June 21, 2018

Blockchain Can Drive Efficiency and Enable New Business Models in Global Logistics Industry

An online search for 'blockchain' will yield hundreds of articles. While the breadth and depth of these articles are wide-ranging, it is generally agreed that blockchain will become ubiquitous in many sectors including but not limited to financial services, insurance, healthcare, retail, and logistics and supply chain management. My colleagues and I are making significant efforts to better understand how blockchain works and ways it will improve business efficiency.

While many people are hearing the word 'blockchain' more often, very few understand how it works. Arjun Kharpal, a technology correspondent for CNBC, wrote an article on June 18, 2018 entitled "Everything you need to know about the blockchain," Mr. Kharpal begins explaining blockchain by how it "works with bitcoin" and then "see how the technology can be transferred to many other real-world use cases." With respect to supply chain management, Mr. Kharpal says, "Blockchain technology can also be used to track products across a supply chain or route. For example, diamond producer De Beers recently announced that it had trialed the technology to trace the stones from the time they were mined to delivering them to a jeweler. The blockchain can also be used to track ownership of assets such as fine art of even property."

DHL, a global logistics company, through its Customer Solutions & Innovation division, published a report entitled Blockchain in Logistics, which provides perspectives on the upcoming impact of blockchain technology and use cases for the logistics industry. Produced in cooperation with Accenture, a management consulting company, the report aims to answer:
  1. What is blockchain and what are the key challenges?
  2. How is this technology already being applied across industries?
  3. What opportunities could blockchain deliver to your logistics operations?

In addition to the aforementioned article by Mr. Kharpal, the DHL report provides a concise definition of blockchain as "a distributed ledger technology that can record transactions between parties in a secure and permanent way. By 'sharing' databases between multiple parties, blockchain essentially removes the need for intermediaries who were previously required to act as trusted third parties to verify, record and coordinate transactions. By facilitating the move from a centralized to a decentralized and distributed system (see figure 1), blockchain effectively liberates data that was previously kept in safeguarded silos."

Key challenges facing blockchain technology include:

"Gaining industry adoption is the most critical challenge and this will determine the success of blockchain technology in logistics. Being able to accurately and safely exchange information within a community is a key advantage of blockchain and stakeholders benefit the most when their community contains many relevant members. Therefore, similar to Facebook, the value of the community increases when it is adopted by a growing number of relevant stakeholders."

"It is necessary to make progress with blockchain technology itself in order to overcome current technical limitations. This is especially required for companies moving from a pilot implementation to full-scale deployment. For example, some blockchain implementations have been known to scale poorly and suffer from high latency although new innovations are being developed to address these scalability and performance issues."

"Organization and culture play a significant role in the success of digital transformation in any industry. Particularly with blockchain technology, this cannot be overlooked as its adoption will require a collaborative mindset to engage with a large number of stakeholders. Therefore, within
organizations, a culture of embracing new opportunities from blockchain technology should be fostered. Managers, particularly those in IT functions, must gain blockchain expertise to proactively push organizational exploration and, if applicable, adoption of blockchain-based solutions."

The report importantly notes, "While there are many hurdles to overcome, these challenges with blockchain are not insurmountable. Already this technology, despite its relative infancy, is showing promise across a wide range of industries including citizen services, retail, life sciences and healthcare, automotive, manufacturing, energy, and logistics."


Specifically to logistics, the report says "global supply chains are highly complex, with diverse stakeholders, varying interests, and many third-party intermediaries – challenges that blockchain is well suited to address. In the logistics industry, blockchain can be harnessed in two key ways, namely, to drive efficiency and enable new business models:

"Drive efficiency: Blockchain can potentially improve efficiency in global trade by greatly reducing bureaucracy and paperwork. For example, a multi-stakeholder process with a lengthy paper trail could be replaced with an automated process storing information in a tamper-evident digital format.

"Another example is the automation of services that currently require an intermediary such as insurance, legal, brokerage, and settlement services. Blockchain could be used to track a product's lifecycle and ownership transfer from origin to store shelf, even as it changes hands between the manufacturer, logistics service provider, wholesaler, retailer and consumer. It would facilitate and automate each business transaction, enabling a more direct relationship between each participant (e.g., automating payments and transferring legal ownership between parties).

