NPTEL Course on Entrepreneurship - Week 5 - Lectures 21-25 (PDF)

NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURES 21, 22, 23, 24 and 25 Course Modules 6 and 7 (Part) Technological Innovation and Entrepreneurship Prof. C Bhaktavatsala Rao, Ph.D....

NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURES 21, 22, 23, 24 and 25 Course Modules 6 and 7 (Part) Technological Innovation and Entrepreneurship Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras  NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURE 21 Course Module 6 (Part) Technological Innovation and Entrepreneurship Part 1 Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras An Analysis on Global Unicorns 3 Global Unicorns - Country-wise Analysis 11.01 Country Total Valuation in $B 13.00 7.85 7.07 15.60 6.00 United States 678.53 4.54 21.76 4.10 China 374.61 India 54.83 22.90 29.55 678.53 South Korea 29.55 Indonesia 22.90 54.83 United States Germany 21.76 China India Singapore 15.60 South Korea Brazil 13.00 Indonesia Switzerland 11.01 Germany Israel 7.85 Singapore Sweden 7.07 374.61 Brazil France 6.00 Switzerland Israel Australia 4.54 Sweden Japan 4.10 France South Africa 2.58 Australia Malta 2.50 Japan Colombia 2.15 Hong Kong 2.00 Spain 1.40 Analysis Canada 1.00 ❑ Unites States tops the list with a total valuation of Estonia 1.00 678.53$B, followed by China with a total valuation of Luxembourg 1.00 374.61$B Netherlands 1.00 Philippines 1.00 ❑ Though India ranks third with a valuation of 54.83$B, it is Portugal 1.00 only 5% of what United States and China has achieved 4 Total 1267.98 Source: https://www.cbinsights.com/research-unicorn-companies  Global Unicorns - % Achieved Country Valuation ($B) % United States 678.53 54% 1% China 374.61 30% 1% 1% 1% India 54.83 4% 1% 2% South Korea 29.55 2% 2% 2% Indonesia 22.90 2% Germany 21.76 2% 54% 2% Singapore 15.60 1% 4% Brazil 13.00 1% Switzerland 11.01 1% United States Israel 7.85 1% 30% China Sweden 7.07 1% India South Korea France 6.00 * Indonesia Australia 4.54 * Germany Singapore Japan 4.10 * Brazil South Africa 2.58 * Switzerland Israel Malta 2.50 * Sweden Colombia 2.15 * Others Hong Kong 2.00 * Spain 1.40 * Canada 1.00 * Estonia 1.00 * Analysis Luxembourg 1.00 * Netherlands 1.00 * ❑ United States has achieved 54% of the total valuation Philippines 1.00 * when compared to other countries. Portugal 1.00 * Total 1267.98 ❑ China with 30%, ranks second while rest of the countries has achieved only less than 5% of the total * - Negligible valuation of what United States and China has 5 achieved Source: https://www.cbinsights.com/research-unicorn-companies Global Unicorns - Country and Domain-wise Analysis - Top 3 Countries Country Domain Total Valuation in $B Fintech 118.42 Analysis of Global Trends Other 96.28 Consumer & retail 63.30 Internet software & services 62.91 Artificial intelligence 53.70 ❑While Fintech Start-ups are doing E-commerce & direct-to-consumer 48.19 extremely well in United States, Health 43.95 United States Supply chain, logistics, & delivery 42.90 China has achieved almost double Travel 34.40 the total valuation than United Data management & analytics 33.73 Hardware 28.64 States in Artificial Intelligence Cybersecurity 16.95 Auto & transportation 16.19 Mobile & Telecommunications 14.97 Edtech 3.00 ❑Indian Start-ups are doing well in BI & Analytics 1.00 Artificial intelligence 102.39 Fintech closely followed by Supply Auto & transportation 73.29 chain and E-commerce E-commerce & direct-to-consumer 45.28 Hardware 37.03 Mobile & Telecommunications 25.80 Internet software & services 14.50 Potential of India Edtech 13.67 Supply chain, logistics, & delivery Health 11.37 11.10 ❑Of the $1268 B of global unicorns, China Consumer & retail 11.00 US, China and India account for 87 Other 10.10 Auto & transport 5.00 percent in the aggregate. While Travel 4.50 India is in the Top 3, its percentage Fintech 2.86 Data management & analytics 2.65 is only 4 percent, compared to 54 eCommerce/Marketplace 2.07 percent of US and 30 percent of Cybersecurity 1.00 eE-commerce & direct- 1.00 China Fintech 12.80 Supply chain, logistics, & delivery E-commerce & direct-to-consumer 9.10 8.10 ❑That said, with India being home to Auto & transportation 7.20 the largest start-up system of the India Edtech 5.75 Travel 4.30 world with over 7,000 start-ups Internet software & services 3.18 registered, potential exists for India Mobile & Telecommunications 2.40 6 Other 2.00 to move ahead. Source: https://www.cbinsights.com/research-unicorn-companies Global Unicorns - Country and Domain-wise Analysis - Other Countries Total Valuation Total Country Domain Country in $B Domain Valuation in E-commerce & direct-to-consumer 11.65 $B Other 6.32 Artificial intelligence 2.00 Mobile & Telecommunications 4.00 South Korea Supply chain, logistics, & delivery 2.60 Japan Mobile & Telecommunications 1.10 Fintech 2.20 Fintech 1.00 Consumer & retail 1.78 Travel 1.00 Consumer & retail 1.58 South Africa Supply chain, logistics, & delivery 10.00 Mobile & Telecommunications 1.00 E-commerce & direct-to-consumer 8.00 Indonesia Malta Other 2.50 Fintech 2.90 Travel 2.00 Other 1.15 Health 5.15 Colombia Supply chain, logistics, & Fintech 