Sairah Yu's Profile
It’s great to see an airport use the IoT to provide a faster and more convenient flight experience. I do find it ironic, though, that London City Airport is where the pilot was conducted, given that the airport already provides a great experience. LCY was the fastest airport I’ve gone through, and I used to only budget enough time such that I got to the gate 10 minutes before takeoff.
On second thought, perhaps that’s why LCY was a great place to conduct the pilot. With fewer passengers and fewer first-time flyers, volume and glow data would be easier to analyze and less likely to be biased by other factors (i.e., the data set would be cleaner). Plus, there did not exist a sandbox environment to test this pilot — it’s not like there could be a fake airport that could be used for the purposes of this test — so choosing a smaller airport with fewer variables to control makes sense.
I like your suggestion to use the IoT for baggage handling. This is a huge pain point for flyers and it seems possible to tag every item of luggage with an RFID, which would transmit location data to sensors within the airport. Airlines already have to tag bags, right?
Your concerns about privacy are also valid. I imagine that some travelers would not feel comfortable being tracked multiple ways once they enter the airport. I suppose, though, if the values are clearly communicated to travelers, then they would be more receptive. After all, a lot of privacy is already given up by passengers as they go through security.
Now, if LCY could only fix the London fog which always delays outbound flights from that airport…
What Netflix did — migrate from DVDs by mail to streaming video — was impressive because (1) they took a big (i.e., caped-intensive) bet at the right time that people’s media consumption habits would move towards streaming, and (2) they were able to do so (i.e., change their entire operating model) so quickly. I didn’t fully appreciate just how much of their operating model changed. It just wasn’t the technology, but it was also, as you mentioned, a complete change to the content creator / distributor / consumer relationship. (And it makes much sense why they would move to original content.)
I’d like to expand on your point about Netflix’s ability to mine user data to draw insights about behavior and preferences. Netflix’s recommendation engine has been cited as an example of a company flexing its big data muscle. The company used to host contests to data scientists and developers to design a better recommendation engine, offering prizes as large as a million dollars. A lot of technology is behind the content Netflix suggests you watch!
I’d also like to look at the concerns you surfaced, around what Netflix needs to do as it grows and expands into video formats such as 4K, from a technology perspective. Netflix is still on Amazon Web Services and I speculate is AWS’s largest customer (especially after Dropbox moved to its own data centers). The newer formats require even more space and bandwidth, which means higher AWS spend and greater dependence on that service. Does Netflix need to think about building its own data centers, as Dropbox did? It was be an immensely huge capital expenditure for the company, but it would give the company greater control over its cost destiny.
Great post. The inconvenience of phone reservations and paper systems must have handling reservations before OpenTable a headache for restaurants. However, in class we learned that about 10-20% of reservations are no-shows, and I wonder if that percentage is higher for restaurants on OpenTable, given how easy it is to make a reservation. Perhaps OpenTable has simply created a different type of headache.
I agree that there is a big opportunity for OpenTable to use big data to provide a personalized premium experience for users. OpenTable also sells software for restaurants to manage tables better — i.e., the programs behind those touch-screen computers the servers operate. In fact, the online reservation software was built on top of the management software. The management software contains information about orders and where patrons are sitting. If OpenTable could use this entire set of data, not only could it inform restaurants about wine preferences, as you suggested, but also place you at your favorite table or with your favorite server (assuming you’ve been there before).
Your other point, about OpenTable’s expansion into billing and restaurant discovery, is also key because it shows OpenTable’s attempt to own a larger part of the dining experience. I view the management software as the core product it sells to restaurants — the moat that protects its relationship with restaurants from encroachment by competitors. The online reservation system is an additional service that adds value to the OpenTable-restaurant relationship, as will the introduction of a billing system and a restaurant discovery service.
Great post — we don’t talk enough about the effects of digital transformation on the public sector. In the case of Healthcare.gov, this was a very visible event given the amount of attention and dialogue around the Affordable Care Act.