"Enable new business models: Micro payments, digital identities, certificates, tamper-proof documents and much more can be introduced and radically improved using blockchain-based services. For example, driver training organizations could replace easy-to-fake paper-based certificates with tamper-proof digital versions that can then lead to new identity-related services. Just as the Internet began a revolution of communication, blockchain technology could disrupt current business practices and models."

Lastly, the report encouragingly explains, "Blockchain technology is emerging from its first deployments in cryptocurrency and is now likely to have significant impact across almost all industries. Like a pebble dropped into a lake, the ripples from this technology are beginning to expand outwards in all directions including the logistics industry, where blockchain promises to make business processes more efficient and facilitate innovative new services and business models."

How will your organization utilize blockchain technology?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 15, 2018

Report Explores How Digital Technologies Are Shaping the Middle East's Healthcare Ecosystems

According to a report published by The Economist Intelligence Unit (The EIU), "5 out of 14 countries in the Middle East have a well-defined digital transformation plan for healthcare in action. Governments, healthcare providers and companies will have to figure out how to initiate entire healthcare ecosystems to adopt new technology-enabled ways of solving challenges in healthcare."

The EIU's report, Digital Health: Digital Transformation in the Middle East, explores how digital technologies are shaping the Middle East's healthcare ecosystems, activities and stakeholders in significant ways. It is also on this deepened understanding that we examine the opportunities and challenges that lie ahead in the realities of finding digital health solutions for this region. The report is segmented by three chapters.

Scaling up digital health solutions in the Middle East: The seeds of digital transformation 

"Government-led digital transformation efforts in several parts in the Middle East are reshaping how individuals and organisations in the healthcare ecosystem are interacting with each other. There is a stronger need for collaboration and companies will need to engage with other players on new terms."

Key implications:
  • For digital health to take off, there must be a fundamental shift in how stakeholders collaborate. Achieving a vibrant digital health ecosystem often requires government action;
  • Governments and organizations need a strategy not just for itself, but for the entire digital health ecosystem;
  • To scale digital health use, companies need to understand and respond to local challenges and varying levels of readiness for technology adoption in different markets; and
  • Companies can seed change in different markets more effectively and quickly by setting up centers for digital health in strategic locations with high digital density, leading to the formation of digital hubs.
Locating technology's value proposition in different markets

"Digital health instantiates itself uniquely in different countries and markets faced with an exclusive set of healthcare challenges. We examine how quality care can be extended across distances by growing telehealth use in different settings and geographies. We also look at data-driven solutions that are used to create smarter, more efficient and more precise healthcare delivery and patient experiences."

Key implications:
  • New insights will emerge from existing data that will challenge existing strategies and models in healthcare;
  • Recognize and define what healthcare challenges can be addressed by technological solutions;
  • Locate opportunities where technology can be used to enhance core products and value propositions of pharmaceutical and medical device companies, for example enabling more tailored treatments and services through big data insights;
  • Determine how ready are different markets and adopters for the introduction of technologically-enhanced product and service offerings, and tailor a go-to-market strategy accordingly;
  • Figure how incentives for adoption can be better aligned, e.g. initiatives to encourage patients to share their health data; and
  • Healthcare companies will have to think hard how technology can be integrated in their overall growth strategy.
Future care models for the Middle East: Keeping people healthy

"Digital technology is making new care experiences possible by reshuffling delivery nodes of different medical services that will bring opportunities in decentralized and near-patient products and services."

Key implications:
  • Companies need to think about how to offer value in a shifting healthcare delivery landscape as the delivery locus of different medical services gets reshuffled;
  • Anticipate patient and provider needs amid digitization; and
  • Remap patient pathways and journeys. Small preferences in using technology accumulates in broader changes in the patient pathway and journey.
The report further explains that "[w]hile the level of digital maturity is uneven across the region, and sometimes across different areas of healthcare, it is only a matter of time before the full benefits of digital health permeate the region. More than ever, healthcare companies need to respond to that future now."

