I really like your recommendation that Volkswagen should buy a 3-D manufacturing company. It is an interesting proposal that squarely addresses the biggest concern with 3-D printing cost for auto giants, which is that a centralized, single auto-plant manufacturing company can erode Volkswagen’s competitive advantage, some of which stems from its intricate, global supply chain and relationships with vendors. Are automotive giants simply accelerating their own commoditization when they begin to mass-produce car parts with 3-D printing? https://www.cnn.com/2018/09/28/tech/volkswagen-3d-printing-parts/index.html
One critical question for GM is the impact that additive manufacturing will have on their current operating model and margins. Today, additive manufacturing processes require expensive machines, high-cost raw material, and up-skilling of labor. Can GM really come up with the capital it needs to make this transition — to buy (& upgrade) this equipment, put up with the inventory risk, and hire new skilled 3-D printing operators? Additionally, once additive manufacturing really does get incorporated into auto manufacturer’s processes, how will the ability to create custom, personalized with 3-D printing — a unique car for everyone — hurt GM’s brand equity?
This is a terrific look into Big Pharma’s strategy of leaning on Open Innovation to forestall the rapid collapse of their R&D model. My concern, however, is that this is not a sustainable source of competitive advantage for an undiversified pharmaceutical company. Why can’t other pharma companies set richer incentive schemes, spurring a race to the bottom? When payers, providers, and pharma — e.g., the government — set higher monetary rewards with implicit guarantees of FDA approval and CMS reimbursemnt, open innovation looks less appealing.
Thanks, Justin, for this insightful piece. Government agencies are perfectly positioned to use open innovation strategies to take advantage of the public’s knowledge and expertise for “big idea” projects while appropriately incentivizing and compensating valuable contributors. However, I wonder whether $10K and 50 teams is paltry and insufficient. How does incentive design in open innovation account for the appropriate “prize” level that can compete with private sector rewards for the same work?
Thanks Ricardo. The key here is their parent company relationship with UnitedHealth. Optum’s critical advantage is not their IP over machine learning techniques or engineering/data science talent, but rather their ability to access a breadth and depth of data across the health care system (from providers, pharma, and other payers) that they can use to compound the power of their predictive analytics offerings.
Great piece. While Jumio is using ML to optimize for an “old” world of physical IDs, one interesting avenue to explore is whether blockchain-based identity mechanisms will find a way to supplant these status quo systems — financial services seems like a ripe target to begin with, particularly with blockchain-based mechanisms being used to verify market transactions on distributed ledgers.