The first root cause you mention — lack of relevant experience — is spot on. It took a highly skilled team with a strong Silicon Valley pedigree to come in and address the many technical issues that occurred during the rollout. One reason is because there are only a handful of web properties that handle the same traffic volume and backend complexity that Healthcare.gov requires — and they are all based in the Bay Area. There was a great article about this in The Atlantic: https://www.google.com/amp/www.theatlantic.com/amp/article/397784/
That same team has gone on and founded Nava, which aims to solve many of the technical challenges facing the public sector. Along with Palantir, they represent companies with the relevant experience and nimbleness to attempt to fix such problems at a national scale. Perhaps the role of the Public-Private Partnership is key to the successful digital overhaul of the public sector: companies such as Nava leading the transformation, with the support and resources of the Federal Government.
Your point about better leadership is also key. The White House did not have a CTO until 2009, and did not have a CDO (Chief Digital Officer) until April 2015; and I speculate the latter appointment occurred in part due to the Healthcare.gov fiasco. Having the right leadership is not only important from an organizational and decision-making perspective, but also the position is very visible and with the right person in place, others from the technology sector may consider leading Silicon Valley to solve important problems in Washington DC.
Great post. A huge advantage to robo-advisory is their ability to simplify the allocation process for individual investors. Many individuals are clueless when it comes to how much of their money needs to be allocated into stocks, bonds, commodities, emerging markets, alternative investments, or any other asset classes. Fidelity and Vanguard provide resources but the individual still needs to do his or her homework. Betterment, however, gets there by asking a few questions. One concern I have is whether the current performance of the market will affect the ability for robo-advisors to grow. Even though investors should not withdraw their money during economic downturns, it still happens, and I wonder if that will happen to these robo-advisors if the investors are not sufficiently financially literate.
Your question on how quickly robo-advisors need to grow is important given the recent fundraising environment. Betterment and Wealthfront took venture money at high valuations. In order to justify those valuations, they need to grow their assets under management (AUM) rapidly. $6 billion in AUM at 0.25% fees amounts to $15 million in annual revenue. Betterment’s March 2016 fundraising placed the company at a $700 million valuation, or 47x revenues. That’s a high multiple for even a tech company. The only way Betterment can grow their AUM this rapidly is if they reach institutional investors. Pension funds, for example, oversee billions in assets; Betterment needs to convince them to invest at least a part of that in robo-advisory.
If Betterment is unable to do this, then, as you mentioned, they would be an acquisition target. In addition to BlackRock’s acquisition of FutureAdvisor, Northwestern Mutual acquired LearnVest — which was founded by an HBS student — in March 2015. The larger money managers could not only expand the reach of these robo-advisors, but also they would have the reputation and clout needed to get the institutional investors on board.
Great post. By introducing the SaaS business model, Salesforce changed the way companies purchase enterprise software. Instead of purchasing new software every few years, companies can pay a subscription fee and get the latest release. IT spends less time installing the software, as it simply needs to give an employee a login. Perhaps it should not be surprising that most enterprise software companies adopt a SaaS model, including long-standing companies such as Microsoft (Office365) and Adobe (Creative Cloud and Document Cloud, formerly known as EchoSign).
You make a great observation that Salesforce has been particularly beneficial for small- and medium-sized companies; they previously lacked the resources to implement a proper CRM but for a recurring fee can use the Salesforce cloud. I would add, more generally, that all companies benefit from having their CRM in the cloud, given the nature of sales. Before Salesforce, one issue with CRM was that it was never up-to-date for all the people using it. Traveling salespeople could not update their colleagues on the status of a sales opportunity until they returned to their home office. Salesforce eliminates the version control issues that could arise. It also makes complex sales deals occur more easily, particularly if multiple people are having conversations with separate leads within an organization.
I also agree with your point about expanding beyond CRM, and Salesforce’s acquisitions of ExactTarget and Pardot suggest that they are heading in this direction. Given that marketing’s responsibility is to generate leads for sales to close, it seems natural that Salesforce would move “up funnel”. As marketing becomes more digital, more of this information can be fed into the Salesforce cloud, which includes, as you suggested, social media. It will be interesting to see to which degree Salesforce is able to move into this space on its own, especially given that another big move by the company was introducing a platform for other developers to build on top of the Salesforce cloud, which has led to the creation of entirely new companies such as Marketo and Eloqua.
I have a deep fascination for sports leagues outside the big 4, so I really enjoyed reading this.