If you work in the healthcare sector in the Middle East, how will digital health technologies shape healthcare?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

June 12, 2018

Mobile Broadband Development in Central America Is Lagging Behind the Rest of Latin America, Finds GMSA Study

"Delivering mobile broadband to the whole population is now central to the digital strategy of Central American governments," a study by GSMA explains. "Digital government agendas have recently been launched in Costa Rica, Honduras, Panama and Guatemala. However, the region is lagging behind the rest of Latin America as the delay in 3G deployment and adoption spills over to 4G, where it is even more pronounced."

The study, Assessing the impact of market structure on innovation and quality: Driving mobile broadband in Central America, available in both English and EspaƱol, presents the following key points:

Central America is lagging behind in mobile broadband adoption and deployment. Closing this gap requires the promotion of market structures that boost competition in investment and innovation, and public policies that take the entire digital ecosystem into account

"The study examines the role of market structures in the development of the mobile sector in Central America. The market structures of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama are analyzed, exploring their impact on operator performance in investment and 4G networks. A comparative study of public policy in the region shows how policy can foster an environment in which operators acquire greater ability and incentives to compete in investment and innovation, to the benefit of consumers in the region."

Investment in mobile communications in Central America follows an inverted U relationship with the number of operators

"The analysis confirms that operator investment in Central and South America is not necessarily higher in markets with a higher number of players. It reveals the existence of an inverted U, where operator investment is maximized when operators have an EBITDA margin of 32-38%. Operators whose profitability is below these levels invest less."

Operators' 4G speeds in two-player markets are 40% faster than the Central American average and 10% faster in three-player markets

"Analysis of speeds experienced by users of 4G networks in Central and South America consistently show similar results. The study finds (in its most conservative estimates):
  • Operators in two- or three-player markets experience 4G download speeds that are up to 8 Mbps faster due to market structure. This means that users in these markets experience download speeds that can be around 40% faster than the Central American average.
  • Operators in markets with four or more players record 4G speeds that are 2 Mbps slower due to the market structure. This means their users have download speeds that are 10% slower than the Central American average.
These findings were obtained from models of 4G download speeds estimated using Speedtest Intelligence™ data from 52 operators in Central and South America from 2013 to 2016 (based on consumer-initiated tests).

Public authorities in Central America have the opportunity to remedy the delay in 4G by promoting public policy that encourages innovation and investment

"In light of the evidence provided in this study, public policy should promote the ability and incentives to invest, encouraging an environment with greater competition in innovation to deliver better products and services to users. This requires operators to have scale, margins, sufficient expected return and efficiency in the use of spectrum."

The report also identifies three main public policy recommendations:
  1. Merger review should consider how efficiencies can stimulate players' ability and incentive to compete, using appropriate analysis criteria. Additionally, authorities should consider all the competitive pressures operators face in the digital ecosystem, particularly in the context of convergence. These recommendations apply to all the markets, although specific barriers have been identified in Panama, where specific legislation de facto has prohibited mergers for many years; and El Salvador, where efficiency arguments have not been accepted in merger review;
  2. Retail and wholesale regulations limit operators' ability to compete. Three of the six markets have price caps (Honduras, El Salvador and Nicaragua), direct regulations on network quality (Costa Rica, Panama and Honduras) and constraints on price discrimination (Costa Rica, Panama and Nicaragua). Authorities should review the market and competition assessments that form the basis of these regulations; and
  3. Spectrum regulation should promote efficient use by assigning sufficient amounts of spectrum in large blocks and high and low frequency bands. The study finds that Central America has assigned only 21% of the required spectrum recommended by the International Telecommunication Union for efficient and effective provision of mobile services. In this regard, Guatemala, Panama and El Salvador are significantly lagging behind.
Mobile technology can serve as tool for positive change for those living in Central America. Governments of Central American nations, however, must make a concerted effort to reform regulations to attract investment from the private sector.

What recommendations would you add to stimulate the growth of Central America's mobile technology sector?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.