TRANSFORMING DISRUPTIVE TECHNOLOGY INTO OPPORTUNITY INNOVATION AT THE EXECUTIVE AND BOARD LEVEL Michael J.T. Steep Executive Director, Stanford Disruptive Technology & Digital Cities Co-Bank 2018 September in Rancho Mirage
DISRUPTIVE TECHNOLGY DEFINITION Creates or enables new value proposition Changes underlying economics Displaces or disrupts a business model Creates the foundation for sustainable innovation Speed of disruption overcomes resistance Creates enormous economic advantage for those who take advantage of the disruption
Continuous Customer Engagement Understanding the State of Innovation 3 K 20 global companies executives industries
% of CEOs say that the longterm success of their organization depends on innovation and 51 % have increased funding for innovation initiatives
1 RISK AVERSION 2 INCREMENTALISM 3 LEADERSHIP % of companies believe their innovation strategy is delivering a competitive advantage
THE 250 GLOBAL CUSTOMERS TOP FIVE CONCERNS 1 GLOBAL 2 3 4 State of Innovation BARRIERS COMPETITIVENESS AWARENESS INTERNAL EXPERTISE CULTURE OF RISK AVERSION 5 INVESTMENT
OPPORTUNITY TECHNOLOGY creates opportunity exponentially TECHNOLOGY INNOVATION GAP ORGANIZATIONS capitalize on opportunity TIME
TECH INNOVATION GAP What disruptive technology makes possible Strategic Area of Focus In this gap companies find: 1. Their best customers new expectations 2. Start-up and competitor risk What companies can do to respond
EMERGING TECHNOLOGY SOURCES OF DISRUPTION Computational Power Agribusiness Drones Advanced Material Science Optoelectronics Network Technologies Predictive Analytics & AI Predictive Analytics & AI Contextual Intelligence Radically New Digital Manufacturing Path to Innovation
WHAT IT TAKES TO MANAGE DISRUPTIVE TECHNOLOGY MATERIAL SCIENCES COMPUTER SCIENCES BEHAVIORAL SCIENCES Disruptive technology awareness, expertise, combined with business modeling Access Silicon Valley Labs Multi- Discipline Expertise Proof of Feasibility Prototyping & IP Complimentary Engineering Transform disruptive technology into growth opportunities
OPPORTUNITY PROACTIVE VS. REACTIVE Disruptive technology creates enormous economic advantage for those who take advantage of the disruption Leadership and Board-Level support Complementary outside awareness and expertise Strategic focus on right technology with right business model 70 companies who made the transition small to large
TWO INNOVATION APPROACHES Focus on strategic problem to solve Focus on internal needs INSIDE-OUT: Better / Faster / Cheaper OUTSIDE-IN Beyond the Horizon Focus on market needs Focus on products to sell
TRANFORMATION OF APPLE INTO THE MOST VALUABLE COMPANY OUTSIDE IN MODEL Innovation distinguishes between a leader and a follower.
The Apple iphone is a fad that will quickly fade over time. DESTRUCTION OF NOKIA AND MICROSOFT MOBILE PLATFORMS INSIDE OUT MODEL
2 WASHINGTON FOREST GROUPS INNOVATION IN SMALL-MEDIUM SIZE COMPANIES Traditional industry forest products and harvesting Old-school methods of calculating board feet from timber 4% growth rate mature industry Operating costs impaired by low-tech approach Simple outside-in approach looking at the problem Applied expertise in imaging New approach that could eliminate both cost and time Up to 40% improvement in operating costs Game changer
COMPANIES MADE THE TRANSITION SOME EXAMPLES COMPANY EXAMPLE LEADERSHIP Air Bus Group Electric airplane Printing cables BMW I series $4B investment New CTO Board level Outside In New visionary Board level Outside In Idaho Forest Group Digital timber Change in CEO Adobe Subscription model Change in leadership Merrill and Ring Digital imaging President Apple Move to entertainment Change in CEO & Board Microsoft Move to Cloud Change in CEO
COST-EFFECTIVE APPROACH INVESTING IN TECHNOLOGY & INNOVATION Cost-Effective Framework SMALL MEDIUM LARGE ASSOCIATION PARTNER OUTSIDE IN Chamber Tech Group Contracted CTO CTO Vanity Fair Tech Conference Outside In Outside In TDP Tool Partner Contracted Team Stanford EMBARK Program Angle Investor Stanford Disruptive Tech Program Silicon Valley Today Fast Fail Prototype to Roadmap
EXECUTIVE & BOARD LEVEL LEADERSHIP ORGANIZATION RESILIENCY & ADAPTABILITY Path to Innovation Awareness Board level director from the tech sector with network Assessment disruptive Dedicated CTO expert in disruptive technology Organization assessment using methods like Red Teaming Rapid Response Team reporting to CEO comprised of technical expertise and industry gurus with quarterly Board review process Outside-In Approach endorsement of this approach Buy vs. Build endorse use third party companies to prototype like SRI Fast Fail - small investments with unfair advantages counting cards model Identify a Canary that is NOT you
COMPANY CASE EXAMPLES SMALL, MEDIUM, LARGE
RADICAL NEW FARMING MODEL A NEW BUSINESS MODEL Case One-Point-One Robotic-Enabled Aeroponic Farming Fully-automated cultivation with LED lighting and no seasons or disease Direct farm to table no transportation or spoilage urban center focus Decimates labor costs robotic harvesting Minimized fertilizer with 1/10 the water usage Highest quality product with custom nutrient design 10,000 sq. ft. 55 acres - 64x increase profit/sq. ft. with massive energy consumption
ECONOMIC MODEL
DRONES AND HYPERSPECTRAL IMAGING Drones one element of tech convergence Predictive Analytics and AI converge enabling learning at machine rates Hyperspectral imaging becoming miniaturized enabling scanners on drones Printed electronics and smart tag adoption track crops, measure temp, and water usage
ADVANCED META-MATERIALS
RADIATIVE COOLING DROPPED 8º C Reinvention of cooling Super cheap and effective Access to the atmosphere 8-11º C Drop Multiple formats from tarp, insulation for windows, to paint Rule of 10 economics for energy transfer
EVERYTHING & EVERYONE CONNECTED COMMUNICATIONS NOW MEANS DATA ACQUISITION Network Technologies Embedded wireless technology unifies every element of the value chain Massive proliferation of sensors Data from everywhere and everything Collection now includes devices, location, people, and processes like manufacturing Model moves to data usage versus ownership
SUMMARY Path to Innovation Culture trumps innovation EVERY time Cost of digital innovation in startup world is plummeting below company s cost to innovate Technology expertise is critical to understanding future direction Networking skills critical to acquire technology expertise Software makes it possible to build anything that can be imagined Globalization driving knowledge everywhere Best & brightest foreign engineers coming to SV and to companies near you (3M) Engineering knowledge half life now 5 years
REDUCING THE RISK OF TECHNOLOGY INVESTMENT AND CULTURAL LEGACY Path to Innovation AWARENESS ENGAGE RIGHT PROBLEM EXPERTISE TRIAL EXPLORE INVEST
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