Leonardo Hugo Lujan
An exciting application of Open Innovation.
I believe that their current approach to innovation will allow them to deploy unique but single and disconnected initiatives. Even though the impact of these solutions is high because San Jose can leverage on the geographic proximity to Silicon Valley and its big players, the scalability of the model is limited. To scale, I think that an Open Innovation model but in collaboration with other cities would enable governments to identify robust and reliable solutions and would grant companies a more attractive market to develop such initiatives. Besides, all the cities could also benefit from sharing best-practices. Thus, they could minimize the risks of implementing ineffective projects or the learning curve costs during the implementation of the solutions.
Regarding the long-term challenge of applying Open Innovation, I think that the main problem relies on the disconnection between strategy definition (Mayor) and strategy implementation (City manager). So, to solve these discrepancies, strategy definition and implementation should be aligned and should contemplate both short-term and long-term projects. Under this approach, Open Innovation could be applied for both terms, always pre-defining the scope of each initiative before launching it. The effectiveness of the long-term solutions provided would be probably related to the volume of cities involved in the Open Innovation initiative and to the grade of legal certainty governments could offer for the implementation of these projects.
As you mention in the article, the lack of regulation is the main barrier for autonomous cars to deploy their potential. While statistical data generated through these years should be enough to prove that autonomous cars are significantly safer than human-driven ones in terms of the frequency and the severity of the incidents caused, I believe the primary challenge still relies on defining who is legally responsible for the consequences of an accident. Should car manufacturers, government and insurance companies share accountability or should car owners be responsible for possessing the vehicles and assuming the risk? I think that for the technology to be quickly deployed, big manufacturers, government and insurance companies should take the responsibility and bear the consequences. Otherwise, switching costs would be high and owners would require a reliable and robust track-record before deciding to shift to autonomous vehicles. Regarding the moral challenges, the MIT Moral Machine initiative is one example of how to replicate human behavior in really ambiguous situations. I believe that reproducing our more common reactions to no-way-out conditions is the best solution to overcome this challenge.
As Ti mentions, in the short-term, personalization would be more valuable for high-performance shoes than for casual ones. This group of customers would mainly be composed of people who care about their sport or gym performance or of individuals who are looking for a footwear solution that, by adapting to their foot physiognomy, prevents injuries or chronic pains related to the use of uncomfortable footwear. Even though they are not 100% of the market, this segment provides footwear companies with a significant volume to justify the commercialization of fully personalized solutions at a higher margin and thus pay-out the investments in 3D manufacturing methods. However, I believe that in the mid-term the developments of additive manufacturing would significantly reduce the current production cost of this technology. These advancements will unleash additional opportunities to offer personalization in more casual or even luxury products, giving the customers the possibility also to design their shoes. I think that people will be willing to pay a premium to take that “ownership” over the product they are buying and that this premium fee would be high enough to cover the gap between traditional and additive manufacturing costs.
As you mentioned, Open innovation proved to offer Unilever a cost-efficient solution to leverage on the company’s core capabilities of commercializing proven applications. However, regarding the three interesting questions you posted, I believe the main question to answer is what kind of innovation Unilever wants to apply. In other words, is Unilever looking for really groundbreaking solutions that open “blue oceans” spaces or, as most CPG companies, are they looking for incremental and fast innovations (i.e., product improvements, packaging re-designs, etc.)? If they are targeting groundbreaking solutions, I believe that, as you stated, crowdsourcing would limit the innovation capabilities due to the difficulties of aligning an externally sourced radical innovation with the company’s structure and of equalling the power of the solution offered by “one” industry leader. For incremental and fast innovations, I think that crowdsourcing, especially when sourced by mature start-ups, is a perfect way to reduce the time-to-market and to reliably develop products at a lower cost.
Even though we are still far from a sci-fi scene from a Spielberg movie (the film “Minority Report” reflects this dilemma), AI developments are evolving at a faster pace than regulation does, making the gap between law and reality larger. As you mentioned, companies have an excellent opportunity to promote the debate in society and involve many stakeholders even before launching the solutions to the market. However, to safeguard their position and sustainably develop the AI applications market, I believe that both suppliers of AI solutions and users of these products must act coordinately. Otherwise, the single action of an individual company won’t be enough to mobilize society and policymakers. The private sector, acting coordinately, can fuel the ethical and social debate and push people, governments and international organisms to react. However, I think that policymakers have the core responsibility for preventing AI misuse and for granting society that its voice would be reflected in according regulations.
As you mentioned in your analysis, I believe that a good alternative for GE would be to commercialize affordable solutions for small and medium companies but at the same time to maintain its positioning in the more complex and higher-end segment. The first segment would generate the cash needed to develop new solutions for the higher-end market and to reduce the switching costs barriers for the penetration of premium technologies. In the mid-term, the higher-end products would be able to generate cash, differentiate the brand and build technologies that could be later incorporated into the low-end solutions. Also, I think that the GE brand is a competitive advantage itself that would foster the commercialization of the different products and services.