How Corporate Innovation Programs are Measuring Success

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Corporate innovation programs are primarily measuring revenue to show success –but that’s a risk, it a small incubated program is being compared to the primary billion dollar business lines. ROI is a fallacy metric of corporate innovation. Basing program success on ROI too early, rather than dedicated innovation KPIs, will not yield an accurate representation of progress.

In our recent Crowd Companies research, “The Corporate Innovation Imperative” (available for download here), we found there is a startling chasm between what organizations are measuring around innovation and which KPIs truly indicate program success from infancy through maturity. Corporate innovators who implement realistic measurement plans that focus on innovation KPIs, not immediate ROI, find greater executive support and are given adequate time to deliver results.

Our survey data of corporate innovation leaders reveals that the most common metric attached to innovation program success is increased revenue (66%), Other top measures of success include greater customer satisfaction (54.5%) and faster time to market for new products or improvements (45.1%) (see figure below for full list of innovation metrics).

Top Innovation Success Measures


Companies should focus on measurment depending on which phase of their innovation cycle they’re at. Lookoing at the classic Agile Startup methodology put forth by Eric Reis, companies (large and small) can focus on innovation metrics (usage, renewal, referral) in addtion to raw revenues.

Though innovators report increased revenue as an indicator of success, mature corporations reveal that focusing on ROI over other growth KPIs is actually harmful to innovation, and that programs should first encourage speed to market and increased ideas cycling through the pipeline. Migros, one of our interviewees, monitors KPIs of possible yield models instead of revenue for its innovation programs, with agreed-upon guardrails like maximum accepted expenditure per year and total investment volume over a period of time. It also plans out expectations for when innovations will break even in order to set realistic measurement goals and act accordingly if and when they are or aren’t achieved.

As companies climb the ladder of maturity, they also begin to clarify which of the four innovation goals (product innovation; operations; CX; or business model) they’re setting out to achieve (see figure below) — both within each program individually and in their innovation charter for the company overall. This impacts the metrics they attach to signal progress. When pursuing a new corporate innovation program, setting clear goals that answer “why this program?” is paramount to choosing the right initiative.


Corporate Innovation Impacts Customers in Four Ways

Advanced companies build their capacity for innovation by approaching innovation goals separately at first (avoiding the trap of too-early ROI expectations), each with its individual programs and support mechanisms. Then, as the corporation matures in its efforts, its programs will strategically progress to fulfill all four innovation goals within a culture of innovation that serves as the lifeblood of the organization.

For example, each of the above innovation goals have different associated KPIs for each, for example Product Innovation will be focused on usage, revenue, and referral, Operational Innovation may focus on reduced costs, higher quality, or faster time to market, Customer Experience innovation may focus on customer satisfaction, engagement, and reduced contact center costs, and Business Model Innovation will focus on newly generated ideas, avoiding disruption or partnerships with young startups.

(Photo via pexels)

These Ten Delivery Drones Are Coming To Your House

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By Jeremiah Owyang, with co-contributor Ryan Brinks

Drones come in many shapes and sizes, and are coming to a front door near you. Retail, logistics, and the way we shop and consume will never be the same.

We call this trend the “Autonomous World” when robots are able to augment, supplant and replace human workers at greater efficiency. It’s happening in all walks of life, industries and sectors, but the one area that will be most impacted will be the retail and logistics space. Earlier this month, I was a keynote at Etail, where over a thousand retailers were present to learn about how on-demand workers and autonomous drones will impact their business models. 

Just three years ago, the thought of delivering packages by drone was a fantastical idea. Today, it is one of the leading obsessions of the tech world, and a future where drones fill the streets and skies now seems inevitable. When that day eventually arrives, it will no doubt change the retail business forever. An estimate from the former White House administration forecast the potential for an $82 billion American commercial drone industry with as many as 100,000 new jobs by the year 2025.

Here are 10 delivery drones that are likely candidates to help companies get there: 

 

  1. Domino’s Robotics Unit
  2. Domino’s is not betting exclusively on either air or ground; if its flying drone venture with Flirtey doesn’t take off  (below), it still has its wheeled DRU, the Domino’s Robotics Unit, in tests on the streets of Queensland, Australia. The 3-foot-tall carrier for up to 10 pizzas keeps them hot — and a few beverages cool too — while speeding along at nearly 12.5 mph. DRU is built by Marathon Robotics, better known for its robotic military targets. Domino’s as a whole produced $2.2 billion in revenue throughout 2016.

