While machine learning and artificial intelligence technologies enable the CIA to process vast amounts of information, algorithms are far from replacing human spies. James Bond will still have his job.
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Given the increasing competition in the industry, I would like to propose that a long-term strategy for Align is to move upstream. Historically, Align’s competitive advantage was that it was one of the first to use 3D printing technology to increase ease of manufacturing and manufacturing capacity. Given that 3D printers are slowly becoming commoditized and other companies can now buy them, print molds, and then vacuum form aligners, it would seem Align can disrupt the status quo by becoming a specialized 3D printing technology house. The real promise of additive manufacturing is that it will allow for on-site manufacture of goods, so Align should be the company that enables dentists to print aligners at their office. Since 89% of Align’s revenue comes from the actual sale of Invisalign retainers[1], this would necessitate a change in business model. Perhaps the firm could give printers to dentists for free and charge for polymers, similar to the model employed by document printer vendors. Alternatively, the company could give away polymer and printers and sell an annual license to the software needed to operate the printer. Regardless of my ideas, though, Align has spent US$61mm, US$76mm, and US$98mm on R&D in 2015, 2016, and 2017, respectively[2], so it appears the company is aware of the challenges and possibilities it faces and plans to evolve with the times.
[1] Align Technology, 2017 Annual Report (San Jose: Align Technology, 2018), p. 2.
[2] Align Technology, 2017 Annual Report (San Jose: Align Technology, 2018), p. 58.
I never knew Lego was so far ahead of the curve in seeking ideas from its user base. In addition to LEGO Ideas, Lego launched an effort, years ago, called Designbyme which allowed users to use a Lego app to design their own model, upload it to an online gallery, and order a custom kit of physical parts from Lego that would allow users to build that model they had designed[1]. In 2012, they canceled the service because of the complexity of designing digital models and because the comparatively high price of the custom kits was prohibitive.
Your piece is timely because Lego has not performed well–financially–in recent history[2]. Interestingly, poor performance has been attributed to bloat in the workforce and not fundamental product weakness. As such, I propose that the company’s model of employing master builders (viewed as artists within Lego) who generate product ideas in coordination with marketers[3] has worked well, and open innovation could be a distraction. This said, I do think technology offers unique ways to make legos come alive, and Lego is slowly adopting these technologies[4], for example, by creating an app that projects finished lego models into VR worlds.
Ultimately, I do think LEGO Ideas is a nice way to engage a devoted user base, but too much focus on digital may be distracting. The company has an iconic product, and Lego manages to stay relevant by licensing rights to produce toys based off stories and images in pop culture. If the company manages itself conservatively for cash flow and sticks with the strategy that has allowed it to weather almost 90 years as a company[5], I suggest it will do well in the future.
[1] Lego, “Designbyme – LDD Lego.com,” https://www.lego.com/en-us/ldd/designbyme, accessed November 2018.
[2] Richard Milne, “Lego suffers first drop in revenues in a decade,” Financial Times, September 5, 2017, https://www.ft.com/content/d5e0b6b0-9211-11e7-a9e6-11d2f0ebb7f0, accessed November 2018.
[3] Lego, “How we design Lego sets,” https://www.lego.com/en-us/service/help/fun-for-fans/more-about-us/how-we-design-lego-sets-408100000008835, accessed November 2018.
[4] Andy Robertson, “New Lego Augmented Reality App Is The Best Open-World Lego Video Game,” Forbes, December 1, 2017, https://www.forbes.com/sites/andyrobertson/2017/12/01/new-lego-augmented-reality-app-is-the-best-open-world-lego-video-game/#12b38e0e498a, accessed November 2018.
[5] Lego, “The LEGO History,” https://www.lego.com/en-us/aboutus/lego-group/the_lego_history, accessed November 2018.