4.62 delivery 1.00 E-commerce & direct-to-consumer 4.54 Travel 1.00 Germany Auto & transportation 2.25 Hong Kong Supply chain, logistics, & Other 2.20 delivery 1.00 Travel 2.00 Data management & analytics 1.00 Spain Auto & transportation 1.40 Auto & transportation 14.30 Canada Mobile & Telecommunications 1.00 Singapore Artificial intelligence 1.30 Estonia Auto & transportation 1.00 Fintech 10.00 Brazil Supply chain, logistics, & delivery 2.00 Luxembourg Other 1.00 E-commerce & direct-to-consumer 1.00 Netherlands Hardware 1.00 Health 8.00 Switzerland Fintech 2.01 Philippines Other 1.00 Cybersecurity 1.00 Portugal Internet software & services 1.00 Artificial intelligence 3.25 Hardware 1.60 Israel Auto & transportation 1.50 The fact that even developed industrial Mobile & Telecommunications 1.50 Fintech 5.50 countries such as South Korea, Germany Sweden Other 1.57 Japan and Sweden trail behind India in global Auto & transportation 1.60 Internet software & services 1.16 unicorn pecking order is encouraging. Flipping France Health 1.14 the thesis, however, the developed industry in Other 1.10 Artificial intelligence 1.00 such countries is itself in the vanguard of Internet software & services 2.50 technological innovation or has been absorbing Australia Other 1.04 Fintech 1.00 start-ups even before they reach the unicorn7 status. Source: https://www.cbinsights.com/research-unicorn-companies The Product Staircase Commercialisation Validation Testing Prototyping Ideation Where and how does disruption happen? 8 The Technology Pyramid Innovators Differentiators Followers Who is best placed to disrupt and/or transform markets and industries? 9 Technology Development in Home Light Bulb ✓ Over a century of base Edison technology (1879 to 1985) ✓ Recent 25 years have seen some breakthrough technologies in CFL and LED technologies ✓ Massive improvement in energy efficiency from the first design, accompanied by progressive drop in pricing, significant increase in lifespan, and increase in customisation options ✓ Now, microchip embedded and sensor enabled ‘smart bulbs’ 10 Technology driving LED light bulb features S.N. Type Energy Efficiency 1 Traditional incandescent light bulb 10% 2 Incandescent halogen bulb 30% more efficient than (1) 3 Compact fluorescent light (CFL) bulb 75% more efficient than (1) 4 Light emitting diode (LE) bulb 90% more efficient than (1) Early to market LEDs were inefficient in heat dissipation and burned out prematurely If every American home replaced their five most frequently used light fixtures or the bulbs in them with LED bulbs that have earned the ENERGY STAR, America would: ▪ Save enough energy to light 33 million homes for a year ▪ Save near $5 billion each year in energy costs ▪ Prevent greenhouse gases equivalent to the emissions from nearly 6 million cars Positive technology not only improves features for customers but also protects environment 11 Types of technological innovation Evolutionary Innovation  Sustainable Innovation Revolutionary Innovation  Disruptive Innovation Transformational Innovation  Established firms focus internally on sustainable There is a symbiotic Universities provide innovation and resort to core technologies for relationship between all the three types of acquisition of start-ups for disruptive innovation the three types innovation Start-ups focus on disruptive innovation and develop up to commercialisation stage 12 Where does technological innovation occur? Established Companies  Traditional main spaces Public and Private Research Centres, including Universities  The new main spaces Start-up Firms  There is a symbiotic Established firms acquire relationship between the start-ups or core technologies the three spaces Universities provide core technologies Start-ups develop the core technologies 13 The Unique Role of Start-ups: From Initial Rejection to Eventual Dominance Performance improvement required by mainstream markets Expected trajectory of Performance performance improvement Current performance of potentially disruptive technology Time “Every company that has tried to manage mainstream and disruptive businesses within a single organization failed.” - “Disruptive Technologies: Catching the Wave” by Joseph L Bower and Clayton M Christensen, Harvard Business Review, 1995 14 Clayton Christensen on Disruptive Innovation ▪ Disruptive innovations originate in low-end or new-market footholds ▪ Disruptive innovations don’t catch on with mainstream customers until quality catches up to their standards Disruption is a process Four All disruptions need to be Features of Business models are very embraced by big companies different from those of Disruptive incumbents Innovation Disruption comes with risks of failure Exceptions do exist in terms of disruptive technologies brought in by big firms from high-end segments. Flat panels and OLEDs are some examples. 