“The entrepreneurs of this era will challenge the world's greatest sectors of activity. ” –Steve Case, AOL co-founder and moonshot thinker.
The Internet of Things and its ubiquitous connectivity allows entrepreneurs to transform the main real-world sectors, namely those that most affect our daily lives, and that are driven by people, smart products, platforms, partnerships, new policies and perseverance.
Steve Case is someone who should be listened to – he’s what we call these days a moonshot thinker, an exponential entrepreneur. Someone who co-founded AOL and, as CEO in the early days of the Web, ran the iconic business that popularized access to the Internet and instant messaging for consumers, consolidating the term Internet Service Provider (ISP) as the then-dominant business, and who then co-led the merger of AOL with the mass-media giant Time-Warner in the biggest merger till then, is worth listening to.
American On Line (AOL), founded by William F. von Meister and Steve Case, came about as the result of a series of early failures, among them an unsuccessful alliance with Apple, from which they reaped $3 million dollars, which they used to finance AOL’s stock market floatation, with a value of 70 million dollars, 200 employees and 180,000 subscribers. Seven years later, AOL, with 4000 employees, reached 25 million clients, managed half the Internet traffic in the US and, at the time of its merger with Time-Warner in 2000, a capitalization of $163 billion. AOL was worth more that General Motors and Ford combined. The jingle 'Welcome. You've Got Mail', popularized by AOL to alert clients that they had a new message in their inbox, has been etched into the memories of a generation. Google, Facebook, Twitter, Amazon, YouTube, Instagram, etc. came long after AOL created the digital consumer market.
Steve Case’s book, “The Third Wave: An Entrepreneur’s Vision of the Future”, published in November 2016, is, in his own words, part autobiography –with his successes and failures–, part manual for the future and part manifesto. It’s also a guide for businesspeople who want to fly high, who yearn for ventures with far-reaching impacts on society and disruptions in traditional industries, who don’t fear failure because they learn from it. It's also an historical account of the era of the business development of the Internet and its hype-cycle as an emerging technology: the turbulent beginnings, the collective euphoria, the disenchantment –the bursting of bubble in the case of the dot coms in 2002–, the realistic refocusing, and productive maturation.
Case was inspired by the visionary Alvin Toffler’s book “The Third Wave” (1980), which completely transformed his way of seeing the world and how he imagined the future. Toffler’s book described in 1980 three waves in our society: The first preindustrial wave in which society was predominantly agricultural; the second industrial wave, which arrived along with the Industrial Revolution; and the third Information wave, which, according to Toffler, would be –and, indeed, has been– the era in which people could enjoy nearly unlimited access to a limitless assortment of information services.
As a tribute to Toffler’s inspirational book, Case also structures the evolution of the Internet into three waves:
The Third Wave is the era when the Internet stops belonging to Internet companies. It is the era in which products will require the Internet, even if the Internet doesn’t define them. It is the era when the term “Internet-enabled” will start to sound as ludicrous as the term ‘electricity-enabled,’ as if either were notable differentiators. It is the era when the concept of the Internet of Things (IoT) –of adding connected sensors to products– will be viewed as too limiting, because we’ll realize that what’s emerging is the much broader Internet of Everything.”
This third wave, namely the ubiquitous connectivity of everything and every computer, in which the Internet provides the global infrastructure that enables platforms to be managed in real time, is also the era of Artificial Intelligence, the IoT and enabling technologies, which are allowing entrepreneurs to transform the main sectors of the real world, disrupting them in many cases. For Case, The Internet of Things and its ubiquitous connectivity allows entrepreneurs to transform the main real-world sectors, those that most affect our daily lives, and according to Case, are driven by the 6 Ps: People, smart Products, Platforms, Partnerships, government Policies and entrepreneurial Perseverance.
One characteristic of the behaviour of entrepreneurs stands out in particular: perseverance. As an example, Case cites Peter Diamandis (founder of XPRIZE and co-founder of Singularity University), demonstrating in turn why big corporations have serious difficulties in innovating in this new era: “It isn’t that entrepreneurs are smarter than companies, it’s that they are trying more crazy ideas, taking more shots on goal,” which is a good definition of the entrepreneurial concept Moonshot Thinking. To this can be added another characteristic of success to the mix, namely team entrepreneurship, and what has been proven for most start-ups –the fact that they are founded by two or more entrepreneurs, rather than individuals, as many think. Indeed, AOL itself is such an example.
Without mentioning it explicitly, Case enters into the concept of entrepreneurship and leadership of moon-shooting, which creates an energizing, optimistic business culture eager to be highly disruptive and in which fear of failure doesn’t exist, since it’s seen as a continuous learning process towards an ambitious final goal. A mantra that is constantly repeated in Silicon Valley is “Shoot the Moon, fail fast, learn quickly” –a mantra that corporations could extend to the corporate culture: “Think high, fail often and cheaply, learn faster”.
Case's vision of radical change in traditional industries –with a high likelihood of disruption– is of great concern to corporations. A study conducted in 2015 by the Global Center for Digital Business Transformation (Center DBT) and IMD states that the disruptive potential of this new era is of concern to most boards of directors, who think that almost half of the best companies in their respective sectors will disappear after 2020.
Large companies often go about their business transformation towards the new ineffectively: at best, they rely exclusively on incremental innovation and developing standardized talent in their culture. Firstly, they view the evolution of innovation in a linear, evolutionary way – limited by rigid long-term strategic plans that aren’t reviewed until the end of the period, and in which they fail to consider matching the exponential speed at which the Fourth Industrial Revolution evolves. What’s more, they consider periods that are too long and burdensome, when speed and agility are factors of success. And, secondly, they acquire talent but do not create the environment that allows a new corporate culture adapted to the new challenges to be developed in order to increase agility. As Peter Drucker said, “Culture Eats Strategy For Breakfast”.
Siemens employs 90,000 scientific researchers. Montsanto, General Electric and most innovative companies from any country use and compete for the brightest minds in their industry in the world. They’re awash with masters and doctorates. The raw talent is there, but the question, according to Case, lies in how it is organized and whether the culture helps mobilize them to innovate at an exponential speed. Will failures be seen as learning opportunities for companies? Or will they instead be criticized, their leaders given the thumbs down as in Ancient Rome, their careers within the company sentenced to death? Employing talent simply isn’t enough – they have to have a voice, as well as the resources, the coverage and the environment that allows them to test marketing their ideas. Companies’ innovation teams need to mirror the entrepreneurs of start-ups if they’re to compete with them.
You can find out more about Steve Case’s vision via the following links:
· Forbes article: “Steve Case offers Advice For Entrepreneurs of The Third Wave” (Highs, 2017).
·USA Today article: “Steve Case: ‘Third wave' of Internet will help Middle America business” (Guynn & Swartz, 2017).
·Google Talks video: “Steve Case: The Third Wave” (Grove, 2016).
Case, S. (2016). The Third Wave: An Entrepreneur's Vision of the Future. New York: Simon & Schuster.
Toffler, A., & Alvin, T. (1981). The third wave. New York: Bantam books.
© 2017 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
Here I present some thoughts written down in my notes from among the many bursts of inspiration triggered at the SU Global Summit, and which could be applied to all sectors and areas of society in continuous revolution.
