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Is Your Company Succeeding In Tech Unicorns To Become TA H E L E A D I N G V O I C Innovation E O F Or S TPR? R AT E G Y Rarity
CHIEF STRATEGY We look at the reasons behind the decline in the number of startups valued at $1 billion / 15
Misunderstanding of innovation creates innoganda - a phenomenon which can benefit PR campaigns but has nothing to do with innovation in practice / 24
Chief Innovation Officer Summit September 6 & 7, 2016 | Sydney
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+ 61 (2) 8188 7345 vhernandez@theiegroup.com theinnovationenterprise.com
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ISSUE 10
EDITOR’S LETTER Welcome to the 10th Edition of the Chief Innovation Officer Magazine
Throughout history, the most successful innovators have always had a hard time sustaining performance. Some of the most famous early pioneers in their fields have failed for example, Polaroid, Nokia, Sun Microsystems, and Yahoo. Their products were once celebrated, leading the market and seemingly unassailable. However, they have all since fallen dramatically behind the competition. So, why is it so hard to build and maintain the capacity to innovate?
of all circumstances and factors that affect the sector. It is also important to avoid any possible conflicts between innovation and business strategies. Business unit heads can focus on the target markets whereas R&D scientists and engineers tend to see opportunities in new technological processes. Diverse perspectives are crucial for successful innovation, but they shouldn’t disrupt one another.
In order to effectively maintain innovation, it is vital to have a good innovation strategy that aligns with a business’s overall strategy and goals. This enables the company to pinpoint problems and their solutions quicker. It can also help to synthesize ideas into real business concepts and product designs, and helps the company best understand which projects deserve funding.
The mutual features of business and innovation strategies are that they should both start with a clear understanding of the specific objectives that can help the company stay ahead of its competitors. Those objectives can be different for each company and include, for instance, reduction of the product prices or creating a visible societal benefit, (anything capable of creating value). Choosing the type of value your innovation strategy will create and sticking to it is critical.
There is not one business strategy that fits all companies, and the same is true of an innovation strategy. The decision around which strategies to use must be based on consideration
Finally, the innovation strategy must always be evolving. Introducing an innovation strategy and letting it work once or twice is not enough to create a sustainable impact. Industries
are constantly changing and there is a steady flow of new processes and methods in the approaches companies use to deal with changes and enable growth. In regards to your innovation strategy, it is vital that you have your finger on the pulse with the most recent changes and trends and make adjustments accordingly. By continuously polishing your strategy, you will keep up with the market and aligned with what your customers want. If you have any feedback or want to submit an article, please don’t hesitate to get in touch at anastasia@ theiegroup.com.
Anastasia Anokhina managing editor
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Chief Innovation Officer Summit December 5 & 6, 2016 | New York
Speakers Include
+ 1 415 799 9986 dmarshall@theiegroup.com theinnovationenterprise.com
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contents 6 | THE FUTURE OF JOBS AND EDUCATION
21 | ENTERPRISES ARE MOVING TOWARDS LABS AND INCUBATORS TO FUEL INNOVATION
The life skills people learn and how they learn them have remained relatively consistent through the ages. However, technology will drive change in how professional skills are taught over the next 50 years
Integrating labs and incubators into your business can get your innovation engine humming, but how can you ensure they are successful?
12 | GOOGLE HOME VS AMAZON ECHO
24 | IS YOUR COMPANY SUCCEEDING IN INNOVATION OR PR?
We look at the latest in Google and Amazon’s battle to lead the way at home in tech
Misunderstanding of innovation creates innoganda - a phenomenon which can benefit PR campaigns but has nothing to do with innovation in reality. How can we make sure that we actually innovate?
15 | TECH UNICORNS TO BECOME A RARITY
It seems like the boom in unicorn enterprises is coming to an end. We look at the reasons behind the decline in the number of startups valued at over $1 billion
26 | INNOVATION CHALLENGES THE CORPORATE LONGEVITY OF THE LARGE BUSINESSES
It is predicted that the lifespan of large enterprises is going to drop significantly by 2030. We look at the factors which affect companies’ longevity and force them off the S&P 500 list
18 | DRONES: SKYNET OR SAFE BET?