15  NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURE 22 Course Module 6 (Part) Technological Innovation and Entrepreneurship Part 2 Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras Technology-driven Industries: Ten Examples Bio-pharma- ceuticals Artificial Medical Intelligence Devices Computers Robotics and electronics Technology- driven Industries Machinery Communica- and quality tion equipment Energy Automobiles Aerospace 17 Entrepreneurial and start-up firms play a big role in the transformation of these industries Navigating the Next Industrial Revolution Industrial Year Main Characteristics/Drivers Revolution Steam, water, mechanical production 1 1784 equipment Division of labour, electricity, mass 2 1870 production 3 1969 Electronics, IT, automated production 4 ? Cyber-physical-biological systems ? - Judgement is still out on when the Fourth Industrial Revolution has commenced; from the early 2000’s the origins have been there; and there could be an overwhelming revolution of digital technologies in the next 5 to 10 years. 18 The Most Critical Challenge and Exciting Opportunity Today… “Non-linearity” in Technologies, Processes, and Models Non-linearity implies inexplicability or unpredictability of cause-effect or input-output relationships 19 Innovative Technologies are Reshaping industries Industry Past/Current Future Pharmaceuticals Chemical molecule based Biological cell based Automobiles IC engine driven Electric power-pack driven Internet Connecting people Connecting people and devices Banking Conventional ledgers, Distributed ledgers, password protected blockchains Analytics and Services Human intelligence Artificial intelligence Space Disposable spacecraft Reusable spacecraft Diagnostics Laboratory sampling Wearable devices Energy Fossil fuels Solar, and other renewables Crop Protection Chemical fertilisers and Bio-fertilisers and bio- pesticides pesticides 20 Inventive Technologies are Reshaping How Industries Deliver Value Activity Past/Current Future Body scanning Image capture and desk Direct viewing and analysis analysis Drug Delivery Multiple cells and pathways Directed cells and pathways Electric traction Fixed batteries Battery-swapping Automobile driving Human Autonomous Robotics Human programmed Self-programmed Component manufacture Moulding and pressing Additive manufacturing Disease curing Pharmaceuticals Own cells/ Own immunity Retail Human-served Automated stores Device operation Instruction-controlled Thought-controlled 21 Unpredictable Competitive Forces are Rewriting Business Models Factor Past/Current Future Key customers Homogeneous, segmented Heterogeneous, layered New entrants Established Multiple start-ups Operating systems Coded Deep learning, artificial intelligence Financing National liquidity Global liquidity Competition Industrial, national Global trade wars Key suppliers Components and systems Natural and rare materials Substitute products Improvers Disruptors, transformers Key macro Unlimited growth Climate protection Industrial strategy Business-driven Government-driven 22 22 Technology- A Bridge between Equity and Growth Technology The bridge that connects the equity-growth divide Public Safety Economic Growth Community Health Employment Growth Resource Conservation Incomes and Savings Environmental Protection Quality of Life 23 Strategy Flow, from Idea to Commercialisation Design Manufacturing Investments Marketing ▪ Innovation Business Support Services ▪ Differentiation Strategy ▪ Followership Revenues Technology Pyramid Earnings Margins 24 Successful Entrepreneur Deftly Balances Innovation Intensity and Product Profitability Tactically Strategically High Superior Outstanding Product Profitability Operationally Tactically Low Weak Superior Low High Innovation Intensity 25 Pioneering Leadership Model Technology-driven, Innovation customer-centric Leadership firms Differentiation Leadership Cost Leadership Pioneering Advantage Product Intuition Synergy through digitalisation and Emerging Established deployment of science product-based & technology market-oriented firms firms Physical Emotional Triad Triad Process Business Passion Focus 26 Technology Competence Framework Quantify total technological Index each power of the part of the product Re-focus, value chain for integrating technology Define value new chain technologies Start-ups tend to focus more on technology than on business value chain, diluting the power of technology, as it flows from design to delivery 27 Technological Innovation + Commercial Success Boosts Financial Valuation Acquirer Acquired Year Domain Valuation (USD Bn) Microsoft LinkedIn 2016 Professional social media 26.2 Facebook WhatsApp 2014 Social networking 19.0 Google YouTube 2006 Online video streaming 1.65 Google Android OS 2005 Mobile operating system 0.05 Microsoft Hotmail 1997 Email platform 0.50 Microsoft Skype 2011 Video calls 8.50 Google Instagram 2012 Social media 1.0 Yahoo Tumblr 2013 Micro blogging website 1.10 Apple Beats 2017 Music streaming 3.0 Microsoft Mojang 2014 Game developer 2.5 Amazon Twitch 2014 Video game streaming 0.97 Facebook Oculus VR 2014 Virtual reality 2.0 Google Nest 2014 Home automation 3.2 Walmart Jet.com 2016 Ecommerce 3.3 Cisco AppDynamics 2017 IT operations analytics 3.7 Adobe Marketo 2018 Marketing automation software 4.75 Microsoft aQuantive 2007 Online ad network 6.3  NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURE 23 Course Module 6 (Part) Technological Innovation and Entrepreneurship Part 3 Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras Innovator Strategies Application leadership requires a disruptive approach of using new technologies to make aspirational things a reality (like a flying car, for example). Application Experience leadership requires a Leadership combination of product and process approaches to take user experiences to a different level. Often, novel material and precision manufacturing technologies have to be used together to conceptualise and provide an R&D, elevated level of user experience. Experience Core of Leadership Experimental leadership is particularly Innovation relevant when companies have surplus cash and if pursuit of additional scale in conventional domains with such cash no longer makes sense. Innovator firms desirous of pursuing this strategy must have Experimental close links with experimental Leadership developments in universities and start-ups as well as research laboratories and/or national missions such as clean energy and smart cities. 30  Smart Differentiation: Five Faculties of Futurism The key to differentiation could be so Sensor technologies will be game obvious that it escapes attention. A changers as computer chips have been. striking example is the delay in Virtually any product can be refined or re- providing high quality front cameras in engineered with sensor technologies. smartphones. Smart observation can Biological sensors would be the next Observe a help utilise available technologies to frontier in providing proactive and Future achieve substantial differentiation. effective healthcare delivery. There are two views on innovation-led differentiation. Sense a Time a One is that an innovation would Future Future be off mark if it is commercialised ahead of market preparedness. The other is that prompt introduction of innovations creates its own markets. Magnification technologies in the past and robotic technologies of the present Imagine a Learn a Future is built by individuals who learn have revolutionised surgeries. Labelling at Future Future constantly. While books of science and cellular level of human organs would engineering, design laboratories, provide even greater precision in future. A simulators and testing arenas are all Bed and Pillow Combination (BPC) could essential for the designers to learn and move from being just a sleep aid to being develop, the greatest learning comes a health monitor and wellness provider, from the practical behaviour of current better than any smart wearable. products in the field. Futurism needs to be a strong cultural facet of organisations committed to a 31 technology-driven competitive strategy of differentiation.  Model of Five Technology Forces Product functionality can be viewed in terms of integration of new technologies or enhancement of existing technologies. Power of Functionalities Power of Power of Power of Supportive Operating Materials Ecosystem Systems A firm’s mastery of material and Artificial intelligence will help develop component technology would products that are intelligent and determine the synergy with that independent, eventually simulating Power of of product functionality. the human brain. Processes Manufacturing process should be seen beyond the capability of manufacturing equipment, its tolerances and productivity for operating efficiency and competitive advantage. 32 Performance of products is optimised when they are placed in the right ecosystem Generic Technology Strategies Changes industry fundamentally Ensures superiority on all attributes Life Technology Strategy Provides functional efficiencies Experience Technology Strategy Functional Life technology strategy Technology seeks to extend horizons of Strategy human life through novel areas of operation. The Generic experience strides being made in technology strategy provides understanding human for the broadest set of users biology and addressing the Generic functional total high-end product disease, aging and other technology strategy is performance complete with phenomena are driven by life focused in terms of product elegance. It technology strategy’s quest technology development and generates a product leader, for better life. investment commitment to from all the dimensions one cover target market can possibly consider. segments to achieve an optimal investment-revenue- profit relationship. 33 Elements of Customised Product Design Understanding personal needs Measuring Machine and learning and calibrating Artificial individual intelligence diversities Flexible manufacturing Business data and delivery analytics systems The concept of full-line manufacture as it exists today is one of positioning products at different price points, which almost invariably translates having a range of products from low-spec to high-spec. True customer choice, however, enables the design of a product around the customer needs, with a very open and flexible ‘mix and match’ approach. 