Singularity University does not fit the pattern of the classic academic university. Of course, it boasts the best professors, two of its founders hail from MIT: Ray Kurzweil and Peter Diamandis, and have been honoured by countless institutions, but there, no-one talks about the past, they talk about how they want the future to be: “Hope is not a strategy.” Singularity University mission is to “educate, inspire, and empower leaders to apply exponential technologies to address humanity's grand challenges,” but it is not technology-driven. And it’s not just innovative either: it aims for large-scale disruptions – what Joseph Schumpeter, one of the most influential economists of the 20th century, called Creative Destruction. They don’t intend to appoint any Chairs; instead, they aspire to inspire.
The New Exponential Paradigm can be summed up in the following 21 takeaways messages:
1. What is Moonshot Thinking? SU co-founder Peter Diamandis summarized it as follows: “A Moonshot is going 10X bigger, while the rest of the world is pursuing 10% bigger. When you try to do 10% better, you’re putting yourself in a ‘smartness’ competition with everyone else in the world – a competition you’re unlikely to win. When you instead try to go 10x bigger, you’re forced to approach the problem in a radically different fashion. The result is 100x more worth it, but it’s never 100x harder.”
2. Faster, cheaper computer power is boosting the growth of exponential technologies, including networks & sensors, synthetic biology, robotics, 3D printing, virtual reality, augmented reality, and artificial intelligence, with unexpected convergence and consequences and new business models.
3. A new entrepreneurial mindset is needed to convert big problems into big opportunities for a better world. We should focus on the things we can make an exponential impact on.
4. Over the last 10 years, leadership has been about coping with change and doing the right things. Exponential leadership is about coping with non-change: stops the things that are wrong for everyone, things that should be stopped.
5. The exponential transformation process is not rational – it is fully emotional, and people and policy can either develop it or block it. Diamandis quoted: “Ideas Are Easy, Culture is Hard: Creating the ecosystem for rapidly evaluating and testing ideas is much harder than finding the idea. Filter weaker ideas early by running a ‘pre-mortem’ – predict in advance why an idea is likely to fail – and celebrate and reward ideas that the team kills early.”
6. The various types of Exponential Leadership mindsets include:
7. Speed is the critical currency of our time: the pace of change is accelerating exponentially and we are painfully and detrimentally slow – technology is growing faster than individuals, individuals are growing faster than businesses, and businesses are growing faster than public policy and regulations.
8. As humans, we tend to think linearly. As entrepreneurs, we need to think exponentially to take advantage of the potential of emerging technologies to work together. SU co-founder Ray Kurzweil said: “Our intuition about the future is linear. But the reality of information technology is exponential, and that makes a profound difference. If I take 30 steps linearly, I get to 30. If I take 30 steps exponentially, I get to a billion.”
9. The future world will be characterized by the 6 Ds:
10. Understanding customers’ needs today doesn’t ensure success tomorrow. The strategic advantage belongs to those organizations that can forecast future customers’ needs and respond in advance.
11. Exponential strategies pursue long-term goals but focus on short-term steps dynamically. It’s a constant zoom-in and zoom-out: think big but start small, managing volume, velocity and complexity:
12. There are four convergent forces for exponential health, namely:
There are, of course, a number of exponential controversies:
13. Don’t worry about future artificial intelligence challenges. Worry about human stupidity. Humans develop AI and write policy. AI (Watson) is 90% accurate in making treatment decisions in Early Stage Lung Cancer, professionals 50%. Self-driving cars are now safer than their human drivers. And the more data they gather, the greater their precision in decision-making.
14. Artificial intelligence eats data- AI and machine learning can’t make decisions without having built up enormous amounts of data. We humans can make decisions, albeit sometimes rash ones.
15. AI won’t enslave humans, as we don’t have just one or two AIs in the world – today, we have billions.
16. The aim of AI and robots… is to perform a function better than humans, not to be or think like humans. Aeroplanes fly but don’t imitate birds’ wing movements.
17. There are 2.6 million robots in operation, almost 70% in the automotive, electronics and metal industries. Worried about job loss? No need to be – countries with the highest robot/employee ratios have the lowest unemployment rates (Korea, Japan and Germany). The developed countries with highest unemployment rates, have the lowest robot/employee ratios (Greece and Spain).
18. In 10 years’ time, it’s predicted that 40% of the Fortune 500 companies will no longer exist. Companies that don’t like change will hate the future.
19. By 2025, it’s expected that almost 100% of the global population will be connected to the Internet – that means 5 billion new minds interacting.
20. And the revised prediction for IoT devices connected by 2020: 500 billion!
21. The cost of solar energy continues to fall, from $2.07 per watt in Japan to just $0.65 per watt in India. As solar energy reaches parity with fossil fuels and falls even lower in price, the cost of energy will drop close to zero, leading to greater democratization as increasing numbers of people gain access to it. We are rapidly entering an age in which sustainable energy is accessible and affordable around the planet. Those countries with the greatest capacity to generate solar energy are usually the poorest, so for them, it represents a great opportunity to generate much-needed wealth.
And perhaps nothing better to finish this article about the Singularity University Global Summit 2017 than one quotation from Diamandis: “When I think about creating abundance, it's not about creating a life of luxury for everybody on this planet; it's about creating a life of possibility. It is about taking that which was scarce and making it abundant.”
Click here to access to the Summit livestream recorded.
© 2017 Jorge Calvo
You can find a version of this article published at GLOBIS BUSINESS SCHOOL INSIGHTS
Welcome to the Fourth Industrial Revolution where Toyota, BMW, GM, Tesla, Google and Apple may compete against each other – or not.
Tim Cook, CEO of Apple, has confirmed company plans to enter the self-driving car industry with its own technology, in an interview with Bloomberg on June 5 2017.
The news comes as no surprise to the sector, as in addition to the rumours already doing the rounds as to what was behind Titan, Apple’s project launched in 2014 to develop electric cars and involving 1000 employees, Steve Kenner, Apple’s director of product integrity, informed last December to the authorities of Apple’s intention to start testing self-driving cars – “In order to protect the public and to maintain the innovation cycle, we have asked the NHTSA (the National Highway Traffic Safety Authority) to asses our requests regarding exceptions and interpretations. Our goal is to promote innovation and ensure that this technology serves to save lives”. “Apple uses machine learning (a branch of artificial technology in which machines learn and improve their performance by analysing data and patterns) to make its products and services more intelligent, more intuitive and more personal. The company is investing heavily in research in this field and in automation. We are really excited about its potential in many areas, including transport.”
What’s more, photos were taken on public roads in the San Francisco Bay area of six Lexus cars equipped with Apple systems.
Cook did not want to reveal any more information as to whether they were making their own cars or not, announcing “We’re not really saying from a product point of view what we will do.” It is also known that Apple does not manufacture its own products and outsources production to long-term partners such as Foxconn. Maybe Apple is learning from the experience of Tesla, the third ranked car manufacturer in terms of capitalization, but 10th in the number of units sold, which continues to suffer a multitude of problems in its attempt to establish a supply chain and operations management capable of satisfying demand and reaching reasonable levels of productivity. As if Tesla didn’t already have enough headaches, it then lost the support of Toyota, who this very month sold all its shares it has held in Tesla since 2010.
