what can non-tech incumbents learn from silicon valley?

C O N F I D E N T I A L© Copyright 2012 – 2014 650Labs. All Rights Reserved.

Silicon Valley Wants It All

Why Non-Tech Companies Globally Need to Think Harder Than Ever About Silicon Valley

September, 2014

Page | 1© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L

Silicon Valley has made a big shift …

From “High Tech Capital of the World”

To “Industry-Disruption Capital of the World”

Makes technology-based products

Sells IT to businesses globally

Arms merchant

Builds disruptive businesses

Competes with businesses globally

Mercenary


… and has already disrupted several industries in very significant ways

Industry DisruptorsRevenueDisrupted Disrupted

1. Mobile Handsets

$ 75B Motorola, Nokia, RIM, mobile operators

2. Advertising $ 45B Broadcast & print media, big brands

3. Music $ 20B Music retailers, distributors,labels

4. Movies $ 6B Movie retailers, content creators

5. Hospitality $ 6B All major hotel chainsglobally

Five Examples:


The incumbent CEO’s dilemma: Software Is Eating The World

What’s the most unsettling scenario if you’re the CEO of large incumbent in a slow-growth mature industry somewhere in the world?

How about a well planned, focused attack by a fully-funded, below-the-radar disruptor that simultaneously …

Your move

… Takes on the risks of re-envisioning how your industry can operate and grow

… Builds a product or offers a service that is deemed ‘much better’ by your customers than your current offer

… Focuses on efficiently tearing away your most profitable customers with a better value proposition and/or business model

… Undercuts your cost structure with advanced technology and/or business model innovation

… Hits you with sustained force sufficient to inflict major damage

… Outflanks your every response with a superior battle plan and strategy

… Not constrained as you might be by a bureaucratic culture, lack of an innovative culture, high cost structure and being slow to competitive responses


Software Is Eating the

World…Source: Why Software Is Eating The World by Marc Andreessen, Wall Street Journal, August 11th, 2011


Construction of Valley Vertical Ecosystem

Big / ‘Traditional’ Silicon Valley Companies

High Growth Startups

Global Multinationals


In Silicon Valley, a ‘5-layer’ mobile cluster of 1,000+ companies focused on innovation/disruption has taken root

500+ mobile centric startups in Silicon Valley combined with:

50+ non-Valley mobile companies who have set up a strategic presence in the Valley combined with:

Every major traditional Silicon Valley company with a compelling/viable mobile-centric strategies combined with:

25+ leading mobile operators globally all with a strategic presence in Silicon Valley combined with:

Two Silicon Valley juggernauts who have fundamentally transformed the face of mobile globally:


Equally, there is a formidable retail & CPG cluster in Silicon Valley

Hundreds of retail startups have been funded in Silicon Valley:

Large CPG companies from throughout the world have opened a strategic presence in Silicon Valley:

Large retailers from throughout the world have opened a strategic presence in Silicon Valley:

Dominant Silicon Valley juggernauts themselves are very active in retail activities:


Example: In Silicon Valley, a 1,000+ company financial services cluster focused on disruptive innovation has taken root

10+ financial services centric companies who historically happened to be headquartered in Silicon Valley, combined with:

25+ traditional ‘tech companies’ with a strategic Silicon Valley presence who recognize the utter importance of the financial layer, combined with:

700+ Silicon Valley startups broadly in the financial services space, combined with:

20+ financial services multinationals who have opened a strategic presence in Silicon Valley


Massive Sharing, Ideas Competing, Massive Learning, Fast Cycles – ‘Ideas Cross Pollinating’


Scouting & Business Development

This is the most prevalent type of non-tech activity in Silicon Valley. The company is scouting for innovation trends and their impact on their business, conducting business development, meeting with and evaluating interesting startups, driving alliances, gaining insights what the disruptors are up to, etc.

Build Stuff This activity tends to be focused on application or product development, prototyping, etc. For instance, Deutsche Telekom has 20+ software developers in an office across the street from Google. Their focus is related to Android and it’s success inside DT.

Research Stuff Several companies have pure research teams in Silicon Valley working on advanced technologies that have very long lead times to get to market. These pure research offices generally work closely with Stanford, MIT, etc. They attend academic conferences, etc.

Venture Investing andM&A

Some companies elect to participate via venture investment funds, both on and off balance sheet approaches. Some companies are making direct investments in startups; typically more for strategic insights and staying close to innovation vs. a purely financial returns. e.g. AmEx, Citi and BBVA doing venture investing.

CultureVultures

Looking at Silicon Valley best practices for hiring & retention, leadership development, organizational design, innovation, etc. and trying to replicate those best practices back at HQ.

Five ways non-tech companies tap into Silicon Valley by opening a strategic outpost

C O N F I D E N T I A L© Copyright 2012 – 2014 650 Labs. All Rights Reserved.

Further Reading: http://www.650labs.com/disruptor-proof-points/

[email protected]@markzawacki

#650strategy

Thank You!’

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“Here's to the crazy ones, the misfits, the

rebels, the troublemakers, the round pegs

in the square holes ... the ones who see

things differently – they're not fond of

rules ... You can quote them, disagree with

them, glorify or vilify them, but the only

thing you can't do is ignore them because

they change things ... they push the human

race forward, and while some may see them as the crazy ones,

we see genius, because the ones who are crazy enough to think

that they can change the world, are the ones who do.”

– Steve Jobs

what can non-tech incumbents learn from silicon valley?

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