34 Facets of Technological Behaviour User Affordability Timeliness to Hardware Market Specifications Technological Behaviour Experimental Operating Novelty System 35 Three Steps of De-commoditisation De-commoditised Product Retro-designing to Basic Roots Commoditised with Additional Product Contemporary Principal Features Functions Value Adding Features 36 Even a Simple Product Can Benefit from a Start-up Technology Initiative Should be in leak-proof container, easily usable Should be of pleasant Packing Should be more than fragrance the prescribed Total Fatty minimum of 30% Sensory Substance fatty substance (TFS) Should be free of Should be more than caustic alkali, heavy the prescribed Safety Lathering minimum of 100ml of metals and microbial Power lather whipped up contaminations Determinants of a Good Shaving Cream Water Should not be more than Should be extrudable 60% of the total mass of Homogeneity Content easily from the crimped the cream end of a collapsible tube Should have Should have Unique Adequate Should be a thick emulsion Consistency Shelf-life It should not disaggregate with soft texture, uniform or physically deteriorate colour and steady consistency Material technology determines the competitiveness of a shaving cream Application of CATCH Model for Electric Vehicles Skill Type Activity/ Outcome ▪ Imagine non-fossil fuel vehicles as a way to cut down pollution Conceptual ▪ Imagine self-driving cars as a way to enhance safety and productivity on roads ▪ Analyse and identify electric vehicles as the best possible solution Analytical ▪ Analyse computer and sensor-aided approaches ▪ Re-engineer batteries and vehicles to suit the new requirements Technological ▪ Develop battery charging technologies ▪ Develop newer battery materials ▪ Develop battery-swapping as a balance between power and range Creative for optimal mobility ▪ Reconfigure driving and ownership practices for seamless mobility ▪ Connect and reconfigure the whole spectrum of vehicle makers, Holistic component makers, material manufacturers, power suppliers and automobile users to develop a total electric vehicle ecosystem 38 A Framework of Apple’s Success Design Elegance Customer Supply Connectivity Efficiency Manufacturing Leadership Smartness Seamless Hardware and People Software 39 Alchemy Vs Assembly Factor Assembly of Alchemy of Competencies Competencies Organisations Rigid and Structured Periodic refresh with upgrade of talent (existing and new) Collaboration Project-specific Continuous and perpetual Technological flair Technological solutions for Technological solutions to product development human problems Vision Physically obvious Beyond the obvious Culture Diverse formal and informal Total organisational chemistry relationships Most Organisations Vs. Apple 40 A Diamond of Saviour Skills Product Manufacturing Innovation Excellence Industrial Turnaround Diversification Globalization Skills Customer Centricity Driving Competitive Value Chain Advantage Optimization Discovering New Organizational Customer Needs Collaboration 38  NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURE 24 Course Module 6 (Part) Technological Innovation and Entrepreneurship Part 4 Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras Humatronics and Productivity Conduct super- intelligent Categorise all operations through activities Humatronics Conversion of hazardous Defining Identify human operations to activities for safe robotic operations Humatronics Humatronics Utilise Use telepresence Humatronics instead of for activity and physical value presence accounting 43 Differences in Technological and Business Domains Factor Technical Domains Business Domains Activity Repeatability Novelty Condition Certainty Uncertainty Nature No risk Take risks Focus Productivity Value Relationship Man-Machine Enterprise-Environment Hypothesis Validated through Validated upon business experimentation launch 44 Some Trends of Technological Development Factor From To Connectivity Connected Individuals Connected Societies and Nations Devices Smart devices Connected companions Digital Electronics Bionics Robotics Machine Learning Humanoids Energy Consumable Renewable Industrialization Carbon Credits Carbon-free Chemicals Plastics-heavy Plastics-free Medicines Chemical Biological Domain Function Mechanical - Electrical Physical – Biological – Digital Mobility Combustion Engine Electric and Hydrogen Power-Packs Just About Anything Programmed Sensors and Self-administering 45 A Touch of Human Technology for the Future Memory at full potential Less reliance on search engines Right choice of Recharge for better recall thoughts, words, format and backdrop Artificial Intelligence Memory Logic Ethics Output Inputs Emotions Super-ready Regenerative Operating Processing Reduced rigidity Value Systems Human Enhanced flexibility Accretive Computer Devices Sensors Sensitive & Sensible Be one’s Human communications own device Fuller use of the 5 Apps Malware sensors Discovering from each A Human brain malware other filter rationality logic 46 A Framework for Innovating on Basic Needs Derive incremental value from current technologies Adopt sensor, IOT Upgrade the and other Web established technologies technologies Create new products and Mobility as Integrate into digital services based a technologies on new technologies Basic Need Reposition & Assess costs rebrand & benefits of through breakthrough modern plus technologies ‘retro’ features Integrate