While many people have negative associations with drones, the technology will likely offer some impressive investment opportunities
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carpenter contributors matthew griffin, kit feber, harriet connolly, dean marshall, pearl cheng /5
Matthew Griffin, Futurist and CxO Disruption Strategy Advisor
The Future Of Jobs And Education Life is a learning experience, or so they say.
Broadly speaking, educational
activities can be split into two categories - ‘Life Skills’ and ‘Professional Skills’. The life skills that we all need to learn and the way we learn them have remained relatively consistent across the ages ‘ how we all learn to communicate, socialize and survive. But you can argue that today’s education system is skewed towards the second category, the teaching of professional skills, and it’s this category that will face the greatest opportunities and challenges over the next 50 years.
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While educators prepare their students for a life of learning, it’s more true to say their role is to prepare students for life-long careers. But while that was a relatively simple task in the past it’s now much more difficult. In the past, educators could teach someone Law, for example, and it would be fair to say that we could have expected those students to remain gainfully employed within their chosen profession for at least 40 years if not until their retirement. Today, though, technology is replacing paralegals and, while I don’t take this
view, there are skeptics in the legal profession who are publicly arguing that their industry will be completely automated by technology within just 15 years. In a world where educators are used to educating Generation Y, Z and eventually Alpha students for life-long careers, what happens when jobs in those careers - and even across entire industries - cease to exist? Furthermore, and as a demonstration of society’s enormous shortsightedness, we live in a role-based society where the majority of people, particularly in business typically believe that people are only suited to fit one role. A software salesman can’t sell hardware just as a hardware salesman can’t become a lawyer and a lawyer can’t become a data scientist just as a data scientist can’t become a software salesman. And so on. If we are to assuage some of the hundreds of millions of redundancies that we’ll all face in the next 20 years, society has to change its thinking. After all, there’s no reason why many of us can’t learn new skills.
The changing nature of the job market Over the next 20 years, governments and academia estimate that between 30% and 50% of all of the today’s jobs will be replaced by technology. However, unlike the disruptions of yesteryear, where technology replaced blue collar jobs, today’s technologies are replacing white collar knowledge workers and its shift that could have
dire consequences for you and your children’s future career prospects. Some of the world’s best self-learning artificial intelligence and cognitive computer systems are already replacing advisors, analysts, artists, commentators, consultants, doctors, journalists, musicians, paralegals, PhDs, teachers, translators and even the data scientists who created their original algorithmic models. Machine vision systems are replacing quality inspectors, maintenance workers, security analysts and security guards. Hardware robots have already replaced many of the blue collar factory and warehouse jobs and now they’re replacing bar staff, maintenance workers, porters, soldiers, waiters and surgeons while their new, modern day softwareonly counterparts are replacing administrative staff, customer service clerks and FX traders. In other areas, autonomous vehicles - from cars and trucks to aircraft and half a million ton cargo ships are eliminating drivers, operating crews, parking attendants, pilots and traffic wardens. Avatars are replacing actors, bank tellers, call center agents, teachers, and pre and post sales support staff. Cloud reduced the need for change managers, enterprise architects, and operations staff while the Internet of everything is reducing the need for engineers, inspectors, facilities managers and maintenance staff. Smarter cities will reduce the need for police, street cleaners and a myriad of other public servants while wearables and Telehealth are both
reducing the demand for secondary care workers, doctors, and personal trainers. The lists go on. Look around you and I’d be surprised if you yourself aren’t already seeing some of these changes occurring, albeit gradually, for the moment. Unlike the industry disruptions of the past, though, where jobs were destroyed but where new ones sprang up, worryingly no one, from the UN to the G8, have any idea what the jobs of the future might look like. And, while some point towards jobs that need creativity, empathy and social skills the machines are already acquiring those skills.