 

  1. Amazon’s Drone

 

Much closer to reality is Amazon’s delivery drone itself, which successfully delivered its first order of popcorn and a Fire TV stick to a rural customer near Cambridge, England, in December. The drone is designed to fly under 400 feet with packages that weigh 5 pounds or less within a 10-mile radius of a fulfillment center, enabling deliveries to be made in less than 30 minutes.

Amazon first announced its pursuit of drone technology in December 2013, and with 341,400 employees and $136 billion in 2016 revenue, it is an undisputed leader in the race to deploy retail delivery drones.

 

  1. Flirtey

 

While lesser known than the eCommerce giant it’s competing against, Nevada startup Flirtey beat Amazon to the record books by completing the first government-approved test delivery in March 2016, and the drone that can carry up to 5.5 pounds for a 10-mile round trip further tested 77 deliveries from a 7-Eleven in Reno before the year was out. Unlike Amazon’s drone, Flirtey designed its deliveries to be dropped from a cable while hovering 40 to 50 feet above the ground. The startup has raised $15.8 million and, in addition to 7-Eleven, has also partnered with pizza delivery giant Domino’s for development.

 

  1. UPS and the Workhorse Group

 

No stranger to the intricacies of delivering packages, UPS has driven to the forefront of the drone scene with its deployment of an electric delivery truck equipped with a drone dock on its roof. Its ubiquitous brown trucks have made news in September 2016, when it teamed up with a CyPhy Works drone to make a package delivery to an island near Boston, and again in February when a partner HorseFly UAV lifted off and delivered a package in Florida.

A lot is at stake for UPS; in addition to its standard-setting role in the delivery industry, the company projects that it could save as much as $50 million a year by shaving just one mile off each of its drivers’ routes every day. UPS employs more than 434,000 people and generated $61 billion in 2016.

The HorseFly is an eight-rotor drone developed by the Workhorse Group of Ohio last year, and it can carry up to 10 pounds for a 30-minute flight. As soon as it returns to its truck-top dock, its battery automatically recharges.

 

  1. Mercedes-Benz and Matternet

As would be expected, luxury car manufacturer Mercedes-Benz is upgrading the UPS vision with a drone delivery van concept of its own. This one features a stylish self-driving electric van with a fully automated cargo space and rooftop drone hatch, making the entire process fully autonomous. Mercedes-Benz has designed the van with a 168-mile range and backed drone startup Matternet with a five-year, $562 million investment back in September. Matternet had reported $13 million in funding at the time of the Mercedes partnership. Its drone can carry up to 4.4 pounds and fly 12 miles per charge. The automaker anticipates testing throughout 2017. Mercedes-Benz employs 140,000 and generated revenues of $94 billion last year.

 

  1. Ford’s Autolivery

Legacy automaker Ford isn’t about to pass on the delivery drone opportunity, either. Though lagging behind UPS and Mercedes-Benz in development, Ford recently unveiled its Autolivery service concept with virtual reality headsets at the Mobile World Congress. Married to Ford’s push for fully autonomous vehicles by 2021, Autolivery envisions self-driving electric vans equipped with flying drones for curb-to-door navigation and even skyscraper window delivery. Ford generated $152 billion in revenue last year.

 

  1. Self-Driving Delivery Trucks

 

Mercedes-Benz and Ford aren’t the only companies in hot pursuit of a self-driving retail disruption. Overseas, Charge has designed a self-driving electric delivery van that it says could be ready for use yet this year — and priced competitively with conventional vans. The Oxfordshire, England, startup has been backed by $500 million venture capital firm Kinetik since late 2015. Charge’s lightweight frame can be built by a single person in just four hours, giving the company an initial production capacity of 10,000 trucks per year with just 10 workers on two daily shifts. The electric vehicles are autonomous-ready and emit no emissions over their first 100 miles. A dual mode can extend that range to 500 miles.

