There is no one challenge in the world today that technology will not be able solve in the future. Cures to chronic disease, access to clean water, safer transportation — the list goes on and on.
One reason innovation is so pervasive is that technology itself is so powerful. The average consumer device today has more computing power than a 1980s supercomputer like Cray 2. Modern data platforms can now process massive amounts of Big Data in a fraction of the time it took older databases to load even a single file. Machine learning algorithms with the ability to learn new capabilities without human interventions have the potential to completely redefine how businesses operate
To solve world’s biggest problems, businesses of all sizes and industries must adopt digital technologies
There are a few things we must do to ensure we capitalize on this great potential of technology to solve the world’s biggest problems.
First, we need businesses of all sizes and industries to adopt digital technologies. One example is the Internet of Things (IoT), which will connect over 50 billion devices by 2020. In decades past we thought about appliances, heavy machinery, medical equipment, cameras, and other things as primarily as physical objects. Today these “objects” are increasingly connected and becoming “digital.”
Cars are an easy example: today they can actually tell us where to park and oftentimes can even park for us. Sensors can now alert maintenance teams to problems before they actually materialize. In the future, the driverless car ecosystem will be built on an IoT backbone. For a typical consumer who has experienced recurring car repairs, traffic delays, and parking problems, IoT will usher a brave new world for them.
In truth we’ve really only scratched the surface of what’s possible when physical assets and sensors are used to their fullest potential as digital devices. IoT today is where dial-up Internet was in 1990s. The next 10 years will enable these objects become intelligent and become part a network that will drive seamless collaboration, creating trillions of dollars of economic value.
So it shouldn’t be any surprise that big technology companies are moving aggressively in IoT. Just last week SAP committed €2 billion over the next few years to help business customers adopt new IoT capabilities.
But adopting technologies is only one piece of the puzzle.
We also need to rethink how companies incubate the latest breakthroughs that aren’t yet ready for widespread commercial adoption. And how we can change the mindset of how companies rethink business models.
Here the burden falls more directly with large companies, many of which have existing financial resources for research and development that can be partially repurposed.
The fact is that applications for modern technology are evolving so quickly, standard business practices simply cannot keep up. Many businesses don’t want to absorb the risks associated with a constant stream of disruptive change. To this point, Boston Consulting Group reports over 72% of Fortune 500 CEOs say rapid pace of innovation is their biggest challenge. Ninety percent of those leaders believe they are too slow to market with new products.
New investment approaches can fill this gap.
Every company today must now think of itself as a venture capitalist. While internal product development is key to driving organic innovation, there is an increasing need for businesses to build, nurture, and invest in a group of startup companies to incubate new growth opportunities. The startup environment offers a complementary model for innovation that in combination with internal product efforts can drive a vibrant innovation culture. Not every startup will yield a new $1 billion revenue business. But companies creating collaborative initiatives between internal product development and external startups benefit significantly from early stage investment in the startups.
The final element of a digital success formula is partnerships.
Consider the wide array of sectors already involved in supporting new ventures – universities, venture funds, community-based incubators, and public sector agencies, to name a few. Businesses are not typically organized to see these kinds of entities as a single, startup-focused value chain. Organizational silos have unintentionally minimized mature companies’ ability to see the startup ecosystem holistically. A new breed of partners has risen to mitigate this challenge.
TechStars is one organization focused on connecting entrepreneurs with corporate partners. Their approach gives small startups a platform to showcase the very latest disruptive innovation. It also gives entrepreneurs access to mentors from large corporations who help develop business plans, product strategies, and commercial opportunities.
Through TechStars, SAP is helping shape a new generation of ambitious technology companies
Coming back to IoT, TechStars this week is unveiling a new program focused exclusively on startups innovating in this category. Major corporate partners, including GE, Bosch, SAP, and others, are lined up to help shape a new generation of ambitious technology companies.
Mentors in the TechStars IoT initiative, myself included, get the satisfaction of nurturing ambitious entrepreneurs while also scouting new strategic opportunities for our employers.
Taken together, adoption, investment, and partnerships belong in the core of any business strategy for the digital economy. Beyond fostering better commercial success, this approach will also accelerate solutions to the big societal challenges that have stymied us for generations.
Deepak Krishnamurthy is the chief strategy officer for business software market leader SAP SE. He is also an executive sponsor of SAP’s external startup incubation engine, SAP.io.