The future of education Education is one of the society’s
cornerstones - after all, as government spokespeople say, it’s what prepares us to become ‘useful and productive members of society.’ But as the jobs market continues to shift education needs to stay ahead of it ‘ decades ahead in some cases, preparing people for jobs in 20, 30, 40 and even 50 years time, and the less that we talk about people living longer and having to retire even later in life the better, let’s keep things simple here. The education industry has a unique dilemma. On average it has 18 years to prepare people for careers that span over 50 years and, as the pace of technological change continues to accelerate, trying to provide people with skills that keep them sharp and employed throughout their lifetime is no small feat. As we’ve seen, if
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the analysts are right, then by 2036 at least a third of today’s jobs, the ones that ostensibly most academic institutions are busy preparing Generation Y and Z for, will have been taken by the machines. The upshot of all of this is that the education industry needs to be developing hard and soft skill curriculums that prepare their students for a changing world but often the education industry is at least one or two generations behind the technology curve ‘ a curve which is increasing exponentially. Take for example today’s chronic shortages of cyber security experts, data scientists and software developers ‘ roles that are cited time and time again by the Fortune 500 and governments as being in great demand. For Generation X, who are often at greatest risk of being made redundant these topics, and the subject matter underpinning them would have had to have been included in the 1960’s and 1970’s curriculums and how many academies in the 1960s prioritised programming as a subject ‘ how many do it today? Even now, as we live and stand in
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the ‘digital age’, the answer is very few. While we could argue that academics are now beginning to catch onto software programming as a crucial part of the curriculum, today’s scientists have already moved on and are programming biology. Where are those skills in the curriculum? The apparent difficulty we have in forecasting the jobs of the future could leave two or more generations struggling for jobs. In the meantime, though - and curriculums aside - the education industry faces a unique opportunity ‘ the opportunity to reach out to everyone on the planet and provide them all with access to insightful, valuable content and there are three areas, curation, distribution and consumption that are all going through paradigm shifts.
Curation Every one of us has a unique individual learning style, so curating educational materials that get the most from each student is no small task. In the past, the majority of content was standardized and the same materials were pushed out to every individual in the same way - irrespective of ability or
learning style. Inevitably, some people took to it and others didn’t and for those who didn’t they got left behind. Over time course books and course work content became digitized, and now we have a plethora of interactive apps, e-books, and other on-demand materials. The digitization of the education industry - albeit gradual - is a turning point. Now in digital form materials are accessible to everyone and everything, humans, and machines, and as a consequence, they can become ‘smart’. Today, all of our educational course materials are curated by humans but there will come a tipping point. By 2030, equipped with artificial intelligence and with unlimited access to powerful cloud computing resources curriculum savvy machines will be able to tap into the power of the cloud to create materials that, based on a wealth of available data, are specifically tailored to the needs, aspirations and learning styles of each individual student. Device embedded cameras and machine vision systems will be able to analyze students’ facial expressions and body language to calculate how
engaged and invested they are, as well as how easy or difficult they’re finding a particular subject or topic. Behavioral analytics will analyze writing styles, patterns, and speeds to measure competency as well as surface the early signs of learning disabilities such as ADHD, dyscalculia, dysgraphia, dyslexia and even memory problems. With so many different modes of feedback the AI engines, or AI directors as they will come to be known, will create rich, adaptive, personalized educational materials in real time. Gamified and embedded with AI, behavioural, contextual and semantic analytics, augmented reality (AR), natural language processing and universal translation and virtual reality (VR) content will be able to take on a life of its own even going so far as providing students with their very own, personalised VR teaching avatar that could take the form of anything from a talking tree to a representation of Johnny Depp.
Distribution Over the past 20 years, we have seen a significant change in the way that content is distributed. In the past students had to attend a classroom
but now educators including MIT and Harvard as well as corporate organisations like P&G and General Electric are offering students from around the world the opportunity to attend their own versions of Massive Open Online Courses (MOOCs) courses run over the internet, often for free that have not tens but hundreds of thousands of participants. The proliferation of new channels creates new opportunities and problems for educators whose curriculums are often standardized and highly regulated. The internet and the proliferation of new ‘over the top’ content, via channels that can include YouTube and WhatsApp as well as Disney, Harvard and the app stores means that children have access to a world of new material of variable quality and sometimes questionable perspectives. As more and more content goes ‘over the top’ (OTT), how we find it and where we find it will also change. Today we’re already beginning to witness the creation of ‘smart’ content ‘ ostensibly the third wave of disruption to hit the content industry. The first being printing and the second being the internet, smart content
is content embedded with AI and machine learning that, rather than waiting for its audience to seek it out, seeks them out instead. Imagine, for example, content that can analyze and see new trends in the jobs market months or years before they materialize and that can push the right types of content to you so you are prepared, virtual CV in hand, for when they do. Today, only 3 billion people are connected to the internet, but over the next decade, new stratospheric network platforms like Google Project Loon, Facebook Project Aquila, and OneVu will connect the last 4 billion, giving them all the same access that you and I take for granted. While we might think that distribution is already ubiquitous the fact remains that only 40% of the planet is connected and that in itself presents educators with an opportunity.