In the United States, the retail industry’s interest in self-driving vehicles has focused on larger distribution trucks, and while leading names like Otto and Embark have made headlines with self-driving technology for highway driving, Starsky Robotics has put together a self-driving truck that also boasts of having remote-controlled last mile navigation. Its aftermarket retrofit kit can turn any big rig into an autonomous vehicle remotely monitored by a driver who can instruct the onboard robotics to physically push the pedals, turn the steering wheel and change gears. These remote drivers can keep an eye on and intervene for 10 to 30 trucks at a time. The San Francisco startup with $3.75 million in funding debuted a successful test in February that featured autonomous driving for 120 miles and remote guidance for 20 miles.

 

  1. Starship Technologies

 

Moving even closer to home is Starship Technologies, which has created a wheeled sidewalk drone for small deliveries across town, I visited them at their Redwood City location and test drove their unit. Spawned from a 2014 NASA robot contest by a pair of Skype innovators, the delivery bot can send up to 40 pounds of goods out into the neighborhood and reach its destination within a 3-mile radius in 5 to 30 minutes by traveling at pedestrian speed.

Headquartered in London and engineered in Estonia, Starship just garnered $17.2 million in funding this January and has already inked partnerships in the United States with DoorDash and Postmates, as well as deals in the United Kingdom, Germany, Switzerland and Estonia with Just Eat, Hermes Parcel Delivery, Media Markt, Swiss Post and Wolt.

 

  1. Carry by Dispatch

 

Another leading contender in the neighborhood delivery race is Carry, a 3-cubic-foot delivery bot that stands 3 feet tall and sports four storage compartments that can hold a total of 100 pounds. While it travels at the same pedestrian speed of 2 to 4.5 mph, Carry is only limited in range by its 12-hour lithium-ion battery. Its compartments are unlocked by an app.

Carry’s $2 million South San Francisco startup, called Dispatch, is testing the bot out on the campuses of Menlo College and CSU Monterey Bay. Dispatch, backed in April 2016 by Andreessen Horowitz and Precursor Ventures, plans to sell access to Carry, not the drones themselves.

10) Amazon’s Flying Warehouse

  1. One of the most widely anticipated concepts for the future of retail delivery is Amazon’s vision of drones literally raining down to Earth from a massive blimp-style flying warehouse. Patented in April 2016, this airborne fulfillment center would house a vast store of popular Amazon products some 45,000 feet in the air and release small drones to glide nearly energy-free to their destination. Upon delivery, the drones would then fly to a nearby collection site to await a return trip to the flying warehouse.Amazon also attained a February patent for an alternate delivery method from its flying warehouse: parachutes instead of drones. And another patent theorizes a system of light poles capable of recharging or docking drones.While the challenges that stand in the way of such visions are daunting, they have nonetheless inspired many to dream outside the box.

 


Challenges Facing Delivery Drones

Despite the prevalence of successful drone tests across the country and world, the real roadblock to a drone-filled future for the retail industry is government regulation. Regulatory frameworks are lacking and commercial drone rules are stifling. The Federal Aviation Administration prohibits drones from flying higher than 400 feet, at night, over human heads and outside their pilots’ line of sight.

Better rules have been proposed, but that process is moving slowly. A government committee recommended standards for drone flights to the FAA in April 2016, and Congress ordered the FAA to create new regulations that would allow for commercial drone delivery by 2018. The new Trump administration, however, has thrown a curveball into that progress via an executive order requiring two federal regulations to be rescinded for every new one passed.

Meanwhile, other workarounds are also being proposed. A D.C. bill to allow personal delivery devices has been introduced, and Virginia was the first state to pass legislation allowing delivery robots to operate on sidewalks and crosswalks across the state. That law, drafted with the help of Starship Technologies, goes into effect on July 1. Similar legislation has been proposed in Idaho and Florida.

Besides airspace concerns, costs and energy usage constraints — particularly in the collection of deployed drones — have hampered drone development.

But with so many players now in the game, viable solutions are bound to find their way to customers’ doors in the near future.

 

 

Corporate Innovation Challenges: Culture, Budgets, and “Frozen” Management

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Corporate innovation leaders face many challenges when attempting to get innovation programs off the ground. Peter Schwarzenbauer, chairman of BMW (a Crowd Companies member), is quoted saying, “Innovation is a willingness not to be understood for a long period of time.”