supportive technologies 47 Digital Limits and Opportunities Big Data Limited by Analytics Data Precision and Lack of Perfection Intuition Discipline and Lack of Compliance Instinct Learning based Inputs Confusion, Ethics and Values 24x7 Operation Programmed Choices Opportunities Limits Digital World 48 Risks of Dependence on Automated Technology New Technology Risks Driverless car Wrong choices under random traffic conditions Computer controlled operations – Risk of getting hacked from manufacture to medication Smart home technologies Intrusion into privacy Cognitive loss associated with experiences that General automation are missed out Algorithmic devices Biases built into algorithms AI processed insurance claims Mistaken assessments Autonomous chat-bots Reflecting human prejudices based on training Hybrid human-machines Instructional conflicts and overwriting AI systems in the Cloud Issues of control and governance AI weapon systems Bugs can cause lethal consequences Reusable spacecraft Unknown galactic forces 49 The Advantages and Limitations of Digital Assistants ▪ Processing of huge data ▪ Discovery of patterns Advantages ▪ Takeover of all routines ▪ Precise scheduling and reminding ▪ Helps multi-tasking for humans ▪ Standardised experience, not necessarily customisable ▪ Human attention may be further digressed to Limitations monitoring digital assistant ▪ A researcher’s need could be entirely different from an executive’s ▪ Services limited by language, culture, nativity, etc. 50 Challenges of Leveraging Digitisation Increased cost of Internet of Genetic Things rewiring; Loss Distanced, of though memorising, connected calculating remote and working exploration skills Reducing Loss of Digital human personalised interface in customer Impact teaching and interface learning Recruitment Skill-shift due through face to automated reading medications technologies Device- influenced lifestyles. 51 Localised Globalisation India has shown the way how global trends can be modified to suit local needs, and in the process create new hybrid products that are more globally relevant. Product Base Factor India Factor Resultant Honda, Toyota, Hyundai Automobiles Global designs Poor roads High ground clearance vehicles Global food processing Nestle Maggi Masala Noodles Local tastes technology noodles Patanjali’s Herbal and Personal Modern processing and Used to traditional Ayurvedic products in Products packaging ingredients modern format Mobiles application with Medical Sophisticated hospital GE’s MACi, low cost easy maintenance Devices designs portable ECG devices needs in rural areas 52 Balancing of Domestic and Export Markets Supports Economic Independence India has shown the way how global trends can be modified to suit local needs, and in the process create new hybrid products that are more globally relevant. 50 50 Interaction of ▪ Diversified usage ▪ High Technology domestic-export ▪ Product diversity ▪ High Quality factors lead to superior ▪ Quality-cost equation ▪ Global Delivery Capabilities product, service and ▪ After-sales service ▪ Global Management Systems management paradigms for any firm pursuing a 50:50 balance 53 Motivational Matrix of Aspirational Economics and Aspirational Individuals Aspiration and Affordability present mobility barriers to groups which have different social-economic status. Governments need to minimise the mobility barriers even as people need to exert to tide over the mobility barriers. The force for development is defined by a positive grid in a 2X2 matrix of economy and individuals. Aspirational ▪ Skill gap ▪ Wealth generation economy ▪ Sub-optimal ▪ Sharing of potential prosperity ▪ Decline of a Non-aspirational nation economy ▪ Socio-economic ▪ National strife stagnation and decline Non-aspirational Aspirational individuals individuals 54 Global Innovation Index India is the 60th most-innovative country globally: Top 10 Countries Status of BRICS Country Country Rank Country Score Rank Country Score Income Income 1 Switzerland 67.69 HI 69 Brazil 33.10 UM 2 Sweden 63.82 HI 45 Russia 38.76 UM 3 Netherlands 63.36 HI 60 India 35.47 LM 4 USA 61.40 HI 22 China 52.54 UM 5 UK 60.89 HI 57 South Africa 35.80 UM 6 Denmark 58.70 HI 7 Singapore 58.69 HI 8 Finland 58.49 HI 9 Germany 58.39 HI 10 Ireland 58.13 HI HI-High Income UM-Upper Middle Income LM-Lower Middle Income 55 India in Global Innovation Index India’s ranking in GII over time Year GII Input Output Efficiency 2017 60 66 58 53 2016 66 72 59 63 2015 81 100 69 31 Innovation efficiency is the ratio between output rank and input rank. India’s strength in Innovation Factor Rank Human capital and research 64 Graduates in science and engineering 10 Average expenditure of top three global R&D companies 14 Average score of top three universities in QS ranking 21 Market Sophistication 39 Trade completion and scale of market 16 Ease of protecting minority investors 13 Knowledge and technology outputs 38 Citable documents HI Index 21 Growth rate of per capita GDP PPP 5 ICT exports as percentage of trade 1 Creative goods exports 85 56 Creative goods exports percentage of total trade 18 India’s Weaknesses in Innovation Factor Rank Top innovation clusters, and