Consumption Consumption will be one of the most rapidly changing parts of the learning equation. Students will increasingly become accustomed to AI, AR, avatars and VR-powered content but over time, these technologies will /9
give way to platforms, for which there are already working prototypes, that use brain-computer interfaces (BCI) to transmit content directly into our brains. The adoption of all of this content, whether it’s VR or BCI based will always be influenced by accessibility, affordability, and design and the easier the content is to absorb the more potential we’ll realize. The good news is that many of today’s modern Millennial organizations have already embraced a culture of design thinking. How many of you think that your three year old would embrace technology so quickly if it was difficult to use ‘ okay, they need your finger to unlock your iPad but I’m guessing, that is if they’re anything like my children, that they know how to navigate and use your gadgets with impunity and that in some cases they can use it better than you do. Today and in the future it’s often the frictionless customer experience, often dubbed ‘design thinking’ that accelerates the pace of new technology adoption. Well thought out and implemented correctly Generation Y, Z and Alpha have already shown us that they will embrace new technologies like ducks to water and as these new technologies get curated into new products and services, moral and ethical implications aside they will have no qualms about embracing technologies and capabilities that not so long ago were thought of as magical. As one student put it when asked to describe today’s technology to a person from the 1800s, ‘In my hand I hold all of the world’s information.’
Just think what you could do with that...
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Open Innovation Summit September 28 & 29, 2016 | Boston
Speakers Include
Contact Information + 1 415 799 9986 dmarshall@theiegroup.com theinnovationenterprise.com / 11
googlevs. home amazon echo Anastasia Anokhina, Managing Editor
The time has come to sit back with popcorn and enjoy the ultimate battle of two tech giants - Google and Amazon. Competition is a healthy thing, especially when it’s going to benefit us consumers, and make our daily routine easier.
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The speakers perform tasks like web searches, adding calendar appointments or looking up movie showtimes on the Internet. They essentially perform as your personal assistant
In May this year, Google introduced Google Home, a voice-controlled, internet-connected speaker that is going to compete with Amazon’s smart speaker, Echo. The rivalry is going to be intense because both products target the same audience and are based on similar concepts. So what do they have in common? First of all, Echo and Google Home are both speaker systems. They are designed to improve your daily routine by completing tasks which may be more time consuming if done manually. The speakers perform tasks like web searches, adding calendar appointments and looking up movie showtimes on the Internet. They essentially perform as your personal assistant. Amazon’s product is already available to order, with a pricetag of $179.99. Google aren’t at that stage yet, and we only saw a sneaky presentation at their Mountain View headquarters. Whilst we are still waiting for more details from Google, we can already see that there are differences between the two gadgets. Appearance wise, both have a cylindrical shape but Google Home went for a more compact version than Echo. However, Amazon also launched its Echo Dot, a smaller version which has similar features to its bigger brother and is also based on voice recognition. The top of the Home unit is slanted downwards, whereas Echo’s top is flat. Echo only comes in black, whilst you can choose from a selection of colors for Google Home.
Google, the latter demonstrated the best performance, largely because it used data from Google’s search engine. It seems like Home is powerful enough to leave Echo in the dust. However, what Google is lacking is cooperation with others, whereas Echo can easily order you pizza, set the right temperature at home, and or order an Uber through 3rd party apps. Google Home seems to be more beneficial performance-wise, but if it wants to be successful, it needs to catch up on some of the important features that Amazon offers. If we think of it from a target audience perspective, we will see ordinary people who are interested in improving their daily routine and interested in the new technology but not obsessed with it. Most of the consumers will not notice or read tech reviews, where both products appear similar but will be slightly different from one another. Consumers only want something that is attractive and convenient to use. At the moment, the fact that Amazon collaborates with third-party services such as restaurants, local businesses, and taxi services, puts it ahead of its rival. Google Home’s success will largely depend on whether the company can persuade other developers to collaborate and create new features.
