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Peter Evans, PhDVice PresidentCenter for Global Enterprise

H2O Open TourNew York, NYJuly 19, 2016

Business Transformation | Strategy | Large Companies | Age of AI

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World's 500 largest companies

Revenue $ 31.2 trillion

Profits $ 1.7 trillion

# Employees 65 million

Collective Size

RoyalDutch

Toyota Motor

ENI

Total

AXA

State Grid

Sinopec Group

China National Petroleum

BP

E.ON

Wal-MartStores

General Electric

Exxon Mobil

CountryU.S.

Germany

Australia

Austria

Belgium

Brazil

Britain

Britain/Netherlands

Canada

China

Colombia

Denmark

Finland

France

Hungary

India

Indonesia

Ireland

Italy

Japan

Luxembourg

Malaysia

Mexico

Netherlands

Norway

Poland

Russia

Saudi Arabia

Singapore

South Korea

Spain

Sweden

Switzerland

Taiwan

Thailand

Turkey

United Arab Emirates

Venezuela

CountryU.S.

Germany

Australia

Austria

Belgium

Brazil

Britain

Britain/Netherlands

Canada

China

Colombia

Denmark

Finland

France

Hungary

India

Indonesia

Ireland

Italy

Japan

Luxembourg

Malaysia

Mexico

Netherlands

Norway

Poland

Russia

Saudi Arabia

Singapore

South Korea

Spain

Sweden

Switzerland

Taiwan

Thailand

Turkey

United Arab Emirates

Venezuela

CountryU.S.

Germany

Australia

Austria

Belgium

Brazil

Britain

Britain/Netherlands

Canada

China

Colombia

Denmark

Finland

France

Hungary

India

Indonesia

Ireland

Italy

Japan

Luxembourg

Malaysia

Mexico

Netherlands

Norway

Poland

Russia

Saudi Arabia

Singapore

South Korea

Spain

Sweden

Switzerland

Taiwan

Thailand

Turkey

United Arab Emirates

Venezuela

Source: Fortune Global 500 2015 and Center for Global Enterprise.

Countries

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Strategic Fit

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A framework for understanding change

• Major world shaping trendsMegatrends

• Disruptors Shocks

• Restrictions on market actorsConstraints

• Facilitators (e.g. tech innovation)Enablers

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Mega Trend

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Rise of the data layerNew locus of value creation and capture

Agriculture

Physical Layer

Energy

Physical Layer

Healthcare

Physical Layer

Banking

Physical Layer

DATA Layer DATA Layer DATA Layer DATA Layer

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Startups with “data” in their name

2009 2010 2011 2012 2013 2014 2015Year

2,000

5,000

10,000

20,000

50,000

100,000

200,000

500,000

1,000,000

2,000,000

5,000,000

10,000,000

20,000,000

50,000,000

100,000,000

200,000,000

500,000,000

Running Sum of Funding Total Usd

Waterline Data Science

Vantage Data Centers

SenseData

Reduce Data

Primary Data

HG Data Company

HealthPlan Data Solutions

FlyData

DataStax

DataSift

DataRank DataFox

Datadecision

Datacratic

DataCentred

Databricks

Coho Data

Big Data PartnershipAmerican Prison Data Systems

3D Data

Beekeeper Data

Cequel Data

Crunch Data

Data Stream CBOT

Databraid

DataClover

DataCrowd

Datadog

DataGravity

Datasnap.io

Dataspin

datatracker

DataVote

Double Data

Global Data Management Software

Hyperloop Data

Kona DataSearch

OhmData

PernixData

ScalingData

SlamDataSocial Data Technologies

Turing Data

VelociDataWibiData

WineDataSystem

XOR Data Exchange

Over 100 companies have raised over $1.4 billion

Source: CrunchBase, March 2015

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Large companies explore “data lakes”

ANALYTICS BASED MAINTENANCE

CUSTOMER PERFORMNACE ANALYTICS

DESIGN EFFECTIVENESS

FLEET PERFROMANCE INSIGHTS

PRODUCTION INSIGHTS

RELIABILITY PROGRAM EFFECTIVNESS

Source: Tech Mahindra, NABE Big Data Conference, Boston, June 2016

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Shocks

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Shocks

political

financial

military

natural disaster

Current hazards, events

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Source: http://atlas.pdc.org/atlas/

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World-wide natural disaster trends

Source: “NAT CAT 2014: What’s Going on with the Weather?” Munich Re, January 7, 2015

Annual rate of events has more than doubled since 1980

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Growing attention to resilience

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Applications of AI … supply chain resilience

supply chain management

Companies with large supply chains are exploring AI, which develops appropriate work orders based on an understanding of demand fluctuation.

By integrating the AI into business systems, it may become possible to realize smarter, more efficient operations in a diverse range of areas

More data-driven and more autonomous supply chains provides an opportunity for new levels of optimization in manufacturing, logistics, warehousing and last mile delivery.