Your essay is thought provoking and caused me to consider other examples of innovation bubbling through supply chains and potential advantages of this. One that I found is the case of Taiwan Semiconductor (TSMC). TSMC is a semiconductor contract manufacturer that serves major firms such as Qualcomm, Nvidia, and AMD. For a long time, their technology lagged Intel, but over the past few years, a consensus has emerged that TSMC is out-innovating Intel[1]. Due to the nature of TSMC’s business model as a contract manufacturer, customers come to TSMC with ideas for things they want and ask if TSMC can make them, which provides TSMC insight into future customer demand and allows them to build new capabilities, whereas Intel performs no contract work and tries to predict where markets will go. As it served customers over time, TSMC developed significant differentiated know-how and proprietary technology.
For a more direct response to your question about how Dell may be able to benefit more from creativity in the supply chain, I might submit that Dell may have unused leverage with suppliers, and it can exert this leverage instead of attempting to curry favor with those suppliers. In 2003, The MIT Sloan Management Review published an article that segmented the open innovation ecosystem into Innovation Explorers, Innovation Merchants, Innovation Architects, and Innovation Missionaries[2]. Explorers seek advances in basic science, Merchants are companies such as Qualcomm that invest in and earn royalties from their IP portfolios, Architects are companies with strong commercial acumen such as Boeing that create parameters for a new product and then outsource significant R&D to suppliers, and finally, Missionaries are people and groups that develop new technologies without profit in mind, and Linus Torvalds, who developed Linux, is a prime example of this. Dell, it would seem, fits into this framework as an Architect because, even in its infancy, its success revolved not around fundamental R&D, but in operational efficiency it could wring out of the supply chain[3]. I would propose that, as long as Dell maintains its position as the third-largest computer vendor[4], it will have preferential access to cutting edge ideas from suppliers. In fact, I propose one thing Dell may be able to do better is leverage its heft to get suppliers to develop technologies for it, the way Apple does[5]. In order to do this and to take advantage of the creativity inside suppliers, Dell can potentially focus on moving up the value chain with respect to the products it creates: the company can define needs for suppliers and let them perform the innovation behind those products, while Dell focuses on its competency discovering market needs, marketing, and selling product.
[1] Ben Thompson, “Intel and the Danger of Integration,” Stratechery, June 25, 2018, https://stratechery.com/2018/intel-and-the-danger-of-integration/, accessed November 2018.
[2] Henry Chesbrough, “The Era of Open Innovation,” MIT Sloan Management Review, April 15, 2003, https://sloanreview.mit.edu/article/the-era-of-open-innovation/, accessed November 2018.
[3] Richard Ruback, “Dell’s Working Capital,” HBS No. 9-201-029 (Boston: Harvard Business School Publishing, 2003), p. 1.
[4] “Gartner Says 2016 Marked Fifth Consecutive Year of Worldwide PC Shipment Decline,” Gartner press release (Stamford, CT, January 11, 2017).
[5] Tim Bajarin, “How Corning’s Crash Project For Steve Jobs Helped Define The iPhone,” Fast Company, November 10, 2017, https://www.fastcompany.com/40493737/how-cornings-crash-project-for-steve-jobs-helped-define-the-iphone, accessed November 2018.
You raise an interesting question regarding perpetuation of biases, though I would be inclined to suggest that it would be dangerous for the creators of dating apps to attempt to “correct” for “biases” that exist. Who is to define a “bias”? Likewise, who is to say that those writing the algorithms have are not encoding their own belief systems in code, and thus attempting social engineering… One can construct a frivolous example to illustrate this: suppose Bumble’s developers decide more couples should consist of people with a height difference of 1.5 feet and codes this into its app. Is this concerning? Is this acceptable in which all cultures in which Bumble operates? I ask these questions because I believe they point to a major strength in the current approach dating apps take to match generation: the system in which users reveal their preferences through who and what they like in the app makes these apps scalable because they algorithmically adapt to a user’s race, gender, and ethnicity, and this allows them to be used by a wide range of people in a wide range of places.
