal Blockchain Project?
McKinsey’s report suggests that you identify value by pragmatically and sceptically assessing impact and feasibility at a granular level and focusing on addressing true pain.
Again, we’d completely agree. Blockchain isn’t the answer for most business problems and at Gospel, we are honest enough to tell you that. We have live clients, we’re on release 3.0 and we know what good looks like.
Simply, you shouldn’t be looking for a blockchain project. You should be looking to solve your existing, real problems with solutions that are fit-for-purpose. Solutions searching for a problem rarely get budget and rarely meet generally accepted ‘critical success factors’. We help our clients to determine whether their pain can be addressed by implementing our platform and we know the perfect conditions it takes.
What sort of Blockchain Should I Implement?
McKinsey conclude in their report that the commercial model that is most likely to succeed in the short term is permissioned rather than public blockchain.
Their diagram showing the key attributes and benefits further clarifies why this is the case.
This is the reason that Gospel is a private permissioned blockchain. We understand Enterprise business. We know that you don’t want anyone anywhere having access to your highly confidential data or even merely seeing that it exists. Neither do you want people you don’t know having permission to write to your chain.
However, simply being a private, permissioned blockchain just means that you choose who joins the chain. With almost any other private, permissioned chain except Gospel, you are then sharing all the data in the chain with those people. Sometimes that’s desirable, most times it isn’t. Gospel uses the byzantine fault tolerant, auditable nature of the blockchain to keep control of how the data is used, even when it flows across business perimeters. This builds total trust and security. No other solution does that, blockchain or otherwise.
And if you’re asking “what sort of blockchain should I implement?” as your primary question, you’re asking the wrong one! “How can I solve this problem I have?”, “Can blockchain solve this problem?” and “Can I solve this problem with Gospel?” are better questions.
Will I be able to Run Blockchain at Scale?
McKinsey specifically call out that the argument that ‘blockchain can’t yet scale’ is a misconception. That in fact scale is not only down to future advances, but today is down to design choices.
Gospel has made a series of committed design choices specifically to ensure that our platform does perform at scale and does so right now. We also work with clients to determine how configuration choices they make can further enhance the speed and scale.
Gospel has made a series of committed design choices specifically to ensure that our platform does perform at scale and does so right now.
Further, Gospel work to update our platform regularly with – on average – major releases at least every 6 months and interim releases in between, to ensure that the platform continues to capitalise on gains made in blockchain technology efficiency.
Does this blockchain scale, however, is not really the right question. Public systems need significant scale in a way that private systems don’t. Public systems need to be able to handle *all* the information *the whole world* wants to throw at them in a timely way. Private systems need to be able to handle the amount of data that a particular client and its partners need to handle.
Equally, writing lots of data is actually very easy – the hard bit is changing the data you have repeatedly, quickly and in a non-repudiated way. And that is a very hard problem.
Simple maths means that public chains will never provide scale without compromise. Some of these compromises will be acceptable for some applications. For some purposes a mesh of sidechains is fine (compromises auditability), for others, things like block uncling are an acceptable compromise (compromises the ability to change the same data repeatedly). None of these deliver a consistent worldstate like “real” blockchain.
The right question is therefore “Can the blockchain I’m considering provide the scale I need for my project for the kind of data and transactions I have now and in the future?”
If I Implement Something Now, Will It Be Future Proof?
McKinsey describe one of the biggest challenges as ‘Co-opetition Paradox’ – companies working together who would naturally be competitors.
Whilst there certainly remains a great deal of work to do in establishing standards within certain industries, Gospel has tried to future-proof investments made by clients at this stage by facilitating a huge degree of interoperability. When Gospel is deployed in an enterprise, it is easy to connect an existing application to the platform. Talking to Gospel’s APIs is as simple as talking to Twitter and Salesforce.
When dealing with a legacy system in an enterprise, Gospel has created the LedgerBridge to speak to the system in its own language and bring data into Gospel. If the legacy system needs to be kept synchronised, the Gospel Platform’s ‘Watchers’ can be used to send data back out to the system whenever changes are made.
These capabilities extend to other blockchain platforms as well. Gospel can integrate with almost any digital source of data, including other blockchain platforms. This means that two companies can have their own blockchain implementation and can still cooperate.
McKinsey summarise their report by advising that organisations:
* deploy private permissioned blockchain
* expect initial benefits to be largely cost-saving related
* identify value by assessing impact and feasibility at a granular level
* focus on addressing true pain points
* consider design and keeping certain data off-chain to achieve appropriate speed and scale
Guess what? We agree. We’ve agreed with this for the last two years and it’s why we’ve done what we’ve done with our platform.
We’re very easily distinguished from the general blockchain noise.
And we can separate ourselves from the noise because although we use blockchain, we’re not a blockchain company. We’re not a solution looking for a problem, like a lot of generic blockchains. We use blockchain to solve real business issues.
As a fortunate secondary benefit, some of the things we solve are those generic “blockchain problems”. But primarily what we do is fundamentally different to other blockchain based systems.
If you want to deploy blockchain in a manner that McKinsey’s research reflects AND to solve real business problems right now, quite simply – Gospel is the only company already with its ducks in row.
For more information, take a [email protected].
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