Innovation Archive

0

Shaking up the value chain

Data and digitization are creating a growing array of value-creation choices in industries as diverse as pharmaceuticals, mining, and energy.

During the 1980s, McKinsey’s Fred Gluck and Harvard Business School professor Michael Porter began writing about the interrelated activities through which companies create value for their customers. Executives have always had choices about how to perform the activities in this “business system” (Gluck’s words) or “value chain” (Porter’s). In the digital age, as information disrupts the nature of value creation in many industries, the range of choices available to senior business leaders has increased. For example, digital platforms in the pharmaceutical industry now make it possible to aggregate massive amounts of data on diseases—potentially accelerating the discovery and design of new drugs and challenging the industry’s legacy processes. In energy production and mining, although companies have long outsourced some functions in efforts to drive down costs, digital requires a new approach. Using data, suppliers can offer incumbents an expanded range of capabilities and productivity gains—alluring possibilities that are accompanied by the risk that sharing too much data could shut off areas of future growth. This type of flux in value chains will only intensify across industries, forcing leaders to grapple with existential questions about core competitive strengths in an environment where destabilizing technologies will be the norm.

Will digital platforms transform pharmaceuticals?

Start-up companies are combining genetic information and new therapies to transform drug discovery and development—at greater speed and scale.

Product innovation is at the heart of the pharmaceutical industry’s value chain. Long, capital-intensive development cycles and legacy processes, though, have made it difficult to exploit the full potential of emerging digital technologies to deliver faster, more agile approaches to discover and develop new drugs. Indeed, McKinsey research shows that the industry’s digital maturity lags that of most other industries.

A new current is forming in one area of the industry: start-up companies that are creating biomolecular platforms around cellular, genetic, and other advanced therapies.1 The platforms marshal vast amounts of data on the genetics of diseases, such as cancer, and combine that with patients’ genetic profiles and related data. They zero in on key points along the information chain—for example, where there are linkages between DNA and proteins, and then cells—to “design” new drugs. Much like software developers, the platforms engineer disease therapies built upon the “code-like” DNA and RNA sequences within cells (Exhibit 1).

These techniques have significant implications for the treatment of many life-threatening illnesses that are outside the reach of standard therapeutic approaches. They could also disrupt the industry’s value chain as they speed up drug discovery and development, with the potential for a single platform to scale rapidly across a range of diseases (Exhibit 2).

In one example of a biomolecular platform, for a disease that results from a mutation in DNA that codes for a needed enzyme, the platform models the disease from medical and genetic data to arrive at an enzyme “optimized” to correct for the mutation. The platform then designs a sequence of genetic material to treat the disease, as well as a delivery vehicle to get it to the target cells. In another example, for CAR-T2 therapies, the platform modifies a patient’s T cells (an immune-system cell), which are then deployed to attack a cancer.

A new competitive landscape

Optimized biomolecular platforms have the potential to accelerate the early stages of R&D significantly. For example, it can take as little as weeks or months to go from concept to drug versus what’s often many months, if not years, of trial and error under conventional discovery methods. This is achieved by routinizing key steps (such as preparing a drug for preclinical testing) and using common underlying elements in the design of the drug (such as drug-delivery vehicles that are similar). In the past five years or so, a number of start-ups have formulated dozens of drugs that are in clinical trials and, in some cases, drugs that have already been approved. The large information base behind therapies helps identify the right targets for preclinical and clinical trials.

By Olivier Leclerc and Jeff Smith

More: https://www.mckinsey.com

0

Blockchain beyond the hype: What is the strategic business value?

Companies can determine whether they should invest in blockchain by focusing on specific use cases and their market position.

Speculation on the value of blockchain is rife, with Bitcoin—the first and most infamous application of blockchain—grabbing headlines for its rocketing price and volatility. That the focus of blockchain is wrapped up with Bitcoin is not surprising given that its market value surged from less than $20 billion to more than $200 billion over the course of 2017.1 Yet Bitcoin is only the first application of blockchain technology that has captured the attention of government and industry.

0

ConsumerLab Report Ericsson – 10 Hot Consumer Trends 2018

Imagine you have just arrived home from work. You wave your hand, and the lamp turns on, flashing the light in greeting. The home speaker begins to play music, but when you give it an exasperated look, it turns off. You make a coffee, but grimace because it’s too bitter. The coffee machine immediately offers to add sugar or milk.

Two things are conspicuously absent from this vision of a not-too-distant future. One is an appliance with switches and knobs, and the other is a smartphone full of remote control apps. Our research indicates that consumers are increasingly moving towards a paradigmatic shift in how they expect to interact with technology. Ever more things are becoming connected, but the complexities of how to control them all are a different matter.

On the one hand, alternative yet equally good user interface solutions for simple functions have existed for much longer than we’ve had electronic gadgets. A Westerner who experiences an Asian meal for the first time soon finds out that the user interface to that meal is a pair of chopsticks rather than a knife and fork. On the other hand, mass-market acceptance of digital technology has made the proliferation of user interfaces practically infinite. Every new device with a screen adds new user interface variations, which are then multiplied by the number of apps within each gadget.