I liked the concept of Predix and GE’s vision of the Industrial Internet and find it sad that GE grew too big for its own good under Jeff Immelt’s watch. Given GE’s leverage and the unhealthy finances of its power business[1], it seems the company will not have the ability to invest significantly in innovation and will instead have to focus more on cash flow. In fact, earlier this year, it was reported that GE planned to sell its digital assets, including Predix[2]. This said, I do not believe GE’s woes portend doom for innovation in the industrial sector, or even at GE. For example, GE Healthcare and Intel are jointly developing machine learning powered imaging tools[3], and these are likely to yield benefits quite soon: some of the tools they are developing are already being piloted at select hospitals. I would propose that what we will see at GE in the Larry Culp era is a company that, after slimming its portfolio to two operating units (GE Healthcare and GE Power most likely) builds machine learning into products and services those businesses offer.
[1] Thomas Gryta and Saumya Vaishampayan, “GE Shares Fall Again, Hit New Low,” November 12, 2018, https://www.wsj.com/articles/general-electric-shares-keep-falling-on-track-for-fourth-straight-session-of-declines-1542039574?mod=searchresults&page=1&pos=8, accessed November 2018.
[2] Dana Cimilluca, Dana Mattioli and Thomas Gryta, “GE Puts Digital Assets on the Block,” July 30, 2018, https://www.wsj.com/articles/ge-puts-digital-assets-on-the-block-1532972822, accessed November 2018.
[3] GE Healthcare, “Beyond Imaging: the paradox of AI and medical imaging innovation,” http://newsroom.gehealthcare.com/beyond-imaging-ai-imaging-innovation/, accessed November 2018.
You make a good point; however, many branches of government service are able to attract and retain talented people because those people are inspired by the idea of serving a higher purpose. This said, there is no denying the fact that many also leave government because pay is low compared to the private sector. I would propose that programmers and data scientists are, as a group, motivated by
1) Opportunity
2) Money, and
3) Job PerceptionThe data science roles at the CIA offer access to tools and pools of data that are perhaps only rivaled by those at top Big Tech firms, so the opportunity is quite compelling. Ironically, the government does have the money to pay market rates, and proof for this can be found in a Wall Street Journal article about Palantir was just published today[1]. The article mentions that the only part of the business have ever turned a profit is the government services arm; this fact can be read to mean that the government is paying ABOVE market rates for the programming talent at Palantir to come work for them, but sadly, the CIA does not appear to offer competitive salaries for data scientists working on the inside as CIA employees[2][3]. Finally, the perception of CIA and intelligence agencies is hurting in the post-Snowden era, and this can impact the ability to attract and retain talent even if CIA is paying market rates.
Perhaps the solution I proposed above is too simplistic, and a more interesting question is whether the CIA should pay market rates for programming talent AND use an image makeover/marketing campaign to make it a place programmers and data scientists would feel more interested in joining. I wonder what political hoops would need to be cleared for CIA to pay the millions that top data scientists now command[4]?
[1] Rob Copeland and Eliot Brown, “Palantir Has a $20 Billion Valuation and a Bigger Problem: It Keeps Losing Money”, The Wall Street Journal, November 13th, 2018, https://www.wsj.com/articles/palantir-has-a-20-billion-valuation-and-a-pretty-big-problem-it-keeps-losing-money-1542042135, accessed November 2018.
[2] CIA, “Careers & Internships,” https://www.cia.gov/careers/opportunities/science-technology/data-scientist.html, accessed November 2018.
[3] Paysa, “Palantir Technologies Data Scientist Salaries,” https://www.paysa.com/salaries/palantir-technologies–data-scientist, accessed November 2018.
[4] Cade Metz, “A.I. Researchers Are Making More Than $1 Million, Even at a Nonprofit”, The New York Times, April 19th, 2018, https://www.nytimes.com/2018/04/19/technology/artificial-intelligence-salaries-openai.html, accessed November 2018.