Lean Blockchain Systems Thinking – Reinventing Value Streams
This book brilliantly illustrates how blockchain and Web3 are revolutionizing value exchange in society. Blockchain technology sets new standards for transparency, provenance, and traceability, benefiting every stakeholder across the value chain in an interoperable manner. The technology fundamentally transforms industries, verticals, and functions within organizations, enabling decentralized identity, asset tokenization, governance, and enhanced privacy. This book offers a deep yet accessible guide to navigating this new paradigm.
Table of contents:
Chapter 1: Innovation
Chapter 2: Purpose
Chapter 3: Balancing
Chapter 4: Cause and Effect
Chapter 5: Principles
Chapter 6: Building Blocks Chapter 7: Procedures
Chapter 8: Kanban
Chapter 9: Tokenization
Chapter 10: DMAIC
B4L has developed a LBST framework to make abstract concepts tangible and actively involve participants in the (re)design of processes. Each phase has its own canvas or game format.
Lean Blockchain house
What are the 5 key elements that blockchain adds to the lean house?
1. Alignment of Purpose
Processes are a derivative of an organizational strategy and determine the common goals and shared values. It gives “purpose” to the organization and enables alignment with people and processes. BC enables this for business collaborations.
2. Build in trust
BC has solved the double spending problem on the internet. Processes can be redesigned without the need of a (non value adding) trusted third party in the middle.
3. Value Stream
How do you get flow in processes if the value flow is continuously interrupted by an intermediary? BC allows value to pass from hand to hand. Transparency and visual management provides insight and control by design for all participants.
4. Quality and time
Blockchain shares information from the source/expert/oracle. This method not only saves a lot of time (just-in-time) and costs (first-time-right), but also ensures that the input quality comes from the expert.
5. Culture
What if we could design an infrastructure that contributes to the 17 Sustainable Development Goals? We now have the tools (BC, IoT, AI) and knowledge (lean thinking).
Value stream mapping – reinventing value flows
Value stream mapping
Provides a visual representation of the value and non value adding activities. It is used to optimise and understand a process.
- Value adding (VA)
Activities the customer is willing to pay for. - Non value added (NVA-W), waste
Peer-to-peer transactions eliminate numerous constraints in the flow of value, such as waiting times, overproduction, overprocessing, defects, and the need for intermediaries. By removing these non-value adding activities, blockchain streamlines the value exchange process, making it more efficient and seamless. - Non value added (NVA-R), requirements.
Smart contracts revolutionize collaborations by enhancing their efficiency, effectiveness, and predictability. These intelligent contracts establish the new rules of the game, providing a reliable and automated framework for conducting business transactions. With smart contracts, parties involved in a transaction can trust that the agreed-upon terms will be executed accurately and without the need for intermediaries.
Just-in-Time
Just in time means delivering exactly what the customer needs; the right product, in the right quantity, at the right time. The aim of the methodology is to optimize coordination between the logistics of stakeholders and create maximum flow and minimize internal stock. Blockchain will integrate process and product information within and across enterprise boundaries. What ERP (Enterprise resource planning) did for a single company blockchain will do for networks of companies.
System thinking
With design thinking the goal is to think in a cooperative system to overcome traditional bottlenecks in value flow. Lean consultants already know that transparency, standardization and real-time information are very powerful tools to reduce variability and instability in a system. With blockchain these tools are integrated in the concept. An additional benefit is that measurement, analysis and improvements are made from a common interest and shared point of view.
Stakeholders who normally don’t work that close together do now have an incentive to contribute to a just-in-time the system.
Quality management
How does Blockchain improve quality management?
Product
Blockchain brings transparency to the input quality. It makes it possible to verify and prove authenticity based on Smart data. It is even possible to tokenize real assets by creating a digital twin and track and trace the unique item throughout the entire supply chain. Also documents, qualifications, licenses, certificates can be digitized.
Organizational
The purpose (Hoshin Kanri) of a blockchain is based on a shared understanding (standards) and reality (visualization). A lot of waste is avoided by the re-use of data from the source (waste/trust management). With signals (kanban) and direct feedbackloops (alignments) it looks like a supermarket model (Taiichi Ohno).
Business
With blockchain the Who, When, What becomes clear for the entire process. It brings consensus to the needs, the expectations and critical activities of all participants. The end-consumer is often part of the solutions. This makes it easier to measure and monitor satisfaction and take appropriate actions to improve the functioning of the entire chain.
Total Output Quality
By collecting information about the possible environmental, social and economical costs and benefits or advantages environmental full cost accounting becomes reality.
Reduce the non value adding activities
A system comprises value-adding, non-value-adding, and essential activities (like KYC procedures). Lean focuses on maximizing value-adding activities, while Blockchain minimizes waste by design. Systems thinking ensures we prioritize what truly matters!
3 principles to reduce the waste by design:
1. Lean thinking: peer 2 peer value exchange
2. Blockchain thinking: automated system rules with smart contracts
3. System thinking, continuous improvement and analysis of the whole
Roles, Resources, Rules, Relationships and Results
Roles/Identity
Unique identifiers for people (SSI), companies (wallets), for content (CID) and products (DID’s). DID’s rely on cryptography to prove that you are in control of a given identity.
Relationships
Digital data carriers on physical products (like a QR code, RFC) with look-up mechanism. Legal identity identifier (LEI).
Rules
Data processing, data exchange, storage, authentification, integrity, security and privacy protocols
Resources
Intellectual property, verifiable credentials, linked Data links information to a precise uniform Resource identifier (URI). Similar as URL points to a specific website, a computer can automatically understand the information received from a URI.
Results
Digital identities (DID), verifiable credentials (VP), verifiable presentations (VP) and Linked data are powerful examples of standardization. These are the Lean building blocks systems should be designed.
Evolution of accounting
In daily live we do a lot of transactions. In fact, you could think of any interaction as a transaction. However, we only record valuable transactions by writing them down in ledgers/ databases/registers. Those ledgers allow people to demonstrate his or her property or achievements to gain value in a social context. Basically they coordinate ownership, identity, the status and authorizations.
Central coordination: proof by authority
So everything that has value is nowadays stored in ledgers. Those ledgers are the starting point for all transactions of value. Organizations that provide storage and access to the data are called intermediaries or third parties. Intermediaries exist because we don’t trust each other. Intermediaries therefore organize trust and play a pivotal role in this. And the customer pays for this service.
Trust in cryptography
Blockchain technology solved the “double spending problem” on the internet. For the first time in history peer-to-peer transactions can be executed without the need of an intermediary or third party.
The technology is often called “digital ledger technology”. By timestamping balances and providing access to those balances it can (partly) replace the work of the intermediary.
Suppose we no longer use an intermediary for transactions of value on the internet? What will happen to the processing time, the quality and the cost of those transactions? And of course the customer value?
Business process innovation
In processes the material flow (what is needed for production) is often decoupled from the information flow (information what needs to be done) and payment flow. Decoupling of flows causes waste in operation, such as unnecessary stock, loss of quality, waiting, over processing and so on. Synchronizing these 3 value flows is called “settlement”.
By digitizing the product, payment and information flow these flows can transact simultaneously in an one piece flow (transaction). The goal is to reduce settlement time to zero.
Note that the decoupling or fragmentation of information (value flows) leads to further coordination issues, like waiting, emailing, inquiry, research, control, overproduction, trust issues etc.
With linked, digitized and tokenized (atributes/passports) of data, settlement can be synchronized and available 24/7. By optimizing the transfer of value flows and thinking in systems a lot of waste is avoided.