Today you have to know all the devices. But tomorrow all the devices will have to know you. If consumers continue to be faced with the prospect of learning and relearning how to use devices in the face of an ever-increasing pace of technological change, they will become increasingly reluctant to buy in to the future. We might already be close to that breaking point. The current generation of “flat” user interfaces do not use 3D effects or embellishments to make clickable interface elements, such as buttons, stand out. It is difficult for users to know where to click. As a result, they navigate web pages 22 percent slower.1 For this reason, our trends for 2018 and beyond focus on various aspects of more direct interaction between consumers and technology.

With 5G, connectivity is set to become ubiquitous. This might sound simple, but it involves a huge technology upgrade; devices must be able to relay complex human interaction data to cloud-based processing, and respond intuitively within milliseconds. The Internet of Things (IoT) must provide interoperability between all devices, and allow for mobility. Network availability also needs to be maintained, so that devices do not suddenly go offline and lose their human-like capabilities.

More: www.ericsson.com

0

Smart cities: Digital solutions for a more livable future

 

As cities get smarter, they are becoming more livable and more responsive—and today we are seeing only a preview of what technology could eventually do in the urban environment.

Until recently, city leaders thought of smart technologies primarily as tools for becoming more efficient behind the scenes. Now technology is being injected more directly into the lives of residents. Smartphones have become the keys to the city, putting instant information about transit, traffic, health services, safety alerts, and community news into millions of hands.

After a decade of trial and error, municipal leaders are realizing that smart-city strategies start with people, not technology. “Smartness” is not just about installing digital interfaces in traditional infrastructure or streamlining city operations. It is also about using technology and data purposefully to make better decisions and deliver a better quality of life.

Quality of life has many dimensions, from the air residents breathe to how safe they feel walking the streets. The latest report from the McKinsey Global Institute (MGI), Smart cities: Digital solutions for a more livable future (PDF–6MB), analyzes how dozens of digital applications address these kinds of practical and very human concerns. It finds that cities can use smart technologies to improve some key quality-of-life indicators by 10 to 30 percent—numbers that translate into lives saved, fewer crime incidents, shorter commutes, a reduced health burden, and carbon emissions averted.

  1. What makes a city smart?
  2. Smart-city technologies have substantial unrealized potential to improve the urban quality of life
  3. A look at current deployment in 50 cities around the world shows that even the most advanced still have a long way to go
  4. Smart cities change the economics of infrastructure and create room for partnerships and private-sector participation

What makes a city smart? Smart cities put data and digital technology to work to make better decisions and improve the quality of life. More comprehensive, real-time data gives agencies the ability to watch events as they unfold, understand how demand patterns are changing, and respond with faster and lower-cost solutions. Three layers work together to make a smart city hum. First is the technology base, which includes a critical mass of smartphones and sensors connected by high-speed communication networks. The second layer consists of specific applications. Translating raw data into alerts, insight, and action requires the right tools, and this is where technology providers and app developers come in. The third layer is usage by cities, companies, and the public. Many applications succeed only if they are widely adopted and manage to change behavior. They encourage people to use transit during off-hours, to change routes, to use less energy and water and to do so at different times of day, and to reduce strains on the healthcare system through preventive self-care.

By Jonathan Woetzel, Jaana Remes, Brodie Boland, Katrina Lv, Suveer Sinha, Gernot Strube, John Means, Jonathan Law, Andres Cadena, and Valerie von der Tann

More: https://www.mckinsey.com

0

EY – Engineering the engineering org

How can companies design their engineering functions to strike the right balance between market responsiveness and operational efficiency?

Harnessing and optimizing engineering talent is paramount to success in the technology sector, but our experience has shown that there is no single way to accomplish this when it comes to designing an engineering organizational structure. Some structures optimize solution time-to-market, while others optimize operational efficiency. If an organization leans too far in either direction, it risks falling behind competitors in cost structure, innovation or speed-to-market. How can companies design their engineering functions to strike the right balance between market responsiveness and operational efficiency? It is worth noting that what is right for one company in its current form (stage in the product life cycle, competitive landscape, etc.) may not be right for another or for that same company five years from now. In short, there is no right structure — only the right structure at the right time for a given company.

Know your options. There are a wide variety of options when it comes to engineering organizational structures. For this analysis we have grouped them into three categories: vertically oriented, horizontally oriented and hybrid.

  1. Vertically oriented structure where engineering is part of each business unit (BU)
  2. Horizontally oriented structure where engineering is a stand-alone organization
  3. Hybrid structures that use hard and dotted lines to matrix engineers between an engineering organization and BUs

To assess where their company lies on this spectrum, executives can ask themselves questions such as:

  • Who is responsible for meeting customer demands and anticipating market trends?
  • Who owns the product line P&L? Who is responsible for prioritizing engineering investments?
  • Who is responsible for attracting, developing and retaining engineering talent?

by: Barak Ravid, Managing Director, EY Co-head of Technology; Contributors: Barak Ravid
Managing Director, Co-head of Technology, EY-Parthenon, Ernst & Young LLP; Spencer Lee, Vice President
EY-Parthenon, Ernst & Young LLP; Nina Lapachet, Senior Manager, Transaction Advisory Services, Ernst & Young LLP

More: EY

About EY. EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.