Cook stated: “We are focusing on autonomous systems. It’s a key technology we consider to be extremely important, like the mother of all artificial intelligence projects. And it’s also one of the most complex we’ve ever faced”. The mother of all these enabling technologies is AI and machine learning. Cook said “probably one of the most difficult AI projects to work on”.
Upending traditional competitors and alliances
In the Fourth Industrial Revolution, the barriers between traditional industries like IT, electronics, automobile, heavy industry… are beginning to come down. “There is a major disruption looming there,” Cook said on Bloomberg Television, citing self-driving technology, electric vehicles and ride-hailing. “You’ve got kind of three vectors of change happening generally in the same time frame.” And in terms of this latter vector, Apple invested $1 billion last year in Didi Chuxing, the biggest Chinese ride-hailing service.
Apple doesn’t usually take a wrong step and is hardly ever among the first in innovation, preferring to learn from companies who enter first – while Apple builds its own business ecosystem and value chains.
And now Apple has set “machine learning” in motion, developing Artificial Intelligence for its autonomous car systems, which will effectively be the Operating System of cars in the future. Machine learning is based on the accumulation of vast quantities of Big Data to generate patterns and algorithms that are developed using a learning-by-doing approach. Apple’s next step, which will be to publish part of their plans, arises from the need to have cars on the streets to feed “machine learning”, allowing them to create their own system unique from that of Google or the Chinese company Baidu. And this may take several years, which is why Cook is so prudent, always anticipating his plans. And if Apple is doing it now it is because it has been forced to recognise what was already an open secret, and have started to hire the necessary talent and to build alliances.
What's next?Apple has already made moves to attract talent, indeed aggressively so, vis-à-vis electric cars. Elon Musk, founder of Tesla, posted on Tweet: “Apple is where workers go who are no longer of use to us” and said in an interview in The Guardian “Apple is the Tesla Graveyard.” It’s now a matter of attracting talent in Artificial Intelligence associated with self-driving cars: Google and Baidu may suffer as a result.
Regarding future alliances, once we can start joining the dots, maybe we’ll catch a glimpse of what lies ahead:
In short, two good examples for how two big companies have geared their businesses to the Fourth Industrial Revolution. And an observation of how Tesla, a company born in the Fourth Industrial Revolution, is suffering the pains of adolescence as a result of the experience or for ignoring the competitive importance of Operations and Supply Chain Management aligned with its strategy of exponential growth.
Musk is still confident that his COO will put his operations in order. And let’s not forget that Cook, currently Chief Executive Officer of Apple Inc., previously served as the company's Chief Operating Officer under its founder Steve Jobs. Or that in the industrial world, the reference is Toyota and its renowned production system.
Indeed, on several occasions Steve Jobs showed great admiration for the automobile industry, in particular for Toyota’s design quality and operational excellence when he visited Toyota HQ in Japan. In Walter Isaacson’s biography of Steve Jobs there is a single important and relevant reference to cars: “…I recounted what (Bill) Gates had said after he described his last visit with Jobs, which was that Apple had shown that the integrated approach could work, but only ‘when Steve is at the helm.’ Jobs thought that was silly. ‘Anyone could make better products that way, not just me,’ he said. So, I asked him to name another company that made great products by insisting on end-to-end integration. He thought for a while, trying to come up with an example. ‘The car companies,’ he finally said, but then he added, ‘Or at least they used to.’”
Roger Lanctot wrote in his post on Strategy Analytics: “Apple won’t make a car (Toyota already does)”: “Car companies want to work with Google and Apple. Google and Apple want to work with car companies. Until there is a level of mutual respect established between these organizations any outcome is destined to fail.”
One more thing
This situation leaves us with one last question: How long will the disruptive Apple and incremental Toyota take to announce their long-term plans?
© 2017 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
Photo credits: Shuterstock/Zentilia/JCG
My mentor, Founder of Roland Corporation Ikutaro Kakehashi
My first mentor, founder of Roland and Roland DG Corporations, Ikutaro Kakehashi, passed away earlier this April at age 87. Known as Mr. K in the musical instrument industry, he was a great Japanese visionary in the digitalization of musical instruments in the 1980’s and understood better than most the changes brought about by the Third Industrial Revolution.
Before I share what I learned from him, let me share Mr. K's accomplishments. Before the Fourth Industrial Revolution of IoT, AI, and Big Data, there was the Third Industrial Revolution, the "advancement of technology from analog electronic and mechanical devices to digital technology." Mr. K helped in that transformation of music from analog to digital. When the international media (BBC, Fortune, The Guardian, ABC News, The Washington Post) reported the sad news of his passing, they reviewed his contributions to the music world. Mr. K received a Grammy in 2013 for his contributions to the world of electronic music along with Dave Smith (founder of synthesizer company Sequential Circuits), who said, “He was just an amazing man, a good friend, a very good competitor and just innovative all that time.”
In addition to driving the global communication standard among MIDI (Musical Instrument Digital Interface) instruments with Smith, his creations changed the world of music, including the TR-808 drum machine and the TB-303 synthesizer, which kicked off the electronic music movements and were used by Duran Duran, Depeche Mode and Krafwerk. Since then, Roland products have represented a milestone in the evolution of music. Their electronic music instruments and studio equipment formed part of the musical success of Marvin Gaye, Soft Cell, Tangerine Dream, The Human League, Jean-Michael Jarre, Herbie Hancock, Prince, Sting, Andy Summers, Phil Collins, Oscar Peterson, Pat Metheny, Kanye West and Mr. K’s much admired friend, Ray Charles. Many computer games, including Apple products, make sounds derived from the SC-55 Sound Canvas, the first MIDI sound module. As a result, Mr. K was inducted into Hollywood’s Rock Walk of Fame (2000) and awarded an honorary doctorate by Berklee College of Music (1991) for redefining the world of modern music, along with the inventor of the modern synthesizer, Bob Moog.
Mr. K even played a part in the Fourth Industrial Revolution, by focusing on the innovation of cyber-physical interfaces and through the development of sensors and digital processors, made formidable man-machine interfaces that are part of the the revolution's enabling technologies.
Mr. K set up Roland Corporation in 1971 and Roland DG in 1981 in Osaka, both of which later moved to Hamamatsu. Both companies are still leaders in their respective sectors, Roland DG lead by Masahiro Tomioka. I had the great fortune to join the company in 1985 at the age of 24, growing alongside the company but above all learning from his cutting edge vision of business. And more than a visionary and innovative engineer, Mr. K was a global leader who had an equally trailblazing vision in Management and Business Transformation in their evolution to today’s digitalization. Indeed, he was a great business philosopher.
I’d like to take this opportunity to recall some of his thoughts he informally shared with us in the company’s early years and which are studied these days in business schools, managing competencies that are essential to succeed in the Fourth Industrial Revolution.
1. Every change brings an opportunity
Mr. K was a big driver of change. His view was that every change presented an opportunity. He would say that “change and chance” only differ by one letter: it is up to you to choose and know how to find this opportunity. He was so true to this innovative attitude that in 2013, at the incredible age of 83 and with his health, though overflowing as always, beginning to wane, he set up the new digital video-audio devices company, ATV Corporation, pioneering new fields with digital audio and video creative innovations.