But the most important element is always who does it better. The brains of Home is going to be Google’s virtual assistant, which works with the help of its extensive search database, whereas Echo relies on Alexa, Amazon’s assistant. In this respect, Google is ahead of its rival. According to tests which were designed to compare virtual assistants from Amazon, Apple, Microsoft, and
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TECH UNICORNS TO BECOME A RARITY Bloated valuations are giving way to more cautious investment
Charlie Sammonds, Assistant Editor
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In the world of tech, the everswelling stable of unicorns that has been dominating the startup conversation for years is set to be thinned. Unicorns are far more common than their title suggests: According to Fortune, the number of private companies currently valued at $1 billion or more stands at 174. Of that total, a huge 66 can be found in California - the majority in Silicon Valley - with New York and China the other two notable locations. Included in the list are giants like Uber, Airbnb, Snapchat, Pinterest and Buzzfeed, but there are plenty of smaller companies with inflated valuations that are in for a potentially rocky 2016. The impending disappearances will not come as a shock as venture capitalists and analysts have predicted a downturn for some time. In April, Benchmark Capital’s Bill Gurley wrote an essay confirming what has been a discussion for months - that the unicorn situation is unsustainable. Founders, often without a CFO in their ranks, are regularly unequipped to manage such lofty valuations and the burn rates unfortunately associated with tech startups. It is the latter that many site as the likely cause of the downturn in unicorn numbers. Burn rates are one of the key reasons these companies fail. Founders and backers know when the money will run out, but raising funds has become significantly more difficult. According to Bill Gates, ‘There is some sorting out that is taking place. It should never be a case of closing your eyes and saying ‘Oh, it’s a tech company, just throw money at it’. That strategy worked for about two years; now you actually have to open your eyes and look at the company.’ Investment has reflected this mentality - According to a PwC/ NVCA MoneyTree report, VC funding slowed to $11.3 billion in Q4 2015, down 32% from the previous quarter. The ‘easy money’ for tech unicorns
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has continued to dry up this year, and burn rates will have to be curbed in any surviving unicorn company. Some companies have cut perks - free food, massages, gym memberships etc. - but it will be the loss of jobs and assets that really signal a business fighting for survival. For years, companies have been ‘funded at valuations that were far ahead of their fundamental progress as businesses… some of those companies are not actually that great fundamental businesses,’ according to Sequoia’s Alfred Lin, and this creates a problem when the company is made public. Bill Reichert, managing director of Garage Technology Ventures, said: ‘The public markets cannot possibly absorb the current batch of unicorns at their current valuations, not to mention the thundering herd of unicorn wannabes. There will be more disappointment than celebration over the next 18 months.’ Identifying the unicorns most at risk of disappearing is difficult, though. No company goes bust with money in the bank, and private startups are rarely open with their balance sheets - other metrics must be looked at. According to Danielle Morrill, founder of Mattermark (via Business Insider), at-risk unicorns fit the following criteria. They haven’t exited, they have raised over $100 million, they have seen growth in a number of employees in the past six months fall to 5% or less and they have raised new funding in the last 36 months. Unicorns that fit these criteria, as well as having low growth scores, are the most at risk. They have displayed promise but rounds of funding often wildly skew valuations, with employee growth a key giveaway. B2B companies in this situation tend to find buyers - albeit at an often greatly reduced valuation - but B2C unicorns with low margins face a difficult time. Startups that primarily sell to other startups, too, will face difficulty businesses need to know who their customers are if only to avoid a shock
if some of their key clients fold in the near future. According to data from Mattermark, analyzed by Business Insider, a number of e-commerce companies could be in trouble while biotech and energy startups are desperately struggling. The impending decrease in unicorn numbers is not just caused by existing ones struggling, and the slowdown in VC funding will compound the issue and see the pool shrink further. What is perhaps important to remember, though, is that this will simply be a return to normality. The bloated valuations of the past few years have been the true anomaly, and many are of the opinion that a return to realistic investment will actually benefit the economy as a whole. Skyhigh optimism is just one end of the ebb and flow of Silicon Valley and the wider startup scene - the tech unicorn could be set to rediscover its rarity.