one in India (based on Patent Filings) Institutions 64 Rank Cluster Country Ease of starting business 114 1 Tokyo-Yokohama Japan Ease of resolving insolvency 111 2 Shenzhen-Hong Kong China Ease of paying taxes 118 San Jose – San Human capital and research 64 3 United States Francisco Education 114 4 Seoul South Korea Pupil-teacher ratio, secondary 104 5 Osaka-Kobe-Kyoto Japan Inbound mobility in 6 San Diego United States 102 Universities 7 Beijing China Creative outputs 85 8 Boston-Cambridge United States Global entertainment and media 9 Nagoya Japan 61 market 10 Paris France Video uploads on YouTube 68 43 Bengaluru India 57 Digital Economy Potential Digital transformation though disruptive has immense job potential for India with the right strategies. The growing potential of the digital economy in India is likely to contribute substantially to GDP and also create millions of jobs Digital Economy Size (US Bn) Job Creation Sector Potential by 2016-17 2024-25 2024-25 (Mn) IT / ITEs 160 350 6.5 Electronics 100 300 8.9 Telecom 80 150 8.8 E-commerce 30 150 6.0 Digital Payments 3 50 2.5 Cyber Security 18 35 2.5 IOT 6 20 0.5 Sharing Economy 1 30 2.3 Digital Skilling 15 30 2.0 All Sectors 413 1115 40.0 Source: Nasscom, Media Reports 58 Artificial Intelligence: The Future Digital Frontier Artificial Intelligence (AI) in growing fast and is poised to unleash the next wage of digital disruption and new industrial growth, dominated by digital giants like Google, Amazon, Microsoft and Baidu, and electronics and automobile corporations such as Apple and Tesla. A few sectors have also been early AI adopters: Investment by Technology Category (USD Bn) Investment by firms 26 – 39 Natural language 0.6 - 0.9 Virtual agents 0.1 – 0.2 Autonomous 0.3 – 0.5 Technology giants 20 – 30 vehicles Computer vision 2.5 – 3.5 Start-ups 6-9 Smart robotics 0.3 – 0.5 Machine learning 5-7 Sectors of AI Adoption High AI Adoption Medium AI Adoption Low AI Adoption High Tech Retail Education Automotive Consumer packaged goods Tourism Telecom Entertainment Healthcare Financial Services Media Source: McKinsey & Company; Indian Express, 12 July 2017 59 Main Driving Characteristics of Industrial Revolutions First Industrial Revolution Used water and steam power to mechanise production Second Industrial Revolution Used electric power to create mass production Used electronics and information technology to Third Industrial Revolution automate production Using digital technologies to fuse physical, digital and Fourth Industrial Revolution biological spheres Impact of the Fourth Industrial Revolution ▪ More perceptive durable ▪ Digital enhancement of and resilient customer product experiences Products Customers ▪ Data and analytics to serve ▪ More substitutional of human mind customers better ▪ Supply-side boost Fourth ▪ All people connected by mobile Industrial devices Revolution ▪ Integrated healthcare Impacts ▪ Understanding and improving wellness and aging ▪ Improved quality of life ▪ From ownership to accessing ▪ Enhanced transparency People Governments ▪ New Power over people ▪ Pervasive engagement ▪ Pressure to protect jobs 60 Connected Health or Digital Healthcare Connected Health or Digitalised Healthcare is the collective term that describes applications of digital technologies in multiple healthcare processes such as telecare, telehealth, telemedicine, mobile health, home health, hospital health, integrated healthcare, clinical integration and so on. Connected Apps Connected Connected Education Patients Six components of Connected Health Connected Connected Devices & Doctors Wearables Connected Hospitals Some exciting developments: ▪ Predictive analysis, diagnosis and treatment through artificial intelligence ▪ Smart home health including remote patient monitoring ▪ Ingestible technology, including nanotechnology delivery ▪ Patch sensors and wearables for multiple applications ▪ Brain controlled bionics ▪ Implantable technology, including brain chips ▪ Personal genomics, including bio-analytics and DNA diagnostics ▪ Wake and sleep analytics, including real time health data 61 ▪ 3D Bioprinting and regenerative medicine Expectations from the Fourth Industrial Revolution Food Security Energy Clean Mobility Security The Fourth Wave of Technology Digitisation of Water Security Biology Digitisation of Digitisation of Business Life 62 Management of Human Expectations and Technological Enhancements Human psychology and behavior lead or lag science and Human technology Science and technology Psychology move incrementally but & Behavior with step-function leaps every few years Science and Technology of Products & Services 63  NPTEL COURSE ON ENTREPRENEURSHIP Perspectives of Business Strategy and Economic Development WEEK 5 – LECTURE 25 Course Module 7 (Part) Technological Innovation and Entrepreneurship Part 5 Prof. C Bhaktavatsala Rao, Ph.D. Ajit Singhvi Chair Professor Department of Management Studies Indian Institute of Technology Madras The Start-up Spaces In the last few decades, offline to online and disaggregation/disintermediation offered great start-up opportunities based on Internet and Software. Future start-ups will build on these but increasingly