Achieving Incremental Value in Blockchain Initiatives: Let Your Customers Be your Guide

“Blockchain will do for transactions what the internet did for information.”

- Ginni Rometty, CEO IBM

Blockchain enables one (or many) to trust in a shared, single source of truth. It is a record of transactional activities that are both cryptographically validated and immutable. 

Through its ability to create immutable records, Blockchain actually engineers trust and transparency into transactions, records, and the interactions between trading partners and an asset. With blockchain, a valid provenance for every component in an assembled item can be assured, or pre-determined actions such as payments can take place appropriately via a “smart contract.”

 For companies undertaking blockchain projects to add a premium to their business, or utilizing smart contracts to reduce costs from 3rd parties - this post presents a Blockchain Product Management Framework. The framework shows how to bring customer data into the blockchain project early and in a validated fashion. The payoff being that the value of your blockchain investment is being confirmed by customers themselves way ahead of launch.

It’s intended to supplement your functional and technical direction as an additional information source to help you optimize the balance between: business benefits, technology investments, risk and time - and help you manufacture success. 

Introduction and Overview

Blockchain Initiative Product Management Framework
The framework elements can supplement your efforts with additional success drivers. They include:

• Quantifying your goals: the value proposition of your blockchain enabled solution
   
• Mitigating your largest risk early
   
• Confirming the value of your blockchain investment before you build
   
• Speed and time to market to manufacture success

Benchmark Your Blockchain Initiative
Does your blockchain initiative have any of these attributes?

• You have developed a set of customers ready to pay a premium for a blockchain enabled version of your product or service when it launches?
   
• You have secured customers who are committed to trial your blockchain enabled product or service, and who will turn into advocates for you?
   
• You have progressively validated that your internal business objectives will be achieved by the direction of the blockchain project?
   
• You have determined and mitigated your biggest risk to the blockchain initiative? 

The sections below detail how the framework engages users early to help you optimize the hard balance between business benefits, technology investments, risk and time.

Part 1 - Have You Quantified Your Benefits and Mitigated Your Biggest Risks Yet?

Quantified Goals Enable You to Progress Towards Your Target Outcome
It’s likely that you determined blockchain’s value for your business by assessing its capabilities, and aligning its benefits to the value drivers in your business model.

Begin by articulating the initiative’s goals in a measurable manner. This puts stakeholders in a position early to confirm that the blockchain project is headed towards the targeted outcome, or if the leads need to adjust plans.

For example, take the strategic questions below that might form the basis of a blockchain initiative and augment them with testable values. This establishes a basis for measuring progress or taking action.

• How would leveraging blockchain enable me to charge a premium price - and how much?

• How would blockchain enable me to differentiate myself from competitors in a meaningful way? How much additional market share would I gain?

• Could I reduce costs or the way I work with 3rd parties because of the immutable audit trail it provides? What % decrease is achievable?

• How would incorporation of blockchain help me reduce risk-related/liability costs, exposure to business risk or protect against damage to my reputation?

• And thinking a little more radically, does incorporation of blockchain enable me to innovate or re-conceptualize areas of my business due to the presence of a new capability?

The Blockchain Initiative Product Management framework is intended to validate progress towards reaching business goals before the blockchain-enabled version of your product or service launches. The sections below show how progress towards the project's business goals can be validated progressively, generating signals and data about how customers value the initiative - providing you with learning and clarity in the early stages of the initiative.

Finally, I’ve deliberately used example questions above that connect the benefits of the blockchain initiative to your customer value proposition. Your customers are the ones whose behavior you want to influence. Making the assertions measurable enables the organization to optimize its benefits from blockchain. Additionally, this work helps the engineering team focus and prioritize their efforts.


Rank Use Cases To Set the Most Important Area to Confirm Business Value
Quantifying benefits as described above is meant to be a forcing function. It requires you to state the incremental benefits blockchain integration is bringing. More importantly, it forces you to make an assertion (or hypothesis) about the benefits particular customer or partner types will receive, and how much they will value these benefits.

As a next step, review the initiative’s use cases/user stories that articulate the outcome of how your product or service is to be enhanced through blockchain. The use cases are more granular and offer traceability to the scope of the blockchain benefits you want to achieve.

Review the stack rank of the use cases with respect to their relative business value. The objective is to confirm that the blockchain initiative is structured to try to deliver the most valuable elements first (note: a ranking of use cases can start as a strawman to be refined further). Financial modeling combined with sensitivity analysis can show the potential value of a solution or help establish a “floor” for how much better the blockchain “enhanced” business would need to perform to be of value.