Product Innovation Summit September 28 & 29, 2016 | Boston Speakers Include
+ 1 415 799 9986 dmarshall@theiegroup.com theinnovationenterprise.com
Drones:
Skynet or Safe Bet?
Kit Feber, Partner at Big Cloud
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Last week, PwC announced that they were testing the use of drones in a wide array of industries, from construction to insurance. They were testing the drone technology in Poland, because it is one of the only countries in the world, apart from South Africa, that has laws which allow the use of drones at a distance that exceeds line of sight. This says a great deal about the general attitude
to unmanned drones at present, but this skepticism could soon be about to change. It has been reported, admittedly by aforementioned drone enthusiasts PwC, that the drone industry could take $127 billion worth of human work by 2020. This could include, but would not be limited to, work that is currently too dangerous or difficult for humans to complete. Drones could prove invaluable in
detecting gas leaks at power plants, fighting forest fires in the Canadian wilderness, or searching for survivors at the sites of natural disasters. There are already a number of key implementations of drone technology, that could have significant benefits now and in the near future. A team from the University of Zurich have developed a tiny quadcopter which can follow the paths in dense forests from above, and could be used to search for missing people. The Phantom 4 drone, developed by Chinese company DJI and Apple, can autonomously follow its user around, whilst avoiding obstacles such as cars, pets and trees, and could be useful for filmmakers, or people who just like a drone to follow them around! DJI estimate that their drones represent 70% of the total market share worldwide, and retail their drones at $1,399, a bargain considering the sophistication of the technology. E-Commerce giant Amazon amazed the world with its advert featuring a Prime drone delivering a package in under 30 mins from order. While many were skeptical, Amazon is clearly ambitious, and one of their teams in Austria is currently developing the drones, which they hope will be operational in major cities worldwide in the next couple of years. From window cleaning to filmmaking and everything in between, drones are likely to impact every industry, with PwC reporting that infrastructure, agriculture, and transport will be the three areas of maximum utility, with a value of over $80 billion. So what’s the catch? If this affordable, transportable and easily customizable technology is available, why is it not already being implemented on a global scale? Unfortunately, the word ‘drone’ has some rather unfortunate associations. Mention it to some people and rather than see an opportunity, they see a threat. Type the word ‘drone’ into Google, and it’s likely that one of the articles appeared will have a title similar to ‘When Good Drones Go Bad’. One of the most popular Box
Office films at the moment, ‘Eye in the Sky’, focusses on the moral dilemmas facing the pilot of a weaponized drone in Kenya. Associations such as this only highlight the reasons why drone regulations are being so rigidly enforced, particularly in the United States and the UK. Not to mention that a British Airways pilot reported recently that his plane had hit a drone on its approach to Heathrow Airport before he was able to land the plane safely. At the moment, anyone can buy a drone from a shop or online, and anyone can fly it. They have been used to fly over soccer stadiums and political demonstrations, and although 99% of users are conscientious and safe in the use of their drones, it is the 1% who aren’t that appear most frequently in the public eye. Some clarification might be in order. First of all, it is highly unlikely that the drones that are to be used in the industry will be piloted by just anyone, especially with health and safety being what it is today. With the way that legislation is flying about at the moment, particularly in the UK, drone licenses might become the only way of being able to use them. Furthermore, one way of ensuring that drones can’t be used as autonomous killers, as many people seem to fear, would surely be to not fit them with weapons? There are also fears that drones are the latest stage in the automation of traditional jobs, and that if they are allowed to be developed to their full potential, they could replace humans in the workplace altogether. That fear might be allayed by the biggest issue that drone manufacturers are currently looking to solve: their frankly short battery life, which doesn’t stretch much beyond 45 minutes at present. Let’s just hope you don’t get lost an hour or more from Mountain Rescue HQ before they fix that issue!
workers in industries all over the world, or could the drones make their lives easier, by doing the jobs that are monotonous, dangerous or hard to reach? There is a phrase that has appeared recently in relation to the development of autonomous technology: ‘Augmented Intelligence’. This term means that AI will actually look to work alongside humans, rather than to replace them, and it is here that the drones could be most useful. Drones can be used to search the wreckage after a natural disaster, but don’t have the strength to pull a survivor free, which is where a human element will be invaluable. Likewise, many drones won’t have autonomous capabilities, and will, therefore, need a human to pilot them, so drones don’t appear to be replacing the human workforce anytime soon.