I like that you highlighted two ways climate change matters to the WSL — how it affects where the events can be held, and how it affects the behaviors of those involved in the events. While the WSL is a relatively small entity, for them to be successful in any attempt in mitigating against the effects of climate change they need to partner with big organizations like, as you mentioned, NASA and Columbia University. I agree that they should require the communities in which they compete to commit to sustainable practices. At the least, that seems to be within their influence.
Like the point above me makes, I too wonder how much the league will adapt to the effects of climate change, if at all. Does there emerge a different type of surfing that fans will have to appreciate? Or are these changes more likely to spell doom for the league, especially if fewer coral reefs means fewer waves worth surfing?
Your concerns are valid — Lend Lease seems to have found ways to mitigate its contributions to climate change but its efforts to adapt to climate change seem inadequate. And I would think that Lend Lease would be worried about this, being a commercial property developer in a country whose major cities are mostly coastal. I would go a step further and say that cities need to do more than to work with Lend Lease, they need to regulate developers with coastal portfolios more heavily. I speculate that Lend Lease is less willing to change its operations and more willing to defer that risk to the insurers; but if developing in certain coastal areas were made more difficult, then Lend Lease would have no choice but to adjust its operations.
Wow, I was surprised to learn that 80% of the emissions comes from a building’s use of energy and not its construction. What’s also surprising is the diversity of tactics involved in seeking LEED certification. Using greener raw materials and improving processes to achieve energy efficiency seem foreseeable, but hiring “environmental managers” and obtaining better data capabilities seem quite different compared to the types of things Lend Lease usually does. Even though it appears that seeking LEED certification would be more impactful than finding ways to reduce emissions associated with building construction, is that still true after adjusting for the operational changes requires to get them done?
Given deforestation’s contribution to greenhouse gas emissions, it is promising that Unilever, as one of the world’s largest consumer goods companies and one of the world’s largest users of agricultural raw materials, is pushing the industry to shift raw materials procurement to providers who practice sustainable methods. A large multinational must take the lead, especially one responsible for producing 3% of the world’s palm oil and 1% of its soy. It seems, though, that effecting change across the industry requires more than actions made by individual companies, however big, or pressure from industry groups such as the Consumer Goods Forum. Perhaps regulation must be enacted, such as taxes or penalties on the production and sourcing of these raw materials when done unsustainably. In the case palm oil, Unilever would be well-positioned against its competitors, and in other raw materials categories, Unilever would be forced to adjust quickly.
I was surprised, though, to learn where most of the carbon emissions comes from. I did not realize that 68% of greenhouse gas emissions in Unilever’s products occur after they reach consumers. I had assumed that the most impactful areas for Unilever to mitigate its contributions to climate change were in supply chain and manufacturing: procuring raw materials from sustainable sources, finding efficiencies in production to reduce resource consumption, and redesigning logistics to minimize emissions from transportation of inventories. These improvements are relatively incremental compared to innovating on product and packaging, which may result in more drastic changes to operations. Furthermore, will consumers willingly adopt these product innovations? For example, will consumers be too accustomed to the way they use detergents to be willing to change their behaviors for a revamped product? Perhaps, as is alluded to in the post, Unilever must do this product category by product category. The company must do this quickly, though, if it aims to reduce its carbon emissions sufficiently.
(Kudos on conducting primary research!)
I’m impressed by the breadth and creativity in Dig Inn’s approach to mitigate its contribution to climate change. Sourcing locally seems foreseeable, but using lesser known vegetable varieties and rescuing “imperfect” produce to reduce food waste are clever tactics. It’s clear that this is a company that proactively addresses the issue of climate change by embedding mitigation tactics in its core operations.
Perhaps we can take your point on empathizing with farmers further. If Dig Inn is starting its own 40-acre farm to experiment with farming practices and grow specific crops, should it consider vertically integrating by starting more farms and growing more of its own food? I speculate that it takes a lot of effort to find the right farms considering their emphasis on local farms and penchant for lesser known varieties of vegetables. This results in the risk of limited quantities of produce, and Dig Inn mitigates against this by planning menus in farther in advance, but Dig Inn may have it easier operationally if it does not have to react to scarcity. I’m not suggesting Dig Inn be 100% its own supplier, but with its own farms, it can grow enough of the crops it wants to its own standards. Doing this would be costly, but I wonder how it compares to the costs associated with selecting, sourcing, and working with their current farms.