The good news is that doing this work creates another point of validation. You are asserting:

• A) the blockchain initiative will increase the value of your product or service
• B) a particular customer type or segment will be the one to value it

The imperative here is to progressively validate this value starting early in the project, and combine it with a project approach that enables learning to be incorporated into the project without creating excessive volatility (we’ll address this more later).


Mitigate Your Biggest Risk Early in the Blockchain Initiative
What’s the biggest risk to the initiative? Are you able to confirm *now* that you are able to resolve it? If you haven’t resolved your biggest project risk, get clarity around the thinking that says it can’t be mitigated early in the project.

Too often, companies rush forward and defer risks, don’t think broadly enough about them, or are satisfied to “catalog” and merely track them for some period of time. Companies also might bias their focus on technical risk (e.g. tradeoffs from using IBM Hyperledger fabric or Ethereum’s platform for a smart contract). However, they may not take their consideration of risk broadly enough, to encompass a dependency or assumption that could deal a significant blow to the blockchain initiative if it came to pass.

Risk mitigation/resolution is an item that can be validated progressively and should begin early in the blockchain initiative. The point here is that it’s critical to challenge conventional thinking that “tracks” risk. Replace it with early validation that such risks can be mitigated.

Part 2 - Validate That Your Customers Will Value your Blockchain Solution

The Framework’s Validation and Testing Elements Tie to Product/Market Fit
From our perspective, the goal is to achieve Product/Market Fit for the blockchain initiative. 

Product/Market Fit is the point where a product or service delivers value such that customers would be disappointed if they no longer had access to it. Product/Market fit can (and should) be achieved before scale and this Blockchain Product Management Framework is grounded in engaging early with target users to hone in and confirm your blockchain initiative is providing important value to them.

Validating That Your Customers Will Value Your Blockchain Solution
Within their goal of wanting to provide value to customers, Companies and products get into trouble when they proceed based on What they think vs. What they know.

As presented in the previous sections, The Blockchain Project Management Framework utilizes early validation (hypothesis) testing of elements of the core deliverables to ensure the project is on course to provide the customer value needed. There are numerous ways to expeditiously test and validate, and the net benefit is helping the initiative team to move from suppositions to data.

A useful construct here is:

Revenue = Information / Time

(Source: Dan Milestein, Lean Conf.)

The more quickly you can learn verified information, the sooner you can turn it into revenue. This is another reason for more frequent releases (with potentially smaller value - but which yield information) vs. long release cycles or “big bang” launches.

Available validation methods differ depending on your project’s stage, but we’ve only had good experiences from a strong commitment to validation, and it’s baked in to our approach. For example, early stage validation tools might only help to detect a “value signal” from customers - but they get the organization started on using a validation-driven approach.

An example of a “signal” tool is a Kano Analysis that forces customers to rank and tradeoff new blockchain-enabled features versus other feature options, while the initiative is still in a concept stage. And while a positive outcome on a kano analysis doesn’t assure success, if results come back negative - the benefit is is that you are able to A) surface an important find, and B) obtain it very early in the project.

However, actual commitments are some of the best validation tests to seek from customers in response to your blockchain plans. For example, I have secured upfront commitments where global customers and partners have agreed to participate in product feedback sessions and trial the planned product - before we even invested in building it! This is an example of a high quality test to validate the value customers or partners are putting on your blockchain initiative because such a commitment requires prospective buyers to invest their time and integration resources.

A more extreme example is seeing if a customer will commit to pre-purchase your product, based on the blockchain innovations you plan for it. You may not always get a “yes” on this - *but* the dialogue it leads to will invariably generate valuable insights directly from customers about their needs in the blockchain-enabled version of your product. These are important validators of the value the customer sees in your blockchain enhancements.

At a minimum, you can see how techniques such as the above set you up for validated learning early in the product development process.

Treat Validation as Supplemental Work That Enhances Project Execution
As noted throughout, one of Blockchain’s key value enhancements is its ability to tie together a series of highly related, but disconnected elements associated with your product or service into an immutable audit trail that spans the parties that have touched the product.

However, Innovating in the way that's required to reach benefits like these, or to achieve the blockchain enhancements particular to your project - frequently comes with the the need operate successfully in an environment of uncertainty.