What do you think about the rise of drones? Are you excited about the prospect or are you concerned that there are too many unanswered questions?
Drones are clearly a huge opportunity, hence the billions of dollars of investment in the industry in recent months. That being said, does their development spell disaster for
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Enterprises Are Moving Towards Labs And Incubators To Fuel Innovation Labs and incubators are proven to boost innovation and perform as an efficient problem-solving tool
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Dean Marshall Innovation Commentator
It seems like nowadays there is almost a daily announcement about the creation of a lab, a hub or innovation incubator. Solely in the U.S, there are more than 3,500 incubators and accelerators compared to 12 back in 1980. Labs and Incubators are not limited to one industry and can exist within pretty much any sector, from medicine to finance.
Building internal labs and incubators is similar to creating a company within a company. For instance, a lab would still be considered as a part of the enterprise but would have its own unique environment and working atmosphere. Typically, these kinds of projects are aiming to experiment with innovation trends and in the end, they would be able to deliver new products or services. This ‘creative island’ is usually isolated from the corporate space in order to make developers feel comfortable. Innovation is all about generating new ideas and introducing them to the world. However, a core of it is delivering the right product to the customers, bearing in mind their needs and interests. The purpose of labs is to identify ideas that solve important customer problems and also apply design thinking, agile, and lean startup methods to make it happen. Integration of internal incubators and labs is one of the ways in which to do business inside a larger company. Even successful entrepreneurs can run out of ideas and start looking for inspiration elsewhere. Thus, executives often consider options like internal business incubators and innovation labs, places where innovation is born and ideas generated. One of the most successful examples of incubators is based in Pasadena, California - Idealab. The company was started in 1996 and its aim is to find good ideas for new businesses and then recruit people from outside / 22
to complete projects. Successful incubators take a bigger cut of the company than accelerators, usually starting from 20%. In labs people work on different projects, including some in very early experimental phases and others that are fully developed and ready to be incorporated into the main product family. One of the most important features, regardless of the project stage, is the fact that they are all focused on the customer. The eventual aim is to successfully graduate and become a part of the wider company. Unlike groups that are only assigned a single task or problem to solve, innovation labs create a unique ecosystem, where a collective approach can be used for problem-solving as well as product development. This allows a team to test capabilities and hypotheses and deploy faster iterations while ensuring all parties have a shared understanding of the problem. One of the most powerful elements of incubators is that they bring people together from different disciplines and then create a team where everyone is involved. However, in some aspects, it may create challenges because an incubator’s work doesn’t always mix well with the existing business processes, which sometimes creates a tension between those working in the incubator and those following more traditional procedures.
Successful incubators and labs will always make sure that there is ongoing communication and education happening within its space as long as there is no conflict between the innovation team and the rest of the corporate team. It may seem difficult establishing a new business and operating it in a larger company, but if done correctly, it will have a positive impact and provide a number of opportunities for the future.
Chief Innovation Officer Summit September 7 & 8, 2016 | Shanghai Speakers Include
+ 852 5808 1636 ryuan@theiegroup.com theinnovationenterprise.com
Is Your Company Succeeding In Innovation Or PR? Harriet Connolly, Head of Innovation
Have you ever thought about the true meaning of innovation? Believe it or not, it may cause confusion amongst the companies who think they are doing well at innovation but in fact, they may be succeeding in PR. These days, the word innovation is highly popular. It has evolved from a term with a specific meaning, to an over-used must-have amongst totally different industries. The frequent use of innovation, has nothing to do with applying it in practice.
It is not just the word we have a problem with. A number of professionals who genuinely can’t distinguish between innovation and invention, or innovation and creation. Unlike other terms, innovation means something new and uniquely useful, with a stress on the latter.