2. Be the best, rather than the biggest
Instead of pursuing growth at any cost or falling into the trap of commodification, Mr. K encouraged everyone to be the best in everything they did. His vision of developing activities in market niches through digital solutions also entailed being market leader, which guaranteed above-market growth and kept the company’s competitive muscle still strong even today.
3. We live in an age with no samples
We live in an era of constant change. We can’t rest on the laurels of success or rely on past references. We must learn from our clients. Rather than emerging from R&D departments, true evolution comes from our clients who share with us their creativity and future needs.
By involving clients from the outset in the product development phase—including many of the musicians mentioned above, who passed through Roland’s R&D centre in Hamamatsu to create new sounds and instruments—Mr. K was one of the first drivers of co-creation—something that seems new now, but has always been familiar to us at Roland. This led the company to building a reputation of developing “friendly” products that were incredibly easy to use and highly reliable. He used to say: “users don’t know technological limitations, but inspire us to follow new paths.”
5. Learn from mistakes
We should learn more from mistakes than successes. Learn from errors. In moments of crisis, Mr. K always looked for a way to get something positive from the experience, taking into account the emotional factor by involving people. After navigating our way through a particularly severe crisis Roland had experienced, he told me: “We’ve learned from the experience, now reset the past and work for the future,” meaning that we should leave the negative emotional baggage behind us that had built up during that critical period.
The development of MIDI was a clear example of Mr. K's vision of collaborating with competitors. He openly collaborated with Dave Smith from Sequential Circuits in the development of the MIDI, connecting for the first time two keyboards from different companies: a Prophet 600 analogue synthesizer and a Roland JP-6. They openly invited other companies in the industry, including Korg, Kawai and Yamaha, to participate in this networked communication standard. Their futuristic vision did not end there: they also invited the personal computer industry, still in its infancy. MIDI features were adapted to several early computer platforms, including Apple II Plus, IIe, Macintosh, Commodore 64, Amiga, Atari ST, Acorn Archimedes, and PC DOS.
7. Glocal: Think global, act local
From the company’s outset, Mr. K designed an organization in which the different perspectives of global and local could come together and understand each other to create new value. He often said, “The customers are local and want to have relationships with local people. Our people in different countries know the market. The market is not an abstract entity—it’s formed by people, customers and competitors, who act in different ways according to their countries and cultures.” True to his glocal vision of local executives’ empowerment, the decision-making power enjoyed by the President and CEOs—which I had the opportunity to enjoy in my first ‘local’ stage of my career in Spain—was great, as was the peer-to-peer communication between the executives of each country. This enabled the creation of strong distribution channels that were made all the more highly competitive by adapting them to each setting and enabling success cases to be quickly shared—a strength of the company’s for many years that allows it to stay at the top even in times of economic turmoil.
8. Listen to the young, for they are the next leaders
Every time he visited a country, Mr. K had a habit of having an informal dinner with local staff to share his vision. When doing so, he would invite the newest recruit to sit next to him so that he could listen to their ideas. Veteran staff, familiar with this custom, delighted in seeing surprise on the new recruit’s face as Mr. K approached and invited them to sit beside him at the place of honor. I still remember with affection and admiration the first time he invited me to sit next to him in a dining room with about fifty people from the company. I was 26 years old and for a moment I froze. He said, “Come and sit next to me. We’re incredibly proud that you have joined the Roland family and I’d like to hear your views.” Once seated and the formalities completed, he asked me, “Are you happy to be with us? What can we do to make you happy?" One of the slogans Mr. K coined was “cooperative enthusiasm for all stakeholders." Since then, I have asked both employees and customers the same two questions. Now I ask my students the same in business school. Later, at Harvard Business School, where the company took me, that phrase “People First” sounded very familiar: “make your people happy and they will make your customers happy.”
In addition to being a visionary engineer and great entrepreneur, Mr. K put people and customers at the heart of strategy. He made technology at their service and for their enjoyment.
Thank you, Mr. K. Allow me in this crisis that your loss represents to not reset the past.
© 2017 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
Photo credits: ATV Corporation
Japan’s pending robot revolution.
Maybe you remember the movie Blade Runner, based on American writer Philip K. Dick’s science fiction novel Do Androids Dream of Electric Sheep? (1968). The main plot concerns a robot hunter who is faced with killing (“retiring”) six escaped Nexus-6 model androids, and man who helps the fugitive androids. The novel explores the issue of what it is to be human. Unlike humans, the androids are claimed to possess no sense of empathy. This film came to mind recently following a report that the European Union is considering that robots, counted as humans, should pay taxes and contribute to social costs. What’s more, they should have an off switch so that they can be automatically turned off in case they decide to emulate the Nexus-6 androids seen in Blade Runner.
While the EU (and Bill Gates) is contemplating linking robots with taxes, China is heavily promoting them in their Industry 4.0 development plan, Made in China 2025 (MiC2025), which, according to the OECD, will lead it to becoming world leader in terms of R&D investments by 2019. If robots could dream, in Europe they would dream about having to pay taxes because they are substituting people’s jobs, while in China they would dream about receiving public funds because they are contributing to economic growth.
So, what would Japanese robots dream about?
Japan has its own vision, in that it dreams of highly empathetic humanoids. What’s more, it’s spending a fortune on projects that have yet to come to fruition either commercially or industrially, pending a robotics revolution similar to that seen in the electronics industry in the 1970s.
For the moment, we have Pepper, SoftBank’s humanoid, who politely welcomes us at the entrance of its telephone outlets, ASIMO (Honda), who has been seen playing football with ex-US president Barack Obama, Sony’s QRIO dancing to the beat of techno music, and Aiko Chihira (Toshiba), who welcomes clients in Mitsukoshi's Nihombashi department store. Despite the efforts of these technology and industrial corporate leaders and the Japanese government, it’s easy to get the impression that these general advances are more about publicity than being truly effective in terms of improving the lives of the elderly or disabled. This means that the external view of the robotic advances in Japan is somewhat pessimistic. In the Bloomberg article "A Japanese Billionaire’s Robot Dreams Are on Hold," Pavel Alpeyev and Takashi Amano write, “Japan’s obsession with robots isn’t just a cliché. Companies have been trying to drum up enthusiasm for them for years, with little success.... Culture clashes [and] artificial intelligence became key stumbling blocks” for many projects. The authors argue there is a lack of vision vis-à-vis these tremendous efforts, which are often led by brilliant engineers and project managers with no connection to corporate or business strategy. Although we may be more or less in agreement, it’s still a point of view to think about.
Prime Minister Abe urged attendees at the Robot Revolution Initiative Council in May 2015 “to spread the use of robotics from large-scale factories to every corner of our economy and society.” The council is made up of 200 companies and universities, and aims to expand robotics throughout Japanese industry to replace aging workforce, with the goal of increasing sales from 600 billion yen ($4.9 billion) a year to 2.4 trillion yen by 2020. These aims aren’t as absurd as they seem, since Japan has over the years developed a hardware robotics industry capable of supplying components that are increasingly more sophisticated and cheaper, which will allow small and medium-sized companies to get a foothold in this promising industry aimed at both the industrial and service sectors. That said, it’ll be interesting to see how 200 companies reach an agreement in terms of creating an effective, competitive vision within the next five years that may leave some of them by the wayside. As Michael Porter said, sometimes consensus is the enemy of strategy, and in innovation, entrepreneurial—and occasionally disruptive—capacity is a key factor in success.