Change agents are those whose radical, innovative ideas are not internally understood –and the culture of the company resists change that could conflict with existing business models. In our research, we tested to see if technology adoption, relationship with startups, or if understanding new trends would have been a primary cause of challenges –yet over and over, we heard that internal culture was the primary issue.

[Ironically, most Corporate Innovation leaders had more challenges with internal culture –rather than combating disruptive startups from the outside]

As part of Crowd Companies’ research for “The Corporate Innovation Imperative” (available for you to download here), we surveyed individuals responsible for innovation within their organizations. Survey results (below) show that the top innovation challenges include: fostering an internal culture of experimentation and innovation (57%); juggling competing internal agendas and goals (56%); overcoming the middle management “permafrost” layer (45%); and moving forward despite deferred commitment and delayed action (33%).


(Above graphic is from report: Corporate Innovation Imperative, download on slideshare)

 

Top Innovation Challenges:

Our research also included interviews with innovation leaders and strategists from large corporations. During our interviews, we uncovered two additional challenges: keeping up with startup innovations and a steering progress with a lack of clear business goals.

  • Foundational culture change is required to make significant progress.
    Innovators first focus on internal education as a catalyst for cultural change, from external speakers to internal workshops, first at the executive level and then targeted toward other senior leadership. Innovation excursions are also helpful in the initial stages of program development to align executives and teams around what’s possible.
  • Middle management “permafrost” doesn’t support innovation.
    A symptom of a culture resistant to innovation is a middle management layer that can only see short-term goals, not long-term change. As a result, they encourage employees to operate efficiently within their current roles and responsibilities by meeting consistent benchmark metrics. This doesn’t leave room for the innovators to explore new ideas. We heard this middle management layer called everything from the “frozen tundra” to the “permafrost” to the “antibodies.” It’s critical for senior leadership to embrace innovation from the top down, so middle management is empowered to support innovative employees without fear of retribution.
  • Startups innovate quickly, leaving corporations playing catch-up.
    Many companies are burdened with complicated processes, long production cycles, and bureaucratic red tape for moving forward with new ideas. These hindrances stand in direct contrast to the countless nimble startups swiftly prototyping and executing ideas that directly compete with slower-moving enterprises. Innovators commonly turn to educational workshops (in-house or at vendor locations) and university partnerships to speed internal innovation, as well as innovation outposts.
  • Companies lack clear business goals for innovation programs.
    Corporate innovation leaders, who we’ve published more data about their role here, are tasked with tying programs to business metrics and proving ROI to executives, yet they often lack the budget needed to adequately resource said programs to an extent that generates results. There is hope for innovation, though. Our survey revealed four innovation programs with more clearly defined business goals: dedicated innovation teams, innovation outposts, innovation “centers of excellence,” and startup investment programs. Mature companies are even defining innovation goals by individual program, while simultaneously laddering metrics up to overarching departmental and company KPIs.

Companies need to clear the obstacles for Corporate Innovation leaders.
The Corporate Innovation teams are often struggling with internal conflicts –more than combating external startups. When I’ve spoke to these leaders, they are willing to risk their jobs to make a change to help innovate their employer, some said “I’m banking on my employability, not my employment” as they knew they could get jobs elsewhere if it didn’t pan out. It’s key that management help offer them a road towards innovation success. Also, read Steve Blank’s list of the 13 things companies are doing to hamper innovation, or Stefan Petzov of Swisscom’s post on corporate challenges.

(Photo from Cindy Chen)

Who’s Leading Corporate Innovation? Examining the Corporate Innovator Persona

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Experience and Education Set the Foundation for Leadership.

This is a detailed breakout from our recent report on the Corporate Innovation Imperative, over the coming months, more will be revealed about how large companies are behaving like startups –while using their unique capabilities as a large organization.

Attracting the right talent for innovation is a challenge for corporations competing with shiny, agile startups, as is long-term employee retention. Innovative corporations are building innovation talent pools by offering interesting programs, intrapreneur growth, and worthwhile incentives. Because, without a focus on attracting and maintaining innovation leaders, corporations are left seeking a hero to guide their journey toward change.



(Above graphic, from the recent report The Corporate Innovation Imperative, download the partial version as full version is for Crowd Company members.)