benefit from as well as drive fundamental technological innovations and radical industrial transformations Industrial Transformations Technology Innovations Internet Products and Services 2020s Onwards Software Products and Services 2010s Onwards Internet Products 2000s Onwards and Services Software Products Start-up Spaces Keep 1970s Onwards and Services Growing Cumulatively 65 Entrepreneurship Boosts Industrial Strength India has become the world’s second largest mobile phone manufacturer, next to China From just 3 mobile manufacturing units in 2014, India witnessed a jump to 268 smartphone and allied services manufacturing units in 2018 (Source: ICEA) In 2017, 82% of the mobile phones used in India were manufactured in India This has become possible with a diversified manufacturing ecosystem. Of the 268 mobile device manufacturing units: 37% are mobile phone plants 38% are adapter plants 19% are battery plants, and 6% are plants for wired headsets, UB cable, parts etc. The domestic industry, primed by huge domestic demand for smartphones, has attracted major global manufacturers to set up manufacturing plants in India. Component level entrepreneurial initiatives can strengthen the industry structure further 66 Straight Linearity and Simple Non-linearity Conventional strategies tend to be anchored around linear development of technologies and businesses. For example, if email was successful in the 1990s as a popular niche technology of instant communication, all subsequent efforts focussed on making the email more powerful and more collaborative, for example - an Outlook version. If Facebook wove an expanding open social community, Google+ attempted to build multiple circles of communities. Successful breakthrough technologies tend to be non-linear, however. Twitter achieved success with the instantaneous brevity of 140 character messaging. WhatsApp achieved success through texting service that is both free and private, extending equally well on audio and video channels as well as Internet telephony later on, and with end-to-end fully encrypted services more recently. Instagram became successful by being a focussed photo-sharing application in the social media world 67 Linear Non-linearity Sometimes non-linear ideas have their roots in the basic and oft ignored or forgotten natural configurations. Most of the Internet firms and search engine firms are dependent on vast server farms, established on expansive tracts of land. Tesla’s electric car revolution would hinge on a massive battery factory ("giga factory”) with adjacent solar and wind farms, making Tesla as much a huge power storage company as a premium electric vehicle company. In future, just as Sun provides free solar power as nature’s gift to the mankind, manmade satellites may be designed and launched to provide wifi connectivity all over the world. Solar power on ground and on rooftops as well as dedicated solar parks is commonplace; the next horizon lies in floating solar power from farms, lakes, seas and oceans. 68 Digital Impact on Buy-Sell – A Start-up Opportunity for Resource Conservation Instant visibility of total Universe As buyers keep looking at the earliest points of sale and resale, rather Greater Excessive than maximal points of In a digital world, the transparency discounts use and extended use, and choice more one buys the and as sellers keep more one will sell, and looking at the earliest vice versa. If this trend points of purchase and accelerates, as it looks repurchase, products to, the planet could be will only multiply burdened with Electronic exponentially. profligate consumption Commerce Accelerated digital buy- of resources and Lower level of Time sell as an inevitable excessive hoarding of optimised intermediation driver of socio-economic products of multiple purchasing development is a fit case generations for some philosophical and spiritual caveats relating to the limitations of the planet. Reliance on Lack of word-of- physical look- mouth and feel digital reviews Digital buy-sell could lead to a new ecological logjam. A buy-sell nirvana could be a theme that would encourage ‘optimum development-optimum conservation’, if not, ‘minimum development-maximum conservation’. Nations would have ombudsmen, corporations would have offices, societies would have crusaders and families would have thinkers who will reflect the principles of a responsible universal digital age 69 that focuses on design optimization and resource conservation. Digital Transformation of Logistics Industry Digital Disintermediation, Aggregation and Customisation Primary Transportation Secondary Transportation Network Network A H B C D E F G V C E U Manufacturer/ N Transport S Shipper Shipping Distributor Retailer D Agency Fleet Owner T (Owner of Agent/Broker O Goods) O R M E R Warehousing Warehousing W1 W2 Notes: A to B will have its own transportation network as occurring between B and H Manufacturer /shipper having own logistics fleet may reduce a few entities involved but the processes themselves remain Logistics Start-ups - 1 Funding Company Founded Location Investors Domain (USD Mn) Naspers, DST Global, Tencent, 12 Swiggy 2014 Bengaluru 1470 Food delivery others