Archivo del March, 2016

Smart Cities 2016: 7 innovations that will change your world

Making predictions is always difficult and risky. If we are already finding it hard to see eye to eye on our past and present, imagine the trouble we have with the future – blank canvas that it is.

Despite the fact that predictions are risky (and that we don’t often get them right) they do help us to analyse the trends that could unfold, or will simply give us a lot to talk about over the coming year.

In fact, there have been few times when we have seen so many areas in which changes are so imminent and have so much capacity to affect the lives of so many people so quickly, as we’re seeing now. And many of those changes have been brewing over the last year.

Who would have imagined only a year ago that we would be talking about self-driving cars, not as fiction but reality? Who would have dreamed that someone would seriously suggest introducing basic income? Who would have thought that the number of smartphones on the planet would reach 74% of the population? And what about the start of physical money disappearing, and black money with it? Who would have even dreamed that developments such as the Hyperloop would be planning to relegate most high speed train networks to the archives of history?

Doesn’t it feel like an exciting year has just begun?

I have attempted to put those trends that I think hold the most interest, the most promise and have the greatest potential to change the world, into 7 groups. As you will see, this is not about predicting the future but talking about it, and imagining the potential that could lie behind each of those seven opportunities.

1.- Cars transform cities once again

The car has largely defined cities as we know them. If you take a look at the space we dedicate to them, you’ll see that it is huge. It is a space that is in definite contrast to their use, which is not more than 5% of the time on average; space for parking, space in the street, space in the layout of the city and space in our aspirations and dreams.

All of that is changing, and changing very fast. One of the triggers has likely been the certainty that, pretty soon, cars will be self-driven and electric. These two vectors come hand in hand with the cultural transformation in iconic cities such as New York which has seen the car shift from being something aspirational to being simply a utility.

A self-driving car does not need to be parked outside – you call it and it comes to you; it enables changes to be made to the traffic rules we have today which are designed for people, who are slow and can sometimes be more concerned with flouting them than following them. A self-driving car can also drive at any time without a break (for road transportation at night, night-time home delivery, etc.).

An electric car sends the variable cost of transportation into another dimension. Charging the battery of an electric car costs between $1 and $4 depending on the country, and $0 with solar panels; without paying the sun tax, of course! For that money, we get 160-300 km of mileage. It is another dimension in which the only costs of transporting people and goods are paying for the vehicle and extremely low variable costs.

All of this means that the design of cities is more focused on shared cars and public transport along the lines of Uber, with a self-driving, electric future in mind. In the future, we are going to need just a fraction of the space that we now dedicate to transport and it will be cleaner, more efficient and a whole lot cheaper.

The change in mentality is also important. New generations do not dream about having a car; travelling by bike, scooter or electric bike is cool. A city that walks, that exists as a meeting point, results in a city that is designed for moving around by car.

Cars – or the change in our perception of cars – are dominating city design once again, only this time in the opposite way to how it was done in the 19th century.

2. Sharing economy: less sharing, more economy and more Gigs

The sharing economy emerged with the promise of sharing, but is fast becoming about mobilising idle resources through platforms that allow them to be marketed with very little effort. One such example is airbnb, which allows easy marketing of a room or apartment without having to promote it personally. Then there is Uber, along with many others.

This element of available recourses being able to enter the market with very little effort has allowed a high number of anonymous people to penetrate areas that were previously closed off behind significant barriers to entry. This is the case in the example of apartments and taxis. It has forced the level of competition higher, to the point where driving a taxi or having a hotel room is no longer enough. You have to do it well, provide a quality service and innovate if you want to stand out.

This has had a remarkable effect on the market. This month, Yellow Cab – the biggest taxi company in San Francisco – has declared bankruptcy, and the number of great value-for-money apartments on offer has grown enormously all over the world. The market is more of a market, and less dominated by a few companies that determine the offer and conditions. On another hand, these platforms have become global businesses in an economy dominated by ‘the winner takes all’, from which it is almost impossible to escape.

These platforms have also managed to organise their work in a way that is independent and dispersed, and have had a decisive impact on what we understand a business to be. A business is now divvied up and many tasks that used to be done internally now sit outside of it: this is the Gig economy; the on-demand economy.

This invasion of the platforms, in their two forms, is changing everything: our perception of work, the structure of cities, etc.; and we need new legislation that responds to those changes.

Any attempt to stem the tide and turn the clock back or cage in these platforms is destined to fail completely or turn cities or nations that try to ignore the course of history into North Korea. We need to confront it and design regulation for this market that combines social aspiration with the opportunities presented by new technology.

3. Participation: more than a word

Just as technology has torn down barriers to market entry for many people, it has also enabled mass participation and consultation.

We still work with political systems that were thought up 300 years ago, while the rest of our lives and relationships have changed drastically. It is clearly only a matter of time before citizens demand that these systems be updated, and that is going to happen sooner or later, whether we like it or not.

Everywhere, we are seeing a multitude of experiments in which participation, the use of technology as sentiment analysis, or binding or non-binding consultations play a leading role. These experiments will undoubtedly crystallise into practices that will not only be accepted, but become basic rights, whereby unilateral decisions made by governments will be less accepted, less justifiable and seen as less democratic.

4. Invisible money

This year, Denmark is intending to eliminate physical money, while transactions with Alipay in China in 2015 represented $519 billion, with 350 million users. With Alipay, you pay electronically or show a QR code generated on your smartphone, which lasts for one minute in the supermarket. New players such as Apple, Google or Transferwise are either redefining payment methods, or trying to.

