A recently as a decade ago, the world was largely dominated by “pipeline” businesses with linear value chains. We would buy products at retail outlets, or possibly their online versions, stay in hotel chains when traveling and hail taxis one the street and nobody thought much about it.
Clearly, a lot has changed. Today, platforms like Amazon, Airbnb and Uber are dominating those earlier, linear business models. Two new books by prominent economists, Matchmakers and The Platform Revolution, ably explain the dynamics of how platforms like these function as multi-sided markets.
Yet while understanding how platforms work as economic entities is both interesting and important, unless we’re planning on designing a platform ourselves — and very few of us are — it isn’t very helpful. The real value of platforms for most businesses today is that they allow us to access ecosystems of talent, technology and information.
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In 2004, Charles Lickel was eating in a dinner with some colleagues when he noticed that all of the patrons were rushing to the bar. Curious, he followed them to see what all the commotion was about. As it turned out, they were going to see Ken Jennings’ historic six-month run on the game show, Jeopardy!
He was transfixed. Paul Horn, then director of IBM Research, had been bugging Lickel to come up with an idea for the company’s next “grand challenge,” Big Blue’s tradition of tackling incredibly tough problems just to see if they can be solved. The last one drew wide attention when the firm’s Deep Blue computer beat Garry Kasparov at chess in 1996.
The rest, as they say, is history. Seven years later, in 2011, IBM’s Watson beat Jennings and another Jeopardy! champion, Brad Rutter. Today, Watson has become much more than a clever parlor trick, but a potentially huge line of business for IBM. CEO Ginni Rometty expects it to become the heart of Big Blue’s future plans. Yet there are still challenges ahead.
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When Steve Jobs was trying to lure John Sculley to be Apple’s CEO in the early 1980’s, he asked him, “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” Sculley would achieve little at Apple, but Jobs would later make it the most valuable company on the planet.
But did Jobs actually change the world? Sure, he was amazingly successful, but would the world have been so different with a PC and no Macintosh? Android and no iPhone? Dreamworks and no Pixar? Something less, maybe. Still, it’s hard to argue that things would be profoundly different.
That’s not to diminish Jobs’ accomplishments, but they do seem to be more on the order of Starbucks’ Howard Schultz or Nike’s Phil Knight than they are of Einstein, Pasteur or even Edison. The truth is that what has passed for innovation over the last 20 or 30 years has been more focused on disrupting markets than changing the world. We need to do more.
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In 2013, startup guru Steve Blank published an article in Harvard Business Review, titled Why The Lean Startup Changes Everything, in which he argued that, rather than follow the rigid concepts taught at business schools, entrepreneurs who seek to start a business take a much different path.
“Start-ups are not smaller versions of large companies,” he wrote. “They do not unfold in accordance with master plans. The ones that ultimately succeed go quickly from failure to failure, all the while adapting, iterating on, and improving their initial ideas as they continually learn from customers.”
That’s good advice for startups, but it also applies to anyone looking to bring a product to market and there’s no reason that established firms can’t follow it as well. In fact, Experian, the global data giant, has found that by leveraging its vast resources and deep customer relationships, lean startup techniques can be a great fit with its existing business.
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The writer Andrew Solomon has said that travel gives you both a window and a mirror. You encounter people and ideas very different than your own, which makes you aware of new possibilities that never occurred to you before. At the same time, these new experiences give you a different perspective of your own culture.
That’s certainly what I found in my 15 years living and working overseas. As I learned to operate in different cultures and contexts, I often found myself facing questions I never had to answer before and, cut off from my native environment, I had to hack together solutions from bits and pieces I picked up along the way.
But mostly I gained an appreciation for the unique combination of scientific leadership and entrepreneurial energy that has made America the exceptional nation. If we are to continue to dominate in the 21st century, we need to leverage those core assets, while minimizing our capacity for self-destruction. Here are four things we need to do to achieve that:
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When the first industrial robot, Unimate, appeared on a General Motors assembly line in 1961, it was a modern marvel. The job it performed, transporting die-castings and welding them onto car bodies was not only onerous, but dangerous to human workers, who faced both the risk of injury and being exposed to toxic fumes.
Over the last 50 years, robotic machinery has been vastly improved. Due to more sensitive motors and actuators, they’ve become incredibly precise, which enables them to work with small components, often with far more accuracy than a human can achieve. That’s what’s has allowed robots to move from making Buicks to smartphones.
Yet the future lies not in greater precision and accuracy, but the ability for robots to collaborate effectively with humans. Rethink Robotics is one of the companies at the forefront of this revolution, so I talked to Jim Lawton, the company’s Chief Product and Marketing Officer, to learn more about what we can expect the future of robotics to look like.
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In the early 20th century, the great sociologist Max Weber noted that the sweeping industrialization taking place would lead to a change in organization. As cottage industries were replaced by large enterprises, leadership would have to become less traditional and charismatic and more organized and rational.
He also foresaw that jobs would need to be broken down into small, specific tasks and be governed by a system of hierarchy, authority and responsibility. This would require a more formal mode of organization—a bureaucracy—in which roles and responsibilities were clearly defined.
Over time, the likes of Vanderbilt, Carnegie and Ford were replaced by professional managers and the nature of work became less that of sweatshops and more that of “the man in the gray flannel suit.” Today, we are undergoing a transformation every bit as dramatic, a shift from hierarchies, strategies and tactics to networks, platforms and movements.
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Look back to the year 2001 and it’s hard to imagine how different the world was. Global Internet penetration was just 5% then, compared to 50% today, and connection speeds were frustratingly slow. Mobile phones were fairly common, but were capable of little more than voice or text. Google was still just a startup.
Even if you could get online, there wasn’t much to do, besides email and some very basic information services. YouTube was still five years away and people weren’t sure if e-commerce was a viable business model. Many didn’t think Amazon would survive. Social media, of course, wasn’t even on anybody’s radar screen yet.
If the progress since then seems incredible, strap yourself in, because the change over the next 15 years will be far more fundamental and pervasive. Probably the biggest shift will be in how we use technology. While the advancements of the last 15 years have been mainly confined to the virtual world, by 2031 we are going to see the physical world transformed.
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For the past 20 or 30 years, innovation, especially in the digital space, has been fairly straightforward. We could rely on technology to improve at a foreseeable pace and that allowed us to predict, with a high degree of certainty, what would be possible in the years to come.
That led most innovation efforts to be focused on applications, with a heavy emphasis on the end user. Startups that were able to design an experience, test it, adapt and iterate quickly could outperform big firms that had far more resources and technological sophistication. Agility was often the defining competitive attribute.
Yet in the years to come the pendulum is likely to swing from applications back to the fundamental technologies that make them possible. Rather than being able to rely on trusty old paradigms, we’ll largely be operating in the realm of the unknown. In many ways, we’ll be starting over again and innovation will look more like it did in the 1950’s and 1960’s.
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By any measure, Children’s Health in Dallas is a world class institution. It boasts a top notch medical staff, is consistently ranked among the best children’s hospitals in the country and features a Level 1 Trauma Center. Yet by 2011, despite the accolades, its CEO, Chris Durovich, was beginning to have doubts about the center’s impact on the community.
The problem was that, although its patients were getting excellent care once they entered the facility, the health indicators in the community as a whole were getting worse, especially with regard to chronic conditions such as diabetes and asthma. Durovich was determined to fix the problem.
So he brought in Peter Roberts, a longtime healthcare executive, to diagnose the problems in the community and design solutions that would make a positive impact. Over the past four years he, along with the Business Innovation Factory, have been developing an innovative new model that reimagines how the healthcare system works with the communities it serves.
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