According to Japan's Ministry of Economy, Trade and Industry (METI), the Japanese services sector is set to potentially enjoy the greatest impact, since it’s a traditionally inefficient sector in Japan, being only about 60% as productive as its US counterpart. Japan’s government plan is promoting robots to provide logistical support, perform surgery, provide nursing care, and assist in disaster recovery. As robotics expert Yoshiko Yurugi said at the New Energy and Industrial Technology Development Organization, “We are entering an era when we will definitely have to rely on the help of robots.”
Nevertheless, not everything is cheap precision hardware, meaning that what will make robots profitable in the future will be their independence and ability to interact with humans and their surroundings through artificial intelligence. Heading in this direction is Omron, with its robot FORPHEUS, a table tennis instructor robot with commercial potential that is capable of analyzing in real time all the information it receives through numerous sensors connected in its system. This is Omron’s third generation robot, and has been designed to interact with humans (cyber-physical interfaces) not solely to improve productivity—as in the European or Chinese approaches—but to help them: in this case, to improve their sporting abilities in table tennis.
Will Japanese robots be dreaming of playing table tennis in the future?
We’re about to find out.
© 2017 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
Nowadays, it’s not unusual to come across startling articles and reports in the mass media and business journals about Industry 4.0 and how businesses and operations are undergoing a digital transformation through the use of emerging technologies, including IoT, AI, big data, sensors, robots, and 3D-printing. Many of these articles only focus on superficial aspects, such as the application of technology, employing technological jargon —that is impenetrable to the average person— in order to elevate Industry 4.0 news to the heady category of prophesy, as if everything was possible in the future or, even worse, prophesying a future in which there is no room for today’s companies.
It’s easy to come away with the impression that the business world has divided itself into prophets and doomsayers. Prophets promise a business heaven sloshing with 11 trillion dollars by 2025 and eternal happiness for executives, with 55 billion IoT connected devices by 2020, and all this when you instantly climb aboard the digital bandwagon and let the IT angels advise you. The doomsayers threaten us with new demons such Amazon, Uber, Google, Airbnb, who will bulldoze traditional businesses. Angels and demons? It’s as if people, management and strategy suddenly no longer make sense in this new world.
Despite the current popularity of Industry 4.0, and maybe due to the skewed attention it receives at the hands of the media, its effectiveness still remains elusive for many company directors and senior executives. It’s the topic of conversation over a coffee among friends and colleagues and everyone seems to think themselves an expert in technology, or at least, are strongly opinionated about it: you’re either on the side of the prophets or the doomsayers. But we mustn’t forget that this is business, and however much we enthuse over or dislike the Fourth Industrial Revolution and its emerging technologies, there needs be some form of rationalization between management and strategy that is able to transform these prophesies into profitable businesses and the threats into business opportunities.
While all this digital noise is expanding and amplifying around us, many industrial firms have begun a silent revolution —gradually digitalizing their businesses, products and processes— in which strategy drives technology, not the reverse. A number of studies from the US have calculated that the current degree of implementation of IoT and its enabling technologies within industries lies between 25% and 45%, depending on the sector, and forecast that on average this will double in 5 years, reaching levels of 50% to 80% according to industry type.
My colleague Professor Michiya Morita from Gakushuin University and I wanted to ascertain the situation in Japan regarding the extent and level of Industry 4.0 implementation in a country characterised by innovation in technology. We were particularly interested in learning the visions of the executives who are leading the digital transformation in Japanese industrial companies.
To do so, we carried out a survey on the implementation of Industry 4.0 in three Japanese industries –electronics, machinery, and vehicles– in order to gain an understanding of their companies’ strategic vision, implementation level, expectations and future plans vis-à-vis Industry 4.0. We chose these industries because they are subject to intense global competition in terms of implementing Industry 4.0 from German, U.S. and Chinese companies, which are supported by their governments in promoting Industry 4.0. We methodologically separated the companies into two groups –high performers and low performers– to find out if a high performance culture is associated with a clear vision of the key factors and benefits of Industry 4.0.
Our first conclusion was highly significant: for high performance Japanese industries, Industry 4.0 matters a lot. High performers have a clearer vision, better-defined plans, higher expectations and also attain better results than low performers. Surprised? Probably not, but we needed to confirm it in order to focus on those visions linked to obtaining their objective – high performance.
Here, we also share briefly some of our other findings collected in December 2015 from the top executives of 69 Tokyo Stock Exchange listed companies.
Japanese companies remain staunch believers in the Monozukuri culture and place strong emphasis on product development in their strategic plans.
The importance of Industry 4.0 in the strategic plans of Japanese companies is high: 3.7 (out of 5), with a strong focus on production (3.9), on collecting customer information (3.7) and on product development (3.6).
However, according to their executives, the level of Industry 4.0 implementation of high performing companies is relatively low, at 2.5. This could be interpreted as meaning that implementation in these companies started later than in other countries. Their initial vision was inward looking, focusing solely on strategies oriented at product development and improvement and paying little attention to customer-centric or value-chain oriented strategies. We also observed a lack of integrated company vision, and a Kaizen-based execution in which strategy implementation is carried out sequentially and by division: first, through product innovation and later adapting production to the requirements of the new products, then collecting information of the customers of these products… in order to plan production.
Japanese industrial companies like automation but are afraid of the risks inherent to the Internet. Robots? Yes! IoT? Maybe.
Which Industry 4.0-related technologies are Japanese companies using? Investments are mainly occurring in the more mature technologies related to product and quality improvement, namely robots and simulation systems. Curiously, in third place was cyber security, in fourth, 3D-printing –additive manufacturing– and in fifth, IoT platforms. It’s interesting that more attention is paid to Internet security than developing IoT platforms, which seems to indicate a degree of conservatism and an aversion to risk. In last place are cloud computing, augmented reality and big data. If this conservative investment profile were to become a trend, it would signify a dangerous distancing from Artificial Intelligence by Japanese companies and, more worryingly, from their customers and suppliers. Unlike US or Chinese companies, which invest heavily in big data and AI, they would face big problems in creating strong business ecosystems. Perhaps Japanese companies are suffering from a “fear of the link between people, machines, and processes” being brought about by digitalization.
Enhancement of competitiveness and supply chain stakeholders’ satisfaction are key expected benefits from Industry 4.0.
Encouragingly, however, the picture changes when it comes to future expectations. The values for the top three outcomes are similar: Starting with faster response to demand, flexibility is seen as one of the trade-offs and challenges of JIT, and Japanese manufacturing companies expect to cover this gap with Industry 4.0 technologies. Greater customer satisfaction lies in second place, with flexible production systems third. The main assumption here is that these companies are willing to increase customer satisfaction by improving company responsiveness to changes in demand in order to avoid having customers waiting for products and to avoid the build-up of inventories.
Some Japanese companies see Industry 4.0 as the link between people and processes that allows the design of completely new strategic scenarios and business models with more opportunities than risks.
Industry 4.0 presents a series of potential challenges, although these are not seen as any great threat; Japanese manufacturing companies are aware of the risks inherent to areas such as cyber security, but they see the opportunities as being greater. They believe in the strategic opportunities and business models that Industry 4.0 will bring through connecting people and processes in real time. Fear of the risks of connecting people is the lowest concern. Moreover, they do not believe Industry 4.0 will be an industry standard in the future, possibly because we are in the embryonic phase of this paradigm shift.