So *do* establish a prioritized delivery sequence for the the blockchain use cases you are targeting. However, you should also have at the ready an analysis framework to guide decision-makers to make well reasoned trade-off decisions throughout the blockchain initiative. Learnings about elements such as: your organization's legacy processes, existing infrastructure, stakeholder perspectives, or results from the first elements delivered will generate findings to both respond to and take advantage of.

The key takeaway here is that the sequencing of capabilities shown in your product plan, or the timing of their maturity will likely change from the initial version. View this not as volatility, but rather as gaining rigor through more validated feedback. To maximize the likelihood of success in an uncertain environment, approach the initiative in a manner that will incorporate learning and tolerate changes.

Part 3 - Manufacture Success As Your Blockchain Initiative Rolls Forward

Early Steps That Help You Scale for Benefits While Avoiding Errors
Blockchain brings significant value to trust and assurance in trade and commerce, while also bringing new technologies and processes to your business.

However, the potentially significant upside from blockchain integration usually brings newly implemented technologies or processes into the product or service. It’s precisely because of the changes at both ends of the scale that we are specific in how we work with clients on the “go to market” phase of their initiative. Rollout and scale are the executional parts of your initiative where the organization begins to see benefits from their blockchain initiative. While accompanying scaling and volume can induce errors, these negatives can be mitigated with a scaling strategy that addresses the areas below and is initiated early in the initiative.


The Value of Delivering an End to End Experience *Early* - Even At Very Low Scale
Our experience is that you can “manufacture success” by starting early with a version of your blockchain-enabled product that is functionally complete, but capable of operating at only a low scale (where parts of the functionality may actually work or could be simulated).

It’s OK that these initial versions may only support very limited number of users (a working “beta”). The objective is to get real users or potential customers experiencing what you plan to build as early as possible. This way you can determine with much greater rigor how the blockchain benefits you plan to offer are resonating with customers experiencing what the final product will be like.

For example, I’ve personally worked at fortune 100 companies that will explicitly roll out a business program that is operational end-to-end, but is initially limited - by design - to supporting a very small wave of first customers. In this approach, execution of the blockchain enabled project is achieved using a combination of automated and *manual* processes where scale is deferred in order to gain customer-driven learnings early in the project. Such an approach helps you “manufacture success” by enabling full operation for customers and yielding verified learning early to guide requirements and processes to come. This also has the additional benefit of determining the sequence for converting processes from manual to automated to remove bottlenecks and support additional capacity.


The Benefits of Engaging Customers at the Start
The “costs” of changes to your blockchain integration will be lower the earlier they can be discovered and incorporated into the initiative. A core element of the validation techniques presented here is in engaging users from the start and obtaining validated customer data - even while the blockchain initiative is in the planning stages.

Another key part of the framework is supporting low scale versions of your planned product to test with customers early. You’ll be creating more runway for making improvements, keeping you on the path to reaching your target metrics. At its best, this approach gives way to rapid, customer-driven iteration and that can turn early users into credible advocates to the rest.

Part 4 - Conclusion

Conclusion
Blockchain technology assures trust in business transactions by engineering trust into the very creation and delivery of products and services. We believe it’s something we’ll look back on as one of the most significant innovations in modern business. In the near term, forward-thinking companies are using blockchain to differentiate themselves, and in the longer term it will be a required bar for entry.

Companies making the shift to embrace the benefits of blockchain are already integrating new blockchain technology and supporting processes into the creation and delivery of their products and services. Their next-generation offerings are being driven by a vision for how engineered trust through blockchain will advantage them and provide superior benefits for their customers.

The innovation effort that turns this vision into reality and generates the intended benefits can be augmented and supported with the Blockchain Product Management Framework discussed here. The considerations in the framework establish a path to validate that customers are valuing the improvements you are investing in. Additionally, the framework elements can be applied early in initiative delivery and throughout subsequent iterations. The outcome is more agility and predictability to optimize the hard balance between business benefits, technology investments, risk and time - and help you manufacture success.


Getting more information
Do you already have customers signaling their value of your initiative through commitments to pay or try? Are the business objectives of your blockchain project well supported? Are you mitigating your biggest risks?

Contact us and we can discuss how to build them into your blockchain initiative.


Chris Lange
Blockchain Product Management
Chris.Lange.pub@gmail.com
https://www.linkedin.com/in/christopherlange/

© 2018 Chris.Lange.pub@gmail.com - may be reproduced with attribution