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Constraints

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Constraints

regulatory

talentresources

Organizationalstructure

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Firms developing IoT technologies

Organization TypeLarge Industry

Small Industry

Source: Peter Evans IoT Alliance Database, CGE, 2015

Companies most actively developing new products and services

3,046 companies<$1billion sales

220 companies >$1billion sales

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“Before you go to war, assemble allies”“Before you go to war, assemble allies”

Art of Standards WarsCarl Shapiro and Hal R. Varian

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Fragmented/conflicting standards

2016Today

2001 2004 2007 2010 2013

Open Mobile Alliance

Source: P. Evans, CGE, 2015

Internet of Things alliances

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IoT companies by alliance

Organization TypeLarge Industry

Small Industry

Source: Peter Evans IoT Alliance Database, CGE, 2016

IoT Alliance

GSMAssociation 3GPP ZigBee

AllianceZ-WaveAlliance

Digital LivingNetworkAlliance

IEEE-SA EnOceanAlliance

IndustrialInternet

Consortuim

AllseenAlliance

OSGiAlliance

LoRaAlliance

OpenConnectivityFoundation

Open MobileAlliance AIOTI

Internet ofThings

Consortium

OpenInterconnectConsortium

ThreadGroup

Eclipse IoTFoundation

HomeGatewayInitiative

IPSOAlliance

IoT Alliance

GSMAssociation 3GPP ZigBee

AllianceZ-WaveAlliance

Digital LivingNetworkAlliance

IEEE-SA EnOceanAlliance

IndustrialInternet

Consortuim

AllseenAlliance

OSGiAlliance

LoRaAlliance

OpenConnectivityFoundation

Open MobileAlliance AIOTI

Internet ofThings

Consortium

OpenInterconnectConsortium

ThreadGroup

Eclipse IoTFoundation

HomeGatewayInitiative

IPSOAlliance

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Playing IoT standard’s the fieldIoT Alliance

Company

Huawei Samsung LGCisco

Systems NEC Corp IBM Intel HoneywellSchneider

Electric Bosch VodacomSumitomo

ElectricRobertBosch

ArrisGroup BT Group

HomeGateway

Initiative (.. Sagemcom SAP Sprint Telekom Telstra Xilinx Inc.3GPP

AIOTI

Allseen Alliance

Digital Living Network Alliance

Eclipse IoT Foundation

EnOcean Alliance

GSM Association

Home Gateway Initiative

IEEE-SA

IPSO Alliance

Industrial Internet Consortuim

Internet of Things Consortium

LoRa Alliance

OSGi Alliance

OneM2M

Open Connectivity Foundation

Open Interconnect Consortium

Open Mobile Alliance

Thread Group

Z-Wave Alliance

ZigBee Alliance

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4

2

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8

Source: Peter Evans IoT Alliance Database, CGE, 2016

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Enablers

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Ideas as enablers

Classic economic ideas Free market economies are always stable Trend toward full employment & full production equilibrium Freely fluctuating prices in three key areas ensure this outcome (goods, money and labor markets)

Keynesian economic ideas Free market economies are unstable Equilibrium yes, but not necessarily for full employment/ full production Demand becomes a much bigger driving force Supply will always adjust to demand

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Technology as enabler

Yahoo! Directory - 1994 - 2014Telephone switchboards, 1890 – 1960s

Traffic Service Position System (TSPS) Web indexing algorithms

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APIs enable platform data capabilities

Revenues

Reach

Engagement

Innovation

Integration

Application Programming Interface (APIs)

Definition: Standardized machine-readable digital communication interface for a system, which can be designed to have open or restricted access and be exposed both internally and externally of an organization’s network

Exchange and value creation

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API Economy: Core vs. Periphery

Source: Peter Evans and Rahul Basole, with data from ProgrammableWeb, Center for Global Enterprise, 2015

Social media / webJob search / workE-commerce Tools / analytics / big data

Payments

API Clusters

Messaging services

Companies

Enterprise

Amazon SNSAlexa Web Inform

Amazon Marketplace Amazon

SimpleDBAmazon Product

Advertising

Amazon CloudWatch

Amazon Flexible

Amazon Redshift

Amazon SC2

Amazon S3 Amazon Mechanical TurkAmazon RDS

Amazon DynamoDB Amazon Queue Service

Walmart

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AI and enterprise strategy

Explosion of interest in articles related to “ai” and “business strategy”

Number of articles focused on AI and business strategy has grown by

Increase 25 a quarter in 2013 to over 150 a quarter in 2016

from 2013 to 20166x

Source: Data and visualization from Quid, July 2016

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AI and enterprise strategy

• How do alert leadership teams take advantage of AI?

• Is AI similar to other computer technologies?

• What types of internal resources are most needed?

• What types of business processes are required?

• What types of external communities/ ecosystems support competitive advantage?

The search for strategic fit

RoyalDutch

Toyota Motor

ENI

Total

AXA

State Grid

Sinopec Group

China National Petroleum

BP

E.ON

Wal-MartStores

General Electric

Exxon Mobil

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Council of Economic Advisors report on AI

“The biggest worry I have about AI is that we will not have enough of it, and that we need to do more to make sure we can continue to make groundbreaking discoveries that will raise productivity growth, improving the lives of Americans and people throughout the world.”

Jason Furman Chairman

New York University New York, NY

July 7, 2016

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Looking ahead … strategic landscape

Age of Data

Megatrends

Natural disasters

Shocks

Fragmented IoT

Standards

ConstraintsArtificial

Intelligence

Enablers

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Peter Evans, PhDVice PresidentCenter for Global Enterprise

H2O Open TourNew York, NYJuly 19, 2016

Business Transformation | Strategy | Large Companies | Age of AI