A vague understanding of its meaning may also leads to negative consequences, the worst one of which is losing the power of its original meaning. In that case, things could snowball, leading to confusion between those who have different definitions.
The ridiculousness is compounded by companies that want to appear innovative but don’t seem to know what the word means, and create illusions of developing products and launching new ones. This phenomenon has even been given a name - innoganda. Unsurprisingly, there is no good in innoganda and
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in business, it is used to describe an effort that has little hope of driving any material impact. Innoganda campaigns are often run in a piecemeal manner. Sometimes, seeking to emulate others, executives hire a Chief Innovation Officer but don’t give them any budget or staff. Perhaps, following trends, a company might build an innovation lab that doesn’t have the funding or staffing to do anything effectively, but looks good for the press. An increasingly popular move is to create a press release announcing the creation of a new accelerator that will communicate with the startup community and change the way we see things. In reality, the company may not even know what it’s going to accelerate and who it is going to communicate with. There is even a test that you can apply to spot those who are involved in innoganda campaigns. The next time you suspect innoganda, it is worth asking 5 simple questions:
1
. What is the most exciting real project you are working on at the moment?
2
. How would it fit the company’s strategy?
3
. How far are you in the development process?
4
. How do you plan to accelerate from having an idea to the real impact?
5
. Is there enough financial support for your team to make a real product/service out of your ideas?
Blank stares and weak answers will tell you all you need to know. We are not saying that the attempts to drive innovation in a company have no impact, but being poorly treated and organized, these kinds of projects would not give you anything but financial and time loss. A genuine desire to create a unique product and a clear understanding of your strategy, that’s what going to boost innovation in your company.
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Innovation Challenges The Corporate Longevity Of The Large Businesses Old-fashioned business approach is no longer an option in the innovation-driven world Pearl Cheng, Innovation Writer
The storm is coming and a red alert has been issued for executives of large companies. Forecasts predict they may lose control of their firms in the future. The world is changing and external factors affect large businesses by slowing their growth and disrupting their influence. A strategic readiness study says that growth strategy is being undermined by day-to-day decisions inside companies and that too many companies are lacking a coherent vision of the future. / 26
Standard & Poor's (S&P), the world’s leading index provider, predicts a challenging future for the companies on its top 500 list. S&P has been providing financial market intelligence to decision-makers for more than 150 years, meaning that their words have some weight. It is predicted that lifespan of large enterprises is going to drop significantly by 2030. Each year, companies drop out from the S&P 500 list being replaced by new
entries. According to some statistics, in 2015, 28 firms were replaced on the list. Back in 1958, a company could easily expect to stay on the list for 60 years, whereas today the average lifespan is only 18 years. For instance, big players such as H.J.Heinz, US Steel, Dell Computers and The New York Times have been replaced by young but rapidly growing companies like Facebook, PayPal, Trip Advisor and Netflix. One of the reasons for that may be that mature companies are lacking the ability to create new markets and new products because they are too comfortable in their own niche. By missing new opportunities, the firms create a gap which gives an opportunity for the new businesses to jump in the market and gracefully enter the S&P 500 list.
M&A activity. It intensifies because businesses either start struggling and later they are bought out, or, they merge with others because they are not growing fast enough. 2015 was a record year for M&A deals, with more than $5 trillion announced deals. As the situation is escalating quickly, in order to stay big, businesses need to consider abandoning their old strategies and markets and enter new ones. Balancing on the edge does not provide rapid growth and an advantage over the new fastgrowing companies.
The current changes are not catastrophic just yet because the business world tends to have life cycles. Those cycles usually reflect the state of the economy or disruption by technology. The latter factor is an important one, as more young companies are moving towards innovation and set it as their top priority. They attempt to create a revolution by achieving tech breakthroughs, nurturing social media culture and introducing the whole new world of cloud computing. Another force that helps to create new entries is the rise of the startups with billion-dollar private valuations which are also known as 'unicorns'. For instance, Hewlett-Packard sells computers, laptops, and printers. People still buy those products, but they are not buying enough to secure the company's growth in the future. There has been a shift towards the fast-growing technologies such as smartphones and tablets, which gain much more interest from the consumers. HP is still strong but has started to shrink. Additionally, longevity continues decreasing because of the intense / 27
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