I like your suggestion to expand Dig Inn’s data analytics capabilities to improve its ability to forecast supply volumes and lead times, given the precariousness of its supply chain. Furthermore, developing better ways to measure impact and provide feedback to farmers would improve the relationship the company has with stakeholders along the supply chain. I’m wondering, though, if Dig Inn would have to invest heavily to build this capability, and if so, should they spend their time on better sourcing and sustainable farming practices, which they seem to be good at already.
That LafargeHolcim would transition from coal to renewable energy sources such as biomass, and redesign its facilities to reduce thermal consumption, seems foreseeable given how energy-consuming cement production is and how much that process contributes to greenhouse gas emissions. I was surprised, though, to learn that the company has found ways to reduce the amount of clinker, a major raw material, required in manufacturing cement. I had assumed that cement production, having existed for so long, had run out of ways to innovate, but even in this industry there remain technological improvements to reduce the carbon output for the process.
Seeing the company with the largest market share pursuing sustainable practices signals to the industry that addressing climate change is paramount, but I wonder how these operational changes affect the viability of the business. In particular, how does the use of alternative mineral components instead of clinker change the product? The new blended cement is greener, but can it provide the same level of mechanical support and resistance to erosion from harsh elements? To what extent do these changes compromise quality, and in turn, price? Perhaps these changes make the process more costly, and LafargeHolcim can some of absorb it by finding other cost savings — which they have done by making their facilities more energy efficient — but if the company has to pass on some of that cost to customers, then it may rethink how much of its operations it is willing to change.
Naomi raises a valid concern about quality, but I don’t think Nike needs to compromise in pursuit of a lower carbon footprint. If, in as early as 1995, Nike had identified areas in its manufacturing that may have contributed to global warming, then Nike has already been aware and has been making changes, and no one has been concerned about quality since then. Perhaps why Nike is a leader among apparel manufacturers, and corporations more broadly, when it comes to addressing climate change, is that with so many iconic product releases — from Air Max, to Shox, to Free — Nike has shown it is the industry leader in footwear innovation, and innovating on footwear in response to climate change is just another focus as the company’s product evolves.
Nike is addressing the biggest issues. As Figure 1 indicates, reducing emissions from manufacturing and supply chain processes should be the top priority in order to reduce overall greenhouse gas output. But while Nike has improved its operations to mitigate its contributions to climate change, I wonder how much it will have to improve its operations in order to adapt to the effects of climate change. A lot of Nike’s manufacturing remains in Southeast Asia, a region susceptible to floods, typhoons, and other catastrophic weather events. The effects of climate change may translate to a premium that might be passed on to the customer, but not necessarily because Nike needs to monetize its investments in sustainability. I’m more concerned that if Nike has to de-risk its manufacturing and supply chain from the effects of climate change, it may have to move some of its production away from Southeast Area — and that might be costly.
Property and Casualty insurers are undoubtedly affected by climate change — their business remains viable only if they can appropriately adjust for the risk associated with catastrophic weather events.
Of ClimateWise’s six principles, which would be more important from Allstate’s perspective? I speculate the order in Principles 1, 2, 4, 3, 5, and 6. Principle 1 is a top priority if Allstate wants to protect it’s P&C insurance business (although it seems contradictory that Allstate would both improve its risk models and reduce homeowner policies in high-risk regions). Principle 2 is important because the burden to build more sophisticated predictive models matters less if fewer properties in these high-risk areas can be built built due to regulation. Principles 4 is another important hedge, although the financial impact will not be immediate. Principle 3 is also a hedge but is least quantifiable. Principle 5 would be important to companies trying to mitigate their own contributions to climate change, but I doubt that insurance companies’ operations affect the environment that greatly. Principle 6 exists to evaluate a company’s commitment to the first 5 principles and must be done anyway.
By adequately committing to Principles 1, 5, and 6, Allstate may have addressed half the guidelines, but one is perfunctory and the other is relatively less important — which is to say that Allstate could be doing more. If we look at Principles 2, 3, and 4 from the lens of resources required, Principle 4 appears easiest to commit to, and Principle 2 appears hardest, given how much time and effort goes into lobbying governments to be more stringent on land development. If Allstate truly believes it will be affected by climate change, then committing more heavily to Principles 3 and 4, along the ways you recommended, would not only show Allstate’s increased responsibility towards the effects of climate change, but also yield financial gains for the business.