In the report, we analyzed more than 140 LinkedIn profiles of individuals responsible for corporate innovation in varied industries and countries in order to create a persona of the average corporate innovation leader. Use these characteristics to guide your hiring and talent acquisition process, as well as gauge when leaders may be seeking opportunities for advancement or new challenges.

The term “Tundra” emerged as a common theme among corporate innovation leaders, as they described company culture, and specifically, middle management as the “frozen middle layer” or “Tundra” or other similar metaphors of a dense, rigid, cold layer. A more biological metaphor included “antibodies” that are designed to raise barriers to corporate risk. These are very creative, passionate, and motivated professionals.

Key Stats of the Corporate Innovator Persona:

  • Time spent in current role: 3.2 years. This shows that innovators need to know the business, as well as internal stakeholders, before generating new ideas. They must have credibility to sell up to executives. Many were recently hired from the outside, to shake up the inside, some have entrepreneurial backgrounds.
  • Duration of career: 18.6 years. Corporate innovation leaders aren’t fresh out of college. Rather, they have the experience and know-how to align minds and departments around change. Corporate innovation programs often rock the boat, and change agents need to have direct experience steadying the mast and pushing forward. Much of the success of innovation teams depends on internal alignment among tangential departments, like legal and marketing, to move from ideation through implementation.
  • Number of industries in career: 3. With experience comes a desire for variety. Our research uncovered that throughout their careers, corporate innovation leaders will apply their learning to further multiple areas of the business ecosystem.
  • Percentage with “innovation” in title: 61%. Not only do the majority of leaders have “innovation” in their current title, but 40% also had it in their previous role. This indicates that innovation requires a groundswell before reaching a level where resources are allocated toward dedicated leadership. This slow growth trend of innovation leaders reaching senior levels is also reflected in the fact that only 4% have the title of “Chief Innovation Officer.”
  • A highly educated cohort: 46% have an advanced degree. With age and experience often comes higher educational degrees, as is reflected in our finding that nearly half of corporate innovation leaders tout at least a master’s degree.

Mature corporations understand that an innovation program is only as good as the employees behind it. Follow in the footsteps of corporations like Verizon, which has multiple innovation teams in various business units, each with talented members dedicated to both ideation and execution. This helps them move efficiently to prototype and launch new innovations.

Also focus on talent retention, as there’s a commonplace and ever-present threat that your best and brightest will be poached (or, at the very least, approached) by competing corporations or startups. Leaders at mature organizations consistently ask themselves, “Are we doing enough to keep our most innovative employees happy?” The most effective incentives tie employee progress on innovation KPIs directly to pay structure.

I’ve even heard from these innovation leaders, that they’re willing to risk their jobs at their companies to make significant changes, despite butting up against the culture of non-change. One leader commented “I’m backing on my employability –not my employment” when I take risks. This entrepreneurial mindset is a key one to properly manage, and clear internal roadblocks for if an employer wants to retain these go-getters.

If you want to connect with fellow corporate innovation leaders, we, at Crowd Companies have hundreds of members that have this specific role, in our peer to peer council, who meet at our events, online, and beyond.

Report: The Corporate Innovation Imperative

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Our latest research report is now available, which was focused on how large companies are internally getting ready for the many waves of technology disruption that are here now, and coming. Companies need to be ready, with a dedicated innovation program –not just knee-jerk reacting to each new set of technologies that emerges. We asked a number of companies on how they defined innovation, and heard this common pattern:


“Corporate Innovation Defined: Doing something new that solves customers needs –even if it may be in conflict with your existing business”


 

We’ve made a high-level partial version available to the public on slideshare, but the full report is limited to our members at Crowd Companies. Over the coming months, we will publish other insights around corporate innovation.