It would be difficult for companies to manage the enormous data flows (estimated to be in terabytes per hour; a Boeing 787 aircraft could generate 40 TBs per hour of flight) that characterize Industry 4.0 if they don’t implement cloud computing systems –which are standard worldwide– or begin to learn and experiment with big data and AI. It seems that Japanese companies, with their engineering culture, believe more in internal developments than in outsourcing or using standard solutions.
It’s not just about strategy or technology: A high performance management culture is needed
In fact, the implementation of a management culture that promotes innovation across the company, not just in R&D, and makes sure all functions work together and not isolated in silos, is a prerequisite for taking maximum advantage of Industry 4.0. In a company that builds such an entrepreneurial and collaborative culture across the whole organization, Industry 4.0 would not be that disruptive. Moreover, through the evolutionary process of learning-by-doing, the company that implements some of these emerging technologies will gradually acquire the necessary digital know-how and market responsiveness to achieve a highly competitive position in a global environment characterized by increasing complexity and large, rapid changes.
Note: This article is based on a study carried out by Michiya Morita, Jorge Calvo and Yukari Shirota (2016) and partly on their article “Envisioning Supply Chain Management 4.0: The view from Japan”, published in CSCMP's Supply Chain Quarterly Magazine. [QUARTER 3/2016]
In our previous article, we reviewed the main technologies behind the Fourth Industrial Revolution —IoT, AI, Big Data and Smart Sensors—, and we argued that it is the various combinations of these four, which we set out in the next section, that is leading to the merging of the physical, biological and digital worlds. The American technology entrepreneur Jeff Bezos (Founder and CEO of Amazon) stated, in a highly interesting Ted Talk, that “Every new thing creates two new questions and two new opportunities”. We will answer some of the main questions so that you, the reader, can think about these opportunities. Because of the brevity of this article, we will also provide you with links throughout the text so that you can get more information on each subject.
What is an enabling IoT technology? The definition states: “An enabling technology is an invention or innovation that alone or in combination with associated technologies can be applied to drive radical change in the capabilities of a user or culture. Enabling technologies are characterized by rapid development of subsequent derivative technologies, often in diverse fields”. In other words, not all these technologies need to be used at the same time in order. It would be like trying to drink a cocktail made of twelve drinks and four spirits. The first upshot would be a type of “hi-tech inebriation”, the result of “technology abuse”. Which components can we mix to our taste in this magical formula that will lead us into the future? They include:
Mobile smart devices
Cyber Physical Interfaces
Augmented Reality (AR)
The IoT platform deserves special mention, since it allows us to connect all the elements of IoT, devices, sensors, software, cyber-physical interfaces etc. and to share databases and knowledge with strategic partners in the business ecosystem. An IoT platform would be the equivalent of a table we use to assemble our IoT technologies jigsaw puzzle. In Japan, Pokémon GO shares its IoT platform with McDonald’s, since they have clients in common with similar behaviour patterns, without them being competing companies. The bigger this business ecosystem, the more competitive the companies that form it. Steve Jobs was one of the first visionaries to see the potential of platforms to strengthen the Apple business, creating a new context in which any competitor wishing to go into business has to compete with the platform’s other partners. Companies such as Amazon and Microsoft are focusing their business strategies on creating their powerful IoT platforms.
While many of these technologies are not new, the combination of a number of them with IoT, AI, Big Data and Smart Sensors allows new and innovative business, product, services and process models to be created. In other words, they can bring about gradual innovations through digitalization —for example, by simply placing a series of sensors in a drilling machine to gather data on temperatures, vibrations, fluidity of the coolants, the length of the drill, meaning its performance can be optimised and its maintenance forecast more efficiently by analysing the data.
They can, however, disrupt traditional business models, consequently putting the industry at risk: “disruptive innovation is a technologically simple innovation in the form of a product, service, or business model that takes root in a tier of the market that is unattractive to the established leaders in an industry”. “The best run of the large corporations —those that are well managed, pay attention to their customers, and invest in new technology --are vulnerable to being outwitted by disruptive innovators” (HBS Prof. Clayton Christensen, 1997). Disruptions are normally generated by agents outside the traditional industry (Amazon, Uber etc.) as a result of the complacency of companies, who prefer to focus on gradual improvements without taking on any risk. Since disruption results in a change of context --Amazon was an explosive disintermediator bookseller without shops, and Uber is a transport service without owned cars—, by the time traditional industry has noticed, it is usually too late, as clients have moved over to the new, attractive value proposition. There are many such examples in the history of business: the analogue photography industry disappeared when digital cameras appeared and subsequently the digital camera industry suffered as a result of the incorporation of high-resolution sensors into smartphones.
This could justify the phrase “disrupt, or be disrupted”. So it is of vital importance that businesses start to experiment with emerging technologies in order to quickly gain the necessary knowledge within the company and to adapt the corporate culture in order to foster gradual changes. A couple of weeks ago, I visited the ultra-green BMW factory in Leipzig (Germany) where they make the BMW i3 and i8 electric cars. BMW is a good example of how Industry 4.0 innovation can be applied in the design of cars and manufacturing; not only have they designed a car that is 100% electric, but they have also replaced the steel chassis for one made of carbon fibre to lighten the car as much as possible in order to compensate for the weight of the batteries. What’s more, they have come up with new industrial processes: the steel pressing and welding line has disappeared, and in the assembly zone some robots work alongside the operators in a safe and collaborative environment, these kind of robots are also called co-robots. The cages that enclose robots in car assembly production lines will also vanish soon, as robots will be designed to be even more sensitive of their surroundings so as not to harm workers.
As Dr. Voigtsberger remarked, “In BMW, we apply emerging technologies only in certain areas and when it makes direct practical sense —in other words, a positive impact on value added, performance or productivity.” The basic principle of any IoT strategic business plan should start with experimenting, followed by testing, iterating, implementing, and scaling. You can’t build a house by starting with the roof. The same applies to the Fourth Industrial Revolution.
And talking of houses, Christmas is coming and the decorations are cheering up our homes and streets, reminding us of times of love and peace. Not everything is about technology —although for those of you who want to include a little IoT in your Christmas presents, I’ve come up with a list of ideas for all the family, as suggested by Computer Business Review. I’ll leave it to you to work out where you can buy them!
Oral B’s SmartSeries 7000 toothbrush: your smartphone receives signals from the brush and displays an alert to prevent you from damaging your gums by brushing too hard.
The D-Shirt: designed to record a person’s heart rate, GPS location, temperature and speed.
The SITU Nutrition Scale: designed to help users weigh their food and see nutritional information on their iPad via an accompanying app. The Bluetooth-enabled device can also track the amount of calories, salt, fat and sugar in foods, allowing dieters or athletes to see exactly what they’ve consumed on a daily, weekly or monthly basis.
MIMO Baby Onesie: this is a sleep suit and baby monitor that tracks a baby wearer’s temperature, breathing rate, body position and activity level.
Whistle Lab’s dog collar: this wireless-based sensor device attaches to a dog’s collar, which then collects data depending on the dog’s age, breed and weight during the day.
Beddit sleep tracker: it tracks your sleep, heart rate, breathing rhythm, movements and snoring, and no wearable sensors are required because it’s a film sensor that lies under your sheets.
