From Supply Chain to Blockchain in Tokyo

Journey has come to a halt

Every now and then, a booming topic emerges in the big city of Tokyo. The city is full of exciting ideas to build a utopia where people are thrilled with something cool to break-through and hopefully leap into a better life. Blockchain is the word everybody can find almost anywhere in Tokyo. Event notice by newsletter, email, and flyers are unstoppable. The stage is set to host zealous advocates on panel discussion to pushing the idea into a certain direction. Far away from now, there will be no authoritative bank of issuing hard currencies but anybody can create digital coins 24 hours a day in public surveillance. With 20+ work experiences in supply chain management since 1993, the memory was still vivid that a boom of blockchain threw in a kind of immediate rush in body and mind. “This is it!” It was a thrill. The curiosity rose so high that the next move was to search who Satoshi Nakamoto was or were. The following is to spend a large portion of time and focus on getting to know the concept and technology in 2018. But after a year of extensive research and interview with business consultants and engineers, the topic led me to wait-and-see the development of block chain business in Japan.

In early 2000 when it was in the middle of an IT bubble economy, I worked for i2 Technologies in Tokyo, a supply chain management software company. In the booming market, there were two major players of SCM software houses; i2 and Manugistics. The former had strengths in discrete planning of manufacturing and the latter process planning of consumer packaged-good. Both firms formed very solid internal team with solution consultants and deployment engineers. With alliance with system integrator, once the deal was made, the huge project followed. Key success factor was the robust product to sell and solution consultants to propose.

A series of events offered me the prototype at the idea stage. The opportunity came one after another; web-seminar, investor gathering, McKinsey reports, and interview with two engineers. Last July, a graduate school of business invited me to its alumina event. I joined the web seminar of Georgia Institute of Technology. The one-hour seminar was hosted by a professor of Information Technology. She defined the technology and benefits very elegantly if it works. It was a good opportunity to understand the idea from the view of academics. Next thing is to know practical use cases and applicable area of business from non-academic professionals. Is there any project going on?

In the following month, my venture capital friend in Silicon Valley came to visit his home office in Tokyo along with an industry expert. They gave us the lecture of emerging technologies followed by the panel discussion with venture capitalists. These are the people to make an investment decision on blockchain. Although their industry was art and entertainment, they had been informed by a wide-range of industries. One of venture capitalists explicitly stated before the attendees that they would not inject any resources into blockchain technology in Japan. They would rather see the development of the technology in the United States and China. This implies that the technology is infancy in Tokyo and competitive advantage resides somewhere outside Japan. Accessing the voice of venture fund was followed by that of business consultants.

Top management consultancy emphasizes the struggle of the technology. My next step was to go to the reliable source of management experts. So I looked into my database and found the McKinsey report, “Blockchain beyond the hype: What is the strategic business value?” The report suggests three key insights and recommends two approaches. Among them is a clearly proclaimed point which caught my attention; blockchain is still three to five years away from feasibility at scale. Company should address true pain points. Indirectly it implies no or little pain points identified by the company yet. Top business consultants admit that the technology struggles. My subtle voice asked, “Wait a minute. Should I get into this further?”

Two statements from blockchain engineers are a final call for me to freeze the move. One engineer was actually getting involved in the potential financial project with his devise. She said that the prototype of hardware was complete and the software was to be developed if the deal is made. There was little progress on the project. The other entrepreneur has been talking to a major music company in Tokyo to test the idea on blockchain. In the second half of 2018, communication with two engineers stopped talking to me. What is going on?

As of 2018, I have never heard about any blockchain software in Japan. I am sure that there are large scale in-house projects going on but two IT software giants were relatively quiet on this topic; IBM and SAP. There is still something short of being feasible for practice. Three months past 2019, I wondered if I should continue to study blockchain with limited resources. Last year, I spent considerable time on acquiring the knowledge of the technology and identifying the potential area of business. Yet, I have never seen any similar business opportunity. This week, McKinsey published another report to explain the situation of the looming industry. My decision on the technology is to wait-and-see the software company start deploying the system in huge project.

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Taught marketing @ universities in Tokyo, ex-I-banker @ UBS & mgmt consultant @ Kurt Salmon (Accenture Strategy now), Utah, Michigan + Georgia Tech educated

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Hiroshi Hatano

Hiroshi Hatano

Taught marketing @ universities in Tokyo, ex-I-banker @ UBS & mgmt consultant @ Kurt Salmon (Accenture Strategy now), Utah, Michigan + Georgia Tech educated

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