TRANSFORMING DISRUPTIVE TECHNOLOGY INTO OPPORTUNITY MARKET PLACE CHANGE & THE COOPERATIVE Michael J.T. Steep Executive Director, Stanford Disruptive Technology & Digital Cities Co-Bank 2018 August in Colorado
Creates or enables new value proposition Changes underlying economics Displaces or disrupts a business model Creates sustainable innovation Speed of disruption overcomes resistance Creates enormous economic advantage for those who take advantage of the disruption DISRUPTIVE TECHNOLGY DEFINITION
Continuous Customer Engagement Understanding the State of Innovation 250 3 K 20 global companies executives industries
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?
93 % 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 ONLY18 % of companies believe their innovation strategy is delivering a competitive advantage
OPPORTUNITY TECHNOLOGY creates opportunity exponentially TECHNOLOGY INNOVATION GAP TIME ORGANIZATIONS capitalize on opportunity
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 Power Advanced Material Science High Resolution Radar & 5G Network Technologies Predictive Analytics & AI Predictive Analytics & AI Contextual Intelligence Radically New Digital Manufacturing Path to Innovation
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
INNOVATION MODEL 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
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
TRADITIONAL MODEL RESOURCES PRODUCTS LOOKING FOR MARKETS LEGACY HIGH COST MISSED OPPORTUNITY INSIDE-OUT ` RISK AVERSE PROCESS
RESOURCES EXPERTISE LOOKING FOR A SOLUTION INSIDE- OUTSIDE-IN OUT OUTSIDE LOWER COST REDUCTION TECH RISK RISK ABATEMENT PROCESS
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
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
4 COMPANY CASE EXAMPLES ENERGY
TRANFORMATION OF APPLE OUTSIDE IN MODEL Innovation distinguishes between a leader and a follower.
2 WASHINGTON FOREST GROUPS FOREST PRODUCTS 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
SMART SOLAR TRIALS CHANGE IN HOW WE THINK ABOUT ENERGY Energy Shandong Pavenergy and Wattway commercializing technology Cost of solar fallen by 90% in just ten years $11 square foot cost, $15/year per square meter in electricity 1 mile solar road powers 5,000-7,000 homes 2000 miles planned in China 600 miles next five years in Europe power for 6 million people Charge cars wirelessly while digitally assisting automated vehicles Trucking and transportation package tracking https://www.youtube.com/watch?v=sypzb1g5_5e
MORE THEN AN ELECTRIC CAR CONTINUOUS CONNECTION Case Continuous monitoring Fully connected Collision data Distraction detection Manufacturing feedback
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
RADICAL NEW FARMING MODEL END OF FARMING AS WE KNOW IT? 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
WATER AND WASTE MANAGEMENT
WASTE WATER MANAGEMENT INSIGHTS ABOUT POPULATIONS Craig Criddle Professor of Civil and Environmental Engineering at Stanford University Pioneered new approaches to waste water management Understand what is happening to a city population by analyzing waste Insights on drug use, pharma, diet, general health, and other factors https://gpc.stanford.edu/201 8-digital-cities-summitpresentations-modules-8-12
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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