Part 1 - Is the digital transformation failing businesses and industry?

Blockchain? Isn’t this just another passing hype? Isn’t artificial intelligence the new kid on the block? Whatever the case may be, now is anyway not a good time to dwell on early-stage innovation!?Perhaps similar thoughts occurred to you while reading the headline. Why not spend 5 minutes reading Part 1 of our article series – this might change your perspective. You can also go one step further and register directly for our upcoming?introductory onboarding webinar?by using the link at the end of this article.

We have been here before!

Admittedly, we are currently navigating stormy geopolitical and economic waters. Many seasoned industry leaders have a sense of?déjà-vu from 2007 when back then - just as now - we believed we had weathered some of the prevailing economic challenges and ramped back up our day-to-day operations, too busy to do deeper analysis and too busy to notice what was already appearing on some innovation radar screens. The history books show us how quickly the weather can change. In late 2008, we experienced one of the deepest collapses of our global monetary, financial, and economic system. But: 2008 was also the starting point of an unprecedented journey of digital transformation. Those who were well prepared and used the economic crisis to develop radical new approaches suddenly found themselves in pole position.?New market leaders were born, and some unsinkable ships of the past disappeared in the ocean of ignorance.

The ambitious promises of digital transformation

What started in 2009 triggered an impressive innovation journey that led to extremely ambitious programs such as?The fourth Industrial Revolution?announced by the World Economic Forum (WEF) after 2011.

This was associated with great expectations that postulated a profound transformation of society and industry, such as:

• Flexibility without compromising profitability?- The art of batch size 1 manufacturing, combined with the art of using digital twins and AI for predictive/prescriptive maintenance and continuous process optimization
• Customer and consumer intimacy?– Leveraging technology to build direct communication, loyalty and engagement programs on a global scale
• Business model transformation?- Transforming traditional manufacturing business models from selling products to generating product lifecycle-based service revenue-streams
• Transparency and traceability?- From raw materials through processes to customers and consumers until a product’s end-of-life. This sets the stage for meeting emerging ESG-, reputational- and regulatory requirements
• Supply Chains to Supply Networks?- Transforming supply chains into highly flexible, efficient, and open supply networks that include suppliers, cooperation partners, validators, regulators, competitors, customers, and consumers

The progress of the digital transformation in directly Internet-related industries has indeed been impressive in recent decades, but other segments of business and industry, like manufacturing, were not quite able to live up to the high expectations.

The 10 major hurdles blocking successful digital transformation

While few companies and industry players were on board from the start, the majority had developed some sort of digital transformation strategy by 2015. Considering that it took a while for strategies to be put into action, it’s fair to say that systematic digital transformation programs are about 5 to 6 years in the making. Moreover, it is fair to say that many high expectations have given way to considerable disillusionment. According to our research, the following major challenges are currently jeopardizing the success of digital transformation in business in general and in the manufacturing industry in particular:

1. New geopolitical issues?– Leading to a challenging ‘splintering’ that requires different technology stacks and processes along geopolitical boundaries
2. Lack of resilience due to centralization?– One-sided optimization toward efficiency has led to vulnerable enterprise architectures and inadequate risk assessment of many cloud-based solutions
3. Growing dependencies?– A few global technology providers in cloud infrastructure, cloud platforms, software, communications, and cybersecurity dominate the markets. This leads to new strategic risks.
4. Inadequate identity and access management (IAM)?– Our goal of creating collaborative enterprise networks involving suppliers, cooperation partners, validators, regulators, competitors, and customers is simply beyond the scope of today’s IAM solutions
5. Rigidity, complexity and cost of IT systems and cybersecurity?– It is difficult enough to manage all the new business requirements and cybersecurity within closed enterprise boundaries: Creating highly flexible, open business networks makes this almost an impossible mission
6. Managing industrial IoT assets and digital twins?– In addition to opening up new cybersecurity attack surfaces, the new requirements resulting from predictive/prescriptive maintenance, from automated process optimization, AI-integration and from traceability are creating serious challenges around trust, confidentiality, data-access and data-usage rights. This creates unproductive tensions between competing OEM machine- and equipment manufacturers and their actual end users, e.g., the factories of brand-owners
7. Lack of trusted data?– The lack of reliable ‘time-stamped and immutable records of truth’ introduces risks in, e.g., regulation, counterfeiting, taxation, marketing and reputation
8. Resistance from traditional organizational structures?– Publishing visions and strategies about open ideation, innovation, continuous improvement, servant leadership, and respect for diversity and inclusion are one thing, but implementation in traditional corporate structures often faces barriers based on traditional functional silos and hierarchies
9. Knowledge gap and fear of change?– The lack of access to relevant training and/or the lack of willingness of the involved people to acquire future-proof knowledge and skills is turning out to be a major hurdle, especially in the coming era of growing AI use. This human factor has often been largely underestimated
10. The complexity of new business models and the lack of attractive incentives?– whether internally or for customers and consumers: The technical complexity, the lack of convenience, the lack of attractive UX and the lack of relevant incentives prevent many new business models from becoming successful

Squaring the circle with blockchain?

Today’s digital transformation architectures, processes and technology-stacks are like a metaphorical skyscraper on which we ambitiously build floor after floor, while the foundation is only designed for a single-family home.?When the Internet was created, it focused on facilitating peer-to-peer data exchange and textual communication (WEB1.0). Not in their wildest dreams did the Internet pioneers envision today’s use cases based on highly centralized global platforms to which we log-on without asking many questions. Yet more and more consumers and commercial users are finding that today’s so-called WEB2.0 solutions (our digital platforms) are lacking the very foundation to handle:

• Identity
• Privacy
• Property and ownership
• Transparency, traceability, time-stamping and immutability
• Management of trust and transactions of value

Blockchain first came to public attention through cryptocurrencies and other financial applications, which today often cause head-scratching due to recent experiences with fraud, irrational speculations, and hypes. However, as a foundational technology for a next evolution of the Internet, the technologies commonly referred to as ‘blockchain’ and 'WEB3.0' have the potential to address the root causes of many of the above-listed shortcomings.

The top 10 reasons why you need a dedicated blockchain strategy

In Part 2 of this article series, we will explore how blockchain can help overcome the top 10 hurdles of digital transformation. You will discover promising business opportunities and solution approaches based on the latest DLT/Blockchain and WEB3.0 innovations and their integration into existing enterprise architectures.

Please register me directly for the upcoming onboarding webinar

As co-founder of DLT360, an unique think-tank and consulting company, I invite you to join us for diving deeper.?During our upcoming 90 minutes webinar on March 23 and alternatively on March 28, we will outline the context, share latest knowledge and identify exciting use-cases as well as practical next steps towards benefit-oriented ideating and piloting (free participation for early-bird registrations).

Feedback welcome !

Please use the comment section below to share your thoughts and experiences with me, or contact us directly at mailto: [email protected]

DLT360 is a newly formed think-tank, educating- and consulting-organization, driving real-world adoption of Digital Identity and Blockchain in economy and society, with a main focus on corporate business world.

For more information about DLT360, please click on the logo below and visit us directly on our website (please click on the DLT360 logo below):

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