Erik-Toby Peterson-Johnson

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On November 15, 2018, Erik-Toby Peterson-Johnson commented on BMW Bets on 3D Printing your Next Sports Car :

Very interesting read! I agree that BMW’s use of 3-D printing technology endows the company with the capability to better manage inventory, satisfy customer demands more quickly, and increase customization at least at a small scale for the time being.

I do question whether providing 3-D printers to the company’s highest selling dealerships makes economic sense. Most high-selling dealerships have a wide range of vehicles available for sale and high volumes, which means many different series of parts that will move quickly. In this case, given the high cost of 3-D printing and it being better suited to lower volumes, would it not be better to locate 3-D printers in dealerships with low inventory turnover but high rare parts and customer service requirements (e.g. flagship dealerships in Paris, New York, Toronto, Monaco, etc…)?

In terms of the risks of intellectual property, 3-D files can be encrypted to protect against trade secrets being stolen [1], so I do not consider this to be a major risk associated with rolling out 3-D printing on a broader scale, in particular as it relates to obscure or rare spare parts.

[1] Secured 3D Company Website,, accessed November 2018.

On November 15, 2018, Erik-Toby Peterson-Johnson commented on Crowdsourcing snack food trends at PepsiCo :

Insightful article about Pepsi’s use of open innovation! I agree that these types of campaigns tend to generate a significant amount of marketing buzz, but that in all likelihood it ends up not actually contributing to long-term product innovation. The key benefits I see in this tactic are to keep Pepsi top of mind with customers and to gain critical customer insights by enabling additional customer engagement with the Pepsi brand that they wouldn’t get from traditional focus groups.

I don’t necessarily agree though that Pepsi should partner with promising new brands. Companies that already have some degree of brand recognition are likely to be expensive for Pepsi to acquire and will be more difficult to integrate compared with brands that are built in-house. Rather, the idea around crowd-sourcing in a more early-stage manner like with recipes is a good one as it allows Pepsi and the entrepreneur to partner in brand-building, to reduce product costs and mitigate potential IP issues.

On November 14, 2018, Erik-Toby Peterson-Johnson commented on Using machine learning to improve lending in the emerging markets :

A neat application of machine learning technology to solve a major pain point in emerging markets. I agree with your analysis that the lack of granularity emerging market banks employ in developing individual credit scores leaves a major portion of the population unbanked or under-banked and also limits the banks’ growth potential, and that machine learning can help address this problem. In response to your question around whether banks will accept the risk of a third party making lending decisions, I do not think this will be an issue in the long-term. It is at the discretion of the bank to make a lending decision based on a variety of factors, and the third party credit score is only one of them. Furthermore, there are many companies attempting to tackle the same problem, such as Lenddo and ZestFinance, and these companies will inevitably be purchased by large banks who understand and can integrate the technology into their lending operations.

In terms of limitations in the emerging markets context, one of the main hurdles is lack of access to customer behaviour data. Most emerging markets have huge informal economies, such that information about a customer’s business doesn’t ever enter the digital realm, where companies like obtain their information. In addition, micro-segmentation presents the risk of discrimination in lending decisions, and it’s possible that major swaths of borrowers will continue to be left out if the algorithms do not adjust for biases that are present in the training data.

[1] Tech Emergence Website,, accessed November 2018.

On November 14, 2018, Erik-Toby Peterson-Johnson commented on Investment Banks and Machine Learning: Friend or Foe? :

Super interesting read! While the application of this type of technology is still nascent, I think there is broad applicability to other aspects of the investment banking business, mostly as it relates to matching potential buyers and sellers of securities (i.e. bonds and equities).

In response to your question about whether these actors will become completely useless, I don’t believe they will for a few reasons. First, the role of investment banks in the context of the use of this technology is as a broker-dealer. Regulators require companies to engage broker-dealers in order to sell securities to the public, and broker-dealers need licenses issued by the relevant legal bodies to perform this function. I think that overcoming this regulatory hurdle will be virtually impossible due to the implications around investor protections. In addition, the value of such a system seems skewed towards the issuer: predicting which investors will be interested in a particular bond issuance based on past purchasing behaviour can help issuers identify who to speak to regarding an upcoming issuance, but predicting when issuers are going to issue bonds is a far more complex task, given that it is at the discretion of managers and boards to decide how to fund their businesses and in most cases, this is fundamentally unpredictable. Investment banks provide investors with the value that this type of system lacks by bringing actual potential deals to them.

On November 14, 2018, Erik-Toby Peterson-Johnson commented on Size You: Can Adidas use 3-D Printing to Deliver Custom Sized Shoes to the Masses? :

Fascinating read, well done! Reflecting on your questions, I think the go all-in strategy is very risky and would likely result in high short-term costs related to the cancellation of labour contracts with suppliers and shutting down and moving production facilities from current locations. I agree that a more moderated, incremental transition by line is a viable option and provides Adidas with the ability to either cancel the project if not economically viable or tweak certain aspects of it to address customer concerns. An incremental transition is necessary due to the potential risks related to quality control or production problems.

Regarding the $300 price tag, I disagree that this cost needs to necessarily come down for the shoes to be successful, as was mentioned by TOMStudent2020. If Adidas is able to produce a shoe that lasts longer, fits better, looks better, doesn’t rely on cheap labour to be produced, and can be delivered to a customer within a few hours or a few days, customers will come and will be willing to pay for it.

On November 14, 2018, Erik-Toby Peterson-Johnson commented on Grupo Aval: Utilizing open innovation to build a new business model :

Very interesting piece on the digitization of Grupo Aval. Indeed, many banks worldwide recognize the need to use Open Innovation to keep up with the growing number of start-ups dedicated to disrupting their business models, such as RBC and BNP Paribas [1] [2], and I agree that looking to other industries first for potential applications of Open Innovation could position Grupo Aval as an industry leader in banking.

I really like the idea of publishing a platform for entrepreneurs to submit their proposals, primarily because the sheer number of off-target proposals can become a significant strain on the managers that have to evaluate these proposals. That said, I am not sure that pairing employees with entrepreneurs will provide much benefit to the bank, because of the risk of high-performing Grupo Aval employees quitting to join the entrepreneurs if it turns out their ideas have strong merits. Rather, Grupo Aval might be better off just acquiring the entrepreneurs’ businesses outright, while allowing them to operate in a more flexible way upon integration. This way you still get the entrepreneurial ideas, without the same risk of institutional brain drain.

[1] RBC Company Website,, accessed November 2018.
[2] BNP Paribas Company Website,, accessed November 2018.