Updated: Nov 25, 2019
By Marc Georgijewitsch
I think by now we have established, that WE think Blockchain is the best thing since sliced bread. Uses for every industry you can think of, immutable ledgers, quick reliable financial transactions and so much more. But that’s our opinion – a occupational disease so to say; what does the rest of the (business) world think? Reading leading newspapers and journals such as the FT, WSJ, Economist… you get the odd article or two about the Blockchain industry. News reports spiked obviously during the all time high in December 2017, and also now we have a few reports about how Blockchain seems to be the “future”.
But the “realest” indicator for a buzzword to be of actual relevance can be determined quite easily: Has it been taken up by leading consultancies?
Short answer? Yes. If you go to McKinsey, BCG, Bain, Strategy&, Roland Berger, Oliver Wyman, tech giant Accenture (obviously), and all the others, you can with a 100% probability find a section about Blockchain. Either in sectional focus such as Operations, or in industry focus such as Logistics or Financial Services.
But how are generalist-driven strategy consultancies like McKinsey, BCG and Bain faring in the Blockchain Consulting industry? What is their Unique Selling Point? Observing the content on their websites, it is written in a style that you are familiar with:
“… We will dive into the digital technology that has the potential to profoundly disrupt many industries – Blockchain” (Strategy&)
“…its becoming a competitive advantage and an emerging standard for exchanging data and value across participants…” (BCG)
“…Blockchain points the way to a comprehensive digital approach in the paper based documentary trade business” (Bain & Company)
But what makes Blockchain so attractive to incorporate it in the service portfolio of the leading consultancies?
In my opinion this becomes clear when you analyse how strategy consultants work:
1. The market leader in multinational logistics ATransporttoB, is complaining about decreasing profits.
2. The Scottish CEO, Mick McFacey, is determined to reach his annual goals and fulfil his shareholder imposed obligations. He calls his friend John Smith from McBainsey Group, which he met back at Wharton in his MBA Class. John assures Mick that all will be fine and he will send his best team to find the problem and deliver a solution.
3. The consulting team arrives at the client site and starts sifting through the huge amount of data, conducts many client workshops and starts stating hypotheses.
4. Breakthrough: The problem is rising costs, as stakeholders down the transportation chain don’t respect contractual guidelines, and many goods transported by the logistic company stakeholders get damaged, which the company then has to replace. Result? Rising costs à diminishing profits.
5. After evaluating the situation, and trying to come up with more “bulletproof” contracts for the stakeholders, the consultants reach a dead end. Even if the contracts are written tighter, how can they be enforced? Litigation for contract violation takes years, and proof can be destroyed and and and …
6. Solution: BLOCKCHAIN. Why impose contracts, when with a decentralised Blockchain on the foundation of the Ethereum network, you can just rely on smart contracts. (see previous Articles if you are lost by now). The consultants consult their technology knowledge group, come up with a quick-win solution for ATransporttoB and estimate a long-term implementation plan, creating jobs along the way and write up a concise, precise and decisive slide deck, managing to put all the relevant information on 20 slides (and only including 120 in the presentation Back-Up), which they present to Mick McFacey and his other C-Suite colleagues.
7. CEO Mick McFacey is incredibly satisfied: Although the services of McBainsey Group are not to be described as cheap, the outcome more than justifies the cost. He looks confidently ahead to the next shareholder meeting: He can implement a new strategy, is streamlining the supply chain, reducing litigation costs and is equipping the company for the future by using such innovative technologies.
Although incredibly simplified, these 7 Steps can be re-written and applied to any industry you can think of. If there is a use case, you can be sure consultants will be selling it. And, in my unbiased opinion, rightly so.
Thanks for reading, I hope you enjoyed it!