Impact of Blockchain Technology on Businesses
I will report on the details of the “Impact of Blockchain Technology on Businesses,” a seminar hosted by Mr. Yuji Akabane who has undergone management reform for many mid to large-sized companies.
Mr. Yuji Akabane’s main career
After working at Komatsu Ltd., he was engaged in corporate consulting at McKinsey, a management consulting firm, and since then he has had a career in supporting the launch of many venture start-ups. Mr. Tamazuka, a former UNIQLO and current representative director of Lawson, was seen at the seminar hinting there may a connection with the two. Currently, it seems Mr. Akabane is deeply involved in the commercialization of blockchain in Japan, Vietnam, Hong Kong, Singapore, and Uzbekistan.
Crisis of Japanese companies
Mr. Akabane talked about the crisis of current Japanese companies by mentioning their world market capitalization ranking. At the peak bubble in 1989, among the top 10 companies in world market capitalization, 7 companies were Japanese, while out of the top 20 companies, 14 companies were Japanese. In 2016 however, the top 20 consisted mainly of companies based in the U.S., China, and Switzerland, whereas the highest ranking Japanese company was Toyota at 41st place, explaining the crisis Japanese companies are facing.
As a big change, “the competitiveness of large Japanese-US manufacturing (ITÄb0 related) enterprises has decisively changed,” pointing out the weakness of IT utilization, the lack of innovation from venture firms, and the lack of development from new industries. In addition to the keywords of “IT” x “data” x “platform” x “networked hardware” being key to innovation for the several hundred trillion yen industry, the following keywords were also mentioned among them:
IoT (Internet of Things)
Connected car, auto-driving cars
Shared economy, shared services
3D printing, maker’s revolution
How will Japanese companies regain competitiveness in the midst of all the above? Is blockchain a major force having fundamental management to reform and build pillars with new businesses? That was Mr. Akabane’s perspective.
Opportunity of one in 30 to 50 years
He explained how blockchain is constantly changing industries and enterprises and explained the benefits of it.
1. Automated procedures and low costs: Accounting, expense adjustment, sending money, payment methods, payments, realization through smart contracts
2. Establish efficient and a safe supply chain: raw materials, manufacturing, distribution and sales with high reliability and low cost
3. Realization of a Sharing Economy: Efficient use, transfer and evaluation of real estate, intellectual property, services, etc.
4. Ensuring data security: Distribution, storage, and availability of personal information, ID information, certificates rights with peace of mind
Blockchain is likely to overwhelm the foundations of business and industry where the winners and losers will clearly be separated depending on whether or not blockchains can be utilized in that business. I just explained how this opportunity only comes once in every 30 to 50 years.
Efforts of advanced blockchain companies
He explained how the utilization of blockchain with advanced companies such as BMW and Alibaba is currently being conducted.
Utilizing BMW’s Blockchain to “Make the Future Car”.
carVertical (CV): Manage important information on purchases and management, such as driving history, car navigation data, vehicle accident history, etc. on a blockchain
Issues when not using blockchain: There is a risk that the driving history, the accident history, etc. are falsified, and making it difficult for purchasers to trust the provided services. Therefore, even if there was a need, services did not get widely adopted
The same system can be established for machinery such as machine tools, construction machinery, etc., other than automobiles including agricultural, vehicles, ships, aircraft, etc.
VeChainThor (VET): Proves that the product is genuine on the blockchain. Producer information, distribution route information provided by smartphone → Repair history and characteristics of past owners can also be tracked
Issues when not using blockchain: It is not easy to confirm whether it is truly a genuine item; it is rather routine to be deceived even if you pay close attention to an item
The same system can be established for the distribution of non-automobile items such as expensive accessories, bags, paintings, antiques, collectibles, meats, fruits, vegetables, etc.
Bloom (BLT): A blockchain that can safely and easily execute loans for consumers
Issues when not using blockchain: Consumers with certain burdens who cannot get loans and the like had limited purchases of cars. Also, small and medium-sized businesses had similar issues
China Alibaba’s Challenge
Outline of Alibaba and Blockchain Initiatives
Market capitalization: 38 trillion yen
Establishment: March 1999 (still founded less than 20 years ago!)
E-commerce site, electronic money service (Alipay), etc.
In 2017, held 43 applications out of 406 patent applications related to blockchain (2nd place)
In 2018, the Alibaba Group filed 90 patents, exceeding IBM and becoming the highest number of patent applications filer (1st)
Promoted Blockchain Projects
Completed international money transfer using the blockchain in 3 seconds between Hong Kong and the Philippines
Application of blockchain technology to a logistics management system
Using blockchain technology to eradicate food forgery
The number of patents related to blockchain is the second largest among companies in the world.
These one to two years is the last chance
Finally Mr. Akabane raised the following factors on blockchain and encouraged Japanese companies to take action on the blockchain.
Block chains are certainly not yet usable now.
There are various limitations, but it will suddenly become possible to use in 2 to 3 years.
Currently it is expensive, slow, and development difficult
However, we are working on a global scale at full power
After 2 to 3 years, it is almost certain that business processes and new businesses utilizing blockchain will grow rapidly
When it starts moving everything will be held down
As Amazon is pressing down on Japan’s distribution
As Facebook has 2.3 billion users on SNS
As the iPhone occupies most of the profits of all smartphone businesses
Japanese companies must start now or they will not make it in time
There is no time to say that you cannot do it yet
Even if you fail, as long as you start, your know-how will accumulate
If you start now, the experiments will be completed within this year, then you can launch a service starting in 2020
If it is a conventional decision making method, it will not make it in time at all; lean startups are indispensable
By 2021, we believe that advanced companies that utilize blockchain will keep the market down, and it will be important to start experimentation and service development using the blockchain.