Babolat smart tennis racket: French tennis racket maker Babolat has embedded sensors, gyroscopes and accelerometers in the handle, which count and measure strokes, ball speed and where the ball hits the strings.
And you too can light up your Christmas tree with IoT and program it, turning it on and off from wherever you are with the XCSOURCE LED Wi-Fi controller!
So, here’s wishing you a very Merry Internet of Things Christmas and a Happy AI New Year!
“With the current emerging technologies Man will soon be able to get to Mars”. So said the mythical NASA astronaut Captain Scott Kelly in a working lunch that I had the pleasure of attending with various executives at the CSCMP 2016 Conference on 26 September in Orlando. Scott Kelly holds the record for the longest stay in space, standing at more than 400 days, and has participated in numerous space missions, foremost of which was the one in 2015 when he celebrated a full year aboard the International Space Station. Kelly argued that the technology that enabled Man to get to the Moon had less processing capacity than his Smart Phone and that today’s technological advances are more than capable of getting a crewed mission to Mars, 56 million kilometres away with guarantees of successfully getting them back.
This is a notion shared by the President of the United States, Barack Obama, who in declarations made on 11 October claimed that this goal could be reached within 15 years. This would be done in collaboration with private space enterprises Boeing and SpaceX –the company founded by Elon Musk, founder of PayPal, Tesla Motors, Hyperloop and OpenAI.
On 25 October I had the honour of being invited to give a talk at the Boeing Center for Supply Chain Innovation hosted by Professor Panos Kuvalis at Washington University of St. Louis US, titled “IT & Global Supply Chain Management Strategy: A Japanese Manufacturing Perspective”, where I presented a recent study on the implementation of the emerging technologies related to Industry 4.0 and the vision of Japanese industrial companies, conducted in collaboration with my colleagues Professor Michiya Morita and Professor Yukari Shirota of the Gakushuin University. The speaker who preceded me was Kory Mathews, Vice President of Autonomous Systems at Boeing Military Aircraft, who also reiterated the impact many of these systems will have not only on global supply chains but also on many aspects of our lives and industries. He added that quite a few of these technologies are not new, although miniaturisation and low cost were, and that their reliability had been amply proven thanks to IoT and AI, which have been made accessible to society and the economy.
There is a general consensus that we are witnessing the beginning of the Fourth Industrial Revolution, a key moment in which technologies are capable of supporting the visions of enterprise leaders, which in turn drive the development and expansion of these technologies. These visionary leaders see the tremendous potential of the transformation these technologies provide us. Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, explored the possibilities in his book The Fourth Industrial Revolution: “It is characterized by a range of new technologies that are fusing the physical, biological and digital worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human”.
But what are these technologies and what can they do for us, for businesses and for society? How do we connect the dots that trace the outline that shows us the map of the future to come? It is not an easy task, as we are talking about different technologies and disciplines that are considered separate domains of knowledge and skills.
Leonardo Da Vinci, the greatest exponent of European Renaissance in the 15th and 16th centuries, would probably love to live in this current era, just as he lived during the transition period between the Middle Ages and the modern age, of which, as a great multidisciplinary genius, he was the driver, in which there was a great simultaneous revival of the arts and sciences, both natural and social. Today we are living through the accelerated fusion of three great worlds – the physical, the digital and the biological. The knowledge and skills of these until now separate worlds have begun to be shared in multidisciplinary collaborations of scientists, experts and professionals in order to jointly create innovative applications. The boundaries of industry as we know them are starting to blur.
Fortunately, we do not have to have Da Vinci’s mental or creative capacity to be able to understand the world around us. The following sections enumerate and briefly describe some of the foremost emerging technologies related to IoT, starting with core technologies. We will see how some technologies need others in order to work and evolve in this new interdisciplinary world.
Internet of Things (IoT)
This is the standard medium or platform of communication between things, people and computers via the Internet. It is equivalent to the railway lines during the First Industrial Revolution, which allowed trains, propelled by steam from their boilers, to move and connect cities and people. In the business world, IoT involves connecting industries, businesses, commerce and clients without human intervention. And the IoT strategic approach would be aimed at the experience of the client, at designing new client-centred business, product, services and operation models. The legendary Harvard Business School marketing professor Theodore Levitt said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”
Artificial Intelligence (AI)
Continuing with the simile of the First Industrial Revolution, locomotive steam engines and factories were what drove social and industrial advance. Artificial intelligence is the engine of machine-based learning, capable of generating new knowledge and of making instant, and in most cases, more reliable decisions than those made by humans. Let’s focus a little more in one specific area of AI –machine learning –, which include the techniques that enable computers to learn by themselves.
Today, it has been demonstrated that the chances of a self-driving vehicle having an accident are lower than if driven by a human. There are three things AI can do much better than humans: control, optimise and predict. In China it is now possible to receive a preliminary medical diagnosis that has been carried out entirely through AI, with a greater-than-average reliability. This AI system has been developed by Baidu, a Chinese company that also develops AI technology for self-driving cars, with an R&D centre in Silicon Valley and which has been classified as the “second most intelligent” company in the world by the MIT Technology Review. First place in the AI business ranking is held by Amazon, while third place is held by the world’s largest DNA sequencing company, Illumina, which is developing a test to detect a range of cancers at a cost of less than $1,000 per test.
The first locomotives needed coal as an energy source. These days, they say that “Big Data” could be the new oil of economic power. AI needs trillions of pieces of old and real-time data to achieve its efficiency. These huge data banks would be akin to the oil wells and will become valuable strategic reserves. But data alone is useless and, in the same way that oil needs refining into petrol, data also need to be refined. And the result of refined Big Data is information.
This massive use of personal data could lead to ethical and moral conflicts, which would be like today’s pollution by hydrocarbons. Amazon, Facebook, Google, IBM and Microsoft have come together to form a collaborating committee made up of 10 members to promote the development of best practices and the ethical use of AI. Although a spokesperson for the committee has confirmed that they do not intend to lobby, we are beginning to see who wants to position themselves as the big “oil” companies of the future.
At the moment, the European Union is putting all possible legal obstacles in the way of Facebook connecting it personal databases with those of the recently acquired Twitter, given that the strategic aim of this M&A seems to be to amass data in order to generate marketable data about people.
On the other hand, the Chinese government has announced the implementation in 2020 of a system based on the massive capture of its citizens’ big data, which will help to foster a society in which honesty and civility prevail, thereby detecting possible fraudulent behaviour. A number of European governments are following the same route to prevent tax evasion through the merging of their databases.
If until now we have valued companies by their financial capital, their human capital, their reputational capital (brand value), intellectual property capital… we will very soon start to consider information capital as a must.
These enable things and machines to perceive the physical world around them and to combine it with the digital world to provide the information necessary in the decision-making processes carried out by machines communicating with each other. Most IoT-related applications, industrial or otherwise, need intelligent sensors for their real-time interactive functioning and constitute what is known as the user interface.
There are many types of sensors: our car, even though it may not be a self-driver, has dozens of sensors that transmit information in real time to the control centre to manage the vehicle’s smooth operation and safety. By connecting this control centre to an IoT platform, we would be able to generate a large amount of big data, which could be easily handled by AI (we would only need a cheap 3G mobile phone connection).