 

Report Highlights:

  • The top challenges companies face in corporate innovation include: fostering an internal culture of experimentation and innovation (57%); juggling competing internal agendas and goals (56%); overcoming the middle management “permafrost” layer (45%); and moving forward despite deferred commitment and delayed action (33%).
  • Though 61% of innovation leaders have “innovation” in their title, only 4% have the title of “Chief Innovation Officer.”
  • Corporate innovation leaders aren’t fresh out of college. Rather, they have an average experience of 18.6 years, culminating in the know-how to align minds and departments around change.
  • There are 10 types of corporate innovation programs that companies pursue: corporate innovation team; innovation center of excellence; intrapreneur program; open innovation; innovation excursion; innovation outpost; technology education; external accelerator partnership; startup investment; and startup acquisition.
  • The most commonly deployed corporate innovation programs include corporate innovation teams (78.9%); innovation centers of excellence (61.4%); and technology education (54.4%). This shows that companies are first focusing internally on building the right teams, getting governance and processes in place, and educating current and new employees on emerging technologies before spending resources on rolling out external programs or investing in the startup scene.
  • The most common metric attached to innovation program success is increased revenue (66%), though that can be a fallacy metric if weighed too heavily too soon, before innovation programs have the chance to prove real ROI. Other top measures of success include greater customer satisfaction (54.5%) and faster time to market for new products or improvements (45.1%).

Who we Interviewed:
In addition to surveying large companies, we interviewed over 44 leaders at large companies, or at companies that closely partner with them on innovation initiatives.

  1. 500 Startups || Khailee Ng, Managing Partner
  2. Accenture || Jitendra Kavathekar, Managing Director of Open Innovation
  3. Achmea || Ilse Harmelink, Marketing Partners and Digital Marketing
  4. Adobe || Cindy Springsteel, Vice President of Global People Resources Business Partners
  5. ADT || Robert Beaver, VP Technology and Innovation
  6. AXA || Guillaume Cabrere, CEO AXA Lab in Silicon Valley
  7. Cisco || Alex Goryachev, Director of Corporate Strategic Innovation Group
  8. Colgate-Palmolive || Jenny Gomez, Marketing Director of Innovation
  9. Comcast || Danielle Cohn, Director of Entrepreneurial Engagement
  10. Electrolux || Heather Hanson, Global Head of Marketing Technology
  11. European Institute of Technology || Patrick Consorti, EU-US Industry Partnerships
  12. Fujitsu || Kevin Krejci, Business Development and Alliance Manager
  13. Fujitsu || Mohi Ahmed, Senior Director of Open Innovation Program
  14. Galvanize || Ryan Nadeau, Director of Special Projects
  15. GE || Alex Tepper, Managing Director of GE Ventures
  16. HP || Vincent Brissot, Head of Channel Marketing and Operations
  17. Ideation || Charles Lee, Founder and CEO
  18. Johnson & Johnson || Melinda Richter, Head of JLABS
  19. Leroy Merlin || Stephanie Hajjar, Head of Innovation and Entrepreneurship
  20. Mastercard || John Sheldon, SVP, Group Head of Innovation Management
  21. Nestle || Mark Brodeur, VP Digital Innovation
  22. Nexxworks || Peter Hinssen, Founder
  23. Nexxworks || Laurence van Elegem, Marketing and Communications
  24. Nexxworks || Steven van Belleghem, Founder
  25. Pilot44 Labs || Andrew Backs, Founder and Chief Innovation Strategist
  26. PostNL || Michel Bagli, Team Lead of Growth Strategy
  27. Protiviti || Jay Thompson, Managing Director
  28. Protiviti || Steven Massengill, Technology Consultant
  29. Rocketspace || Canice Wu, Director of Corporate Innovation
  30. Savvy Millennial || Savannah Peterson, Founder
  31. Sparks & Honey || Annalie Killian, Director Human Networks
  32. Stanford University || Reilly P. Brennan, Executive Director of REVS
  33. Swisscom || Gregory Leproux, Managing Director and VP Business Development
  34. Swisscom || Stefan Petzov, Principal Architect Swisscom Cloud Lab
  35. Swiss Post || Lorenz Wyss, Head of Ideation and Idea Management
  36. Swiss Post || Theirry Golliard, Head of Open Innovation and Venturing
  37. TD Ameritrade || Sunayna Tuteja, Lead Digital Strategy, Experience, and Innovation
  38. The Intrepreneur Lab || Milan Samani, Founder
  39. Visa || Shiv Singh, SVP Digital and Marketing Transformation
  40. Walt Disney Co. || Duncan Wardle, VP Creative Inc. (former)
  41. WDHB Strategic Learning || Sam Mueller, COO
  42. Wells Fargo || Darius Miranda, VP Innovation Group
  43. Wells Fargo || Nathan Bricklin, SVP Head of R&D Strategy and Experience
  44. WL Gore || Linda Elkins, Leader of WL Gore Silicon Valley Innovation Center

We will continue to publish research on disruptive trends, our next report will be on the Business Models of Blockchain, and more insights from the Corporate Innovation imperative will be shared, be sure to subscribe to this blog.

