The Entrepreneur and the Cloud – Silicon Valley Rejuvenated, Singapore … · Silicon Valley Rejuvenated, Singapore Coming of Age. transforming the accelerating pace of change from
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The Entrepreneur and the Cloud –Silicon Valley Rejuvenated, Singapore Coming of Age.
transforming the accelerating pace of changefrom a challenge to an opportunity
Overview -Topics
• Our current context and the big shift• What it means for SV?• What it means for SV?• Cloud Computing as an engine of innovation• Reflections on Singapore’s Innovation Ecology
Really? How do these topics relate?
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Is it any surprise many of our current models, forecasts, and assumptions anticipate a
Our Context
p p“return to normal” after the Great Recession
ends? Such cyclical thinking ignores the powerful
forces of longer‐term, secularh f h lchange—forces that are increasingly
undercutting widely held assumptions about the sources of economic value.
“Normal” may in fact be a thing of the past.
Trends set in motion decades ago arefundamentally altering the global landscape as a new
d l f b l hdigital infrastructure, built on thesustained exponential pace of performance improvements in computing, storage, and
bandwidth, progressively transforms our business environment. This infrastructure
consists of institutions, practices and protocols that together organize and deliver the
increasing power of digital technology to business and society.
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The return on assets (ROA) for U.S. firms has steadily fallen to almost one-quarter of 1965 levels
Economy-wide Asset Profitability (1965-2008)
4.7%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Ret
urn
on
Ass
ets
(%)
Source: Compustat, Deloitte analysis
0.5%
0.0%
0.5%
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Return on Assets
2008
Similarly, the ROA performance gap between corporate winners and losers has increased over time, with the “winners” barely maintaining
previous performance levels while the losers experience rapid performance deterioration
Economy-wide Asset Profitability by quartile (1965-2008)
20%
1.2%20%
12.9%11.0%
0%
5%
10%
15%
Top Quartile
etur
n O
n A
sset
s (%
)
Source: Compustat, Deloitte analysis
-14.7%
-100%
-80%
-60%
-40%
-20%
0%
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Bottom Quartile
R
2008
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U.S. competitive intensity has more than doubled during that same time
Economy-wide Herfindahl-Hirschman Index (HHI) (1965-2008)
High Competitive Intensity
Moderate Competitive Intensity0.14
0.06
0 02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Source: Compustat, Deloitte analysis
Very High Competitive Intensity
2008
0
0.02
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
HHI
(the lower the number the more competitive)
Average Lifetime of S&P 500 Companies
P 50
0ye
ars
on
S&
P
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However, in those same 40 years, labor productivity has doubled - largely due to advances in technology and business innovation, coupled with open public
policy and fierce competition.Economy-wide labor productivity (1965-2008)
61
141
40
60
80
100
120
140
160
Labo
r Pro
duc
tivity
0
20
1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Source: Bureau of Labor Statistics, Deloitte analysis
2008
The performance paradox: ROA has dropped
in the face of increasing labor productivityFirm performance metric trajectories (1965-2008)
1965
Present
Labor Productivity Competitive Intensity Return on Assets Topple Rate
Source: Deloitte analysis
Present
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But why is this happening??
20th Century Era Captured by Alfred Chandler
20th century infrastructure
Push Economy
roads/cars/trucks/trains/ships/airplanes20 century infrastructure
Scalable Efficiency becomes the goal.• predictable
Standard S curve: stable over decades. (Few real changes in 60 years)+
• predictable• hierarchy• control• organizational routines• minimize variance
S-curve
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Organization Architectures leverage the properties of
Infrastructure Architecturesstable transportation infrastructures => stable transportation infrastructures
Chandlerian firms & focus on scalable efficiency21st C infrastructure drive the exponentialadvances of computation/storage/bandwidth -
causing major jumps/disruptionsa ng aj j p d p nin infrastructural capabilities.
What does this say aboutinstitutional architectures thatcan leverage this acceleration?
The Big Shift
Knowledge Stocks Knowledge FlowsKnowledge Transfer Knowledge Creation
Stable Environments Dynamic Environments
Explicit Knowledge Tacit Knowledge
Transactions Relationships
Zero Sum Positive Sum Mindsets
Push Programs Pull PlatformsPush Programs Pull PlatformsInstitutions driven byscalable efficiency
Institutions driven byscalable peer learning
Key is how one participates in knowledge flowsespecially on edges (firm/industry/region/gen Y,..)
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in a rapidly changing world innovation and agility must reign supreme
Ah, but then think,ecosystems & platforms!
Cloud Computing as an innovation platform
And And helping us participate in many
Kinds of flows
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Amazon’s Novel Innovation Model2 pizza team rule and the platform
Amazon’s Cloud and web services (AWS)creates an ecosystem
that enables startups to get going fast, CHEAP and scale quickly.
Cost:cpu: HP tower 10 cents/hr
storage: 15cents/gigabyte/monthstorage: 15cents/gigabyte/month
And monitor your virtual stack by iPhone
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Amazon’s Cloud and web services (AWS)creates an ecosystem
that enables startups to get going fast and scale quickly.
Animoto startup –(personal MTVs)
went viral one day on Facebook:yscaled from 50 servers to 5000 servers
in just about a dayon the Amazon Cloud
Examples of SaaS services built on AWS, Google AppEngine and Force.com
Storage
Business Infrastructure Services
Business Operations Services
Customer Applications
Content Hosting/DeliveryOrder /Payment Mgmt
Application Management
App Development
Other Business Apps
eCommerce
Salesforce.com Extensions
App Testing
App Security
TelephonyBusiness Process Mgmt
Social Applications
Other: eMail, Portals, Publisher Content, Blogs, etc
Other Commerce AppsApp Performance Monitoring
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Example of a service on AWS, drop.io, around which a
cloud-based ecosystem has evolved
iPhone App built bySaaS created by Android App built by Adobe AIR based DesktopSaaS created by
Desktop App
iPhone App built by independent
developer
uses (as a product
extends
uses(for
uses(as a product
SaaS created by drop.io
SaaS that uses SaaS native to SaaS that uses
Android App built by independent
developer
Adobe AIR-based Desktop App built by independent
developer
extends extends
SaaS created by drop.io
extends extends
uses A B Means B uses A
Key
Desktop App(as a product feature)
(for marketing)
(as a product feature)
SaaS that uses Amazon S3
SaaS native to AWS
SaaS that uses Amazon S3, EC2,
SimpleDB and SQS
But now think about Li & Fung’s ecosystem with12,000 ‘small’ partners needing
co-ordination among them.
Cloud computing will create four waves of disruption
Disruption of other industries
Addressing unmet needs of business ecosystems
Disintegration of vertical cloud computing stacks
service grids.
healthcarefinancial srvsenergy
The Start Up World
y
SaaS/PaaS/IaaS
Interaction services
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In each wave –silicon valley/west coast reigns supreme
But also SV reflects the power/agility ofp g yecosystems that comprise many small
talent driven, agile firms where the whole is more than the sum of the parts .
h d b l hSuch ecosystem supported by learning with &from each other (peer based learning) &
enriched by cloud computing & social mediashould rule the day.
Singapore’s Interactive Digital Media Program
One of their three chosen domains for buildingtheir 21st century economy.
• Biotech• Biotech• Cleantech• IDM
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Thank You
And special thanks toAnd special thanks toDeloitte’s Center for Edge
Shift Index Team – Deloitte COECloud Team – Deloitte COE
Michael Yap and IDM - Singapore
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