Self-driving vehicles have all their sensors, intelligent or not, connected to an IoT platform that uses an impressive array of inertia sensors and three additional types of specific sensors for its autopilot function: cameras, radar and GPS. As self-driving vehicles become more popular, we will see today’s increasingly intelligent utility vehicles –smart cars– mutating mainly towards IoT in order to provide us with greater performance –control from our smart phone and remote voice control– and an optimum maintenance service.
And talking of smart phones, the new iPhone 7 has 14 dedicated sensors that enhance its user interface: a proximity sensor, an ambient light sensor, 12MP and 7MP cameras, a microphone, an active noise cancellation microphone, an accelerometer, a barometer, a three-axis gyroscope, an A-GPS, a GLONASS (Russian satellite navigation system), an NFC antenna for Apple Pay, a touch ID fingerprint scanner and a pressure sensitive display.
With the miniaturization of smart sensors and the exponential development of biosensors and nanotechnology, we will find sensors everywhere, including the human body, carrying out tests, dosing drugs and guiding highly focused microsurgery.
In the next post we will review the most important emerging technologies that are supported by IoT, AI and intelligent sensors.
Until then, I’ll leave you with a dichotomy regarding the new models of digital business recounted by Seth Bodnar, Chief Digital Officer GE Transportation in the CSCMP 2016 Conference: “Disrupt, or be disrupted”. What do you think? I confess I have no particular interest in disrupting anybody, but I am interested in them not disrupting me.
If the subject interests you, I recommend the Forbes article “Disrupt, or be disrupted” written by Randy Ottinger, Executive Vice President at Kotter International, the company founded by my much admired Professor John Kotter, the Konosuke Matsushita Professor of Leadership, Emeritus, at the Harvard Business School.
© 2016 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
We are currently witnessing a silent, rapid transformation of the world around us, a paradigm change in which emerging technologies, driven by the Internet of Things (IoT) and Artificial Intelligence (AI), are leading to the creation of new products, services and novel client experiences without us barely realizing it.
Machines and devices are getting smarter, are beginning to communicate with each other and, more importantly, are starting to interact with humans through our senses. They are also capable of printing objects in 3D and even take care of our comfort and our household bills: these days, smart LEDs light bulbs are connected to the Internet (intelligent lighting systems) and, through integrated sensors, achieve 100% lighting for the user while generating energy savings of 90%. Controlled through our smart phones, they can also predict their periods of use and schedule their maintenance. Could Thomas Edison ever have imagined that light bulbs would one day be intelligent and be able to communicate?
Would Satoshi Tajiri, the developer of Pokémon in 1989, have imagined that Pikachu would be capable of getting 45 million people a day out onto the streets last July? Or that Pokémon GO would one day interact with each player personally, in customised fashion, or be capable of seeing, managing maps, locating its position and creating a virtual world where the gaming area forms part of the environment around us, offering us a unique experience? Not to mention that Pokémon GO gathers trillions of pieces of data about players in real time which some companies can use in order to offer products and services, and also to design new products and services and to create new business models.
We are at the doors of what the World Economic Forum refers to as the Fourth Industrial Revolution, characterized by so-called cyber-physical systems supported by IoT, AI and sensors incorporated into all sorts of devices. Every day, the media reports on smart cities, self-driving cars, smart factories, wearables, smart health-fitness systems, 3D-printers, big data, drones, cybersecurity. We are also told that our tiny smart phone is a million times faster than all the computers NASA used to put Man on the Moon in 1969 combined.
All this may seem mind-blowing and hard to take in. It might seem like science fiction. A new world, vastly superior than we are, that makes us feel tiny. So IoT and emerging technologies need to be accessible and user friendly, creating better conditions in which they are centred on people and the environment.
For certain, to many of our ancestors in 1784, the appearance of steam engines seemed to them to be the “work of the Devil”. They didn’t realise they were living through what would later be referred to as the First Industrial Revolution. They later discovered that the train shortened distances, made cities big, united people and expanded businesses. Businesses that, along with machine-led industrialisation, were capable of creating new welfare and wealth in society.
A century later, in 1870, their successors would have similar feelings when, for the first time, electricity heated and lit up cold, dark houses. Arc streetlamps made roads safer and mass-produced cars replaced horses, allowing increasingly more people to commute freely and to send goods to more places, thereby accelerating the economy of many countries –which today make up the developed countries– in what was the Second Industrial Revolution.
I had exactly the same feeling as a child. When I turned on the first of many electronic gadgets that began to appear in 1969, I had no idea that while I pressed the “play” button on my compact portable audio player I was forming part of the Third Industrial Revolution. The development of electronics, computers and just-in-time manufacturing allowed more people to enjoy a better quality of life and entertainment without leaving their houses. This is the Industrial Revolution that enabled the historic Japanese economic miracle, in which Japan became world leader in the electronics industry and the second largest economy in the world. The US opted for computers and information technologies, and has been leader of the world’s economy since then.
And I’m now experiencing the same feeling, of being at the door to a new world in which the way people-to-machine and machine-to-machine communication will change, a new world in which machines will learn from each other. A different world, full of opportunities, but also risks. Opportunities that we need to harness and risks that will need to be mitigated – the sooner, the better.
These opportunities also mean new business models and new designs in products, services and operations processes – what governments, businesses and consultants refer to as Industry 4.0. According to consulting firm McKinsey, IoT will have an economic impact of 11.1 trillion US dollars in 2025. Cisco, the networking equipment corporation, forecasts that in 2020 50 billion IoT smart devices will be connected during the Olympic Games in Tokyo.
These days, barely 1% of the data available (big data) is used, most of it for alarm and control systems. Within a few years, it will be possible to convert 40% of available data into information for real-time management, optimization, forecasting and learning in learning-machines.
Could IoT and emerging technologies represent competitive advantages in terms of high value-added for businesses? We believe so – exponential advantages. Each month in this blog we will be reviewing new applications, describing in full emerging technologies and discovering how these will transform our lives and businesses.
Will IoT and emerging technologies involve a new phase of growth and world leadership for Japan after the Lost Decade? We believe that if the Government and big corporations, along with small and medium sized companies (SMEs) and entrepreneurs, take firm steps in this direction, Japan will have a big say in Industry 4.0, as it did in the car and electronics industry in their time.
Some Japanese companies are aware of the huge potential of emerging technologies and are taking steps to implement Industry 4.0. In future articles we will present a study on how Japanese companies are approaching Industry 4.0, what expectations and uncertainties they have and will follow their activities and plans.
In the face of this approaching paradigm change, in business schools we are obliged to train the professionals –both entrepreneurs and executives– who will lead the Fourth Industrial Revolution. We are also responsible for helping the business world to visualise this seemingly complex maze of technologies in order to draw up strategic growth plans with sustainable competitive advantages in terms of high value-added, while at the same time minimising the risks inherent to every change. We believe that people should be at the centre of these new applications and that companies’ business strategies should drive the development and implementation of emerging technologies, something we refer to as Strategy 4.0.
See you on this blog next month, when we will talk about applications related to the internet of things. How many can you identify in the world around you?
© 2016 Jorge Calvo
This article has been published at GLOBIS BUSINESS SCHOOL INSIGHTS
How Industry 4.0 and emerging technologies can transform business models, products, services and processes.