 

Robots, Yes Robots, Could Be Trump’s Greatest Threat

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The rise of automation is destined to replace some worker employment, and it could increasingly cause friction with efforts to create new jobs, a hallmark of the Donald Trump administration.

Many studies have forecast a day when repetitive and labor-intensive jobs will be recast by automation, though the jury is still out about whether the humans now holding those jobs will be elevated to more meaningful positions that utilize automation or will be replaced outright.

One particular technology, self-driving cars, is on pace to emerge en masse in 2021, right around the next election, as most car manufacturers will offer these features in their fleets. Furthermore, Lyft has partnered with GM to roll out self-driving on-demand fleets, and Uber and Mercedes have forged a partnership with a similar offering. Uber also purchased Otto, which automates large trucks — a move that will have profound effects on safety, speed, and the shortage of truck drivers.

Today, a large segment of working Americans are professional drivers, which means that many will soon find themselves questioning whether they have a career, job, or income. This will leave the current Trump administration at a crossroads of deciding how to respond. Currently, the Trump administration has pinned its campaign and promise on keeping jobs on American soil and keeping products made in America. This played well to the base of the working class and resulted in his rise to the highest seat in politics. Meanwhile, however, Trump has been very quiet on the topic of automation, and some suggest that automation could undermine his core position.

Far from mainstream America, Silicon Valley represents a bubble that reveals parts of what the future will hold. Just last week, I filmed an automated barista serving coffee in San Francisco without the need for humans, and a few months ago, I visited an automated restaurant in the same neighborhood. In my local city, Starship Technologies is already starting to ship food to people’s homes and offices using a robot. Mercedes, Amazon, Google, GE, and many other companies are also quickly advancing in robotics.

It’s not limited to the physical world, either. As bots and artificial intelligence continue to rise, we’ll see that lower-level white-collar and even mid-level white-collar workers will be impacted (either augmented or replaced) by automation. Take, for example, Walmart, which recently laid off 7,000 in its white-collar billing department by using back office automation technologies.

How will this administration respond to automation? I see a few options:

  1. Resist automation and place limitations. The current administration may seek to limit the amount of automation that can be deployed, keeping American workers intact. The risk is that foreign competitors could leapfrog ahead in productivity by deploying robots, as China-based Foxconn is already doing.
  2. Embrace automation, as it lifts American productivity and GDP. The administration might welcome automation, embracing the productivity benefits it brings to company performance, country GDP, and taxes. The risk is that displaced workers who are unable to upskill will be left in the cold.
  3. Upskill workers with STEAM education. All workers whose positions are threatened by automation could benefit from provided or low-cost education that enables them to upskill so they can manage or support automation rather than be displaced. Some have found that robots actually increase the number of jobs in some scenarios.
  4. Embrace universal basic income. In a less likely scenario, I could imagine the current administration embracing universal basic income, which would be a social program to provide all citizens with a living wage (food, clothing, shelter, and education) regardless of employment status or age. The funds would be derived from taxes on the companies that are deploying automation. The hope is that automation increases total productivity, generating more food, goods, and services than ever before, thereby creating a surplus for humanity. However, IDC industry analyst Alan Webber has given me feedback on this scenario that suggests it is at odds with Republican values, an assessment that’s in agreement with government expert Alan Silberberg in a phone discussion with me.

America and other countries can’t stop innovating their automation and risk lagging behind, as that will give other competitors the opportunity to leap forward. Within the next few years, the Trump administration and other global leaders focused on nationalism will need to prepare a message and plan to deal with the automation that will certainly change the job landscape.

My suggestions: The Trump administration (or any administration, for that matter) should quickly: 1) assess which jobs will be automated, 2) make plans to communicate this to the public, 3) prepare its base with upskilling, 4) and prepare to partner with the technology companies that will be driving this new future. This is the best path forward for the people, businesses, government, country, and world — there’s more at stake than political position.