However, the opportunities do not end there. Blockchain – the bitcoin protocol – ensures complete traceability and secure confirmation without the need for a mediator. How long until we see a version of Blockchain introduced for electronic money? Probably not very long.

Denmark will be successful, and other countries such as Sweden or even Germany intend to follow in its footsteps shortly; but in China, Alipay is what young people use and ApplePay is great.

5. The ability to store energy changes everything!

Tesla has presented its domestic batteries, and all over the world we are witnessing a fierce race to reach the Holy Grail – a battery with a greater capacity, shorter charge time, lower cost and longer duration.

In a world where the cost of solar panels is decreasing fast as their performance improves, a good battery would be the catalyst for energy at zero variable cost; and that is a whole new world.

The efforts made by Tesla on graphene batteries or on substituting lithium for higher performance compounds could enable us to make current batteries 2 or 3 times better. This would give us batteries that charge in around 10 minutes, allow us to drive over 600 km at half the cost, and that are lighter weight and longer lasting. This is the frontier that would really launch the electric car and distributed energy production in many places; this is a frontier we could cross in 2016.

6. Internet and invisible infrastructures

Not long ago, we were happy with 20MB, and 300MB or 1G was a dream. Well, that dream has become reality.

This is the year that this dream goes further; the year we see the internet become something like electricity, where important areas are connected at speeds approaching 1G.

This is also the year of the Internet of Things (IoT).

In any case, the most important thing is most likely not connectivity, but what we can do with it. Nowadays, that means the creation of infrastructures that connect people, create markets and make it possible for them to operate virtually.

The creation of markets is what makes platforms like Uber and airbandb possible and gives them their value. However, digital platforms need not be restricted to markets; their potential goes beyond that, allowing real invisible infrastructures to be created that could allow citizens to participate in public life, speed up and start projects, or accelerate business proposals.

These invisible infrastructures contribute greater value than real ones, if that be possible, because they do more than enable and create capacity; they are directly linked to action. It is not about creating empty buildings, but rather bringing together people who want to do things and helping them to do it.

7. Basic income and Evidence Based policy

For many years, policy has been justified based on ideas, beliefs and values. A more just society required further reaching redistributed policies; a freer society, the abolition and simplification of regulations.

However, as society becomes more complex, it is difficult to be sure that a certain policy will lead us to the desired objective. On the contrary, more often than we would like we find ourselves confronting the bitter truth that policies that have been fought for tirelessly lead to ends that are completely opposite to those intended.

A good example of that is the issue of basic income. Its advocates declare that it will help make workers more competitive by allowing them not to have to accept any offer and to be more selective. On the other hand, its critics argue that many part-time employees who make us more efficient will be lost and we will be less competitive. In reality, nobody knows for sure what effect it will have.

As some countries will be taking a more serious look at introducing basic income in 2016, we will soon know more.

This situation demonstrates that our method of designing policy doesn’t really work, and works badly. When contexts were less complex and the causes more evident, it wasn’t so challenging. However, with the current levels of complexity, endlessly discussing aspects that nobody actually knows and attributing causalities to policies whose impact is little known is not very productive.

Luckily, less dogmatic methods that rely more on experimentation and data obtained from measureable results are gradually gaining ground. It is this, rather than the doctrine or vision of governments, that determines how good certain political measures are. Tools such as Big Data and data analytics will play an essential part in this transformation.
play an essential part in this transformation.

Article originally published at IDEAMERICAS Blog

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Isobionics: Turning a large firm’s unused technology into a business

Isobionics, a Dutch startup company, was established in 2008. Its activities focus on manufacturing natural ingredients for the flavor and fragrance industry. Their products are prepared with an innovative fermentation process, which results in high quality, natural products for customers in the food, beverage, flavor, and fragrance markets. The company’s technology was developed by DSM, a globally operating Dutch chemical company with annual net sales of 9.2 billion euro in 2014. The company has strong technical expertise in biotech and new materials.

The seed for Isobionics was planted in early 2007, when Toine Janssen met with Frank Schaap, a new business developer at Chemelot. Chemelot is an Open Campus for small companies in the chemical business, co-located at the Sittard-Geleen site of DSM in the Netherlands. The infrastructure and services comprise world-class laboratories and research facilities, development services and all-round expertise, from high-performance materials to industrial chemicals.[i] Toine Janssen, a former director at Philips, initially wanted to buy a plant in the Chemelot campus. Instead, Frank Schaap offered him an alternate business proposal: Why not picking up a research project at DSM that had been discontinued?

About a year before Frank and Toine met Rinus Broxterman and a colleague developed a way to produce natural substances—called isoprenoids—through a biotechnological fermentation process. Normally, producing isoprenoids is expensive and laborious, but Broxterman’s method produced better quality results, required fewer production steps, and was 50 percent less expensive.

Rinus decided to file his process with the Emerging Business Unit of the DSM Innovation Centre. The Emerging Business Unit is part of an Emerging Business Area (EBA), which was established to explore innovative fields outside the existing core technologies of DSM and to professionalize innovation within DSM. As 2006 came to a close, it was clear that the EBA was going to drop the proposal because the project did not fit into the DSM’s strategic scope. Jacques Joosten, senior R&D director, however, was convinced the proposal had potential and advised DSM researchers to look for other ways to valorize the technology. Following this advice, Rinus shared the news with Frank Schaap that he had an idea for a new startup. Understanding that an experienced business development manager is a key for success, Rinus and Frank started looking for external managers. By that time, Frank Schaap had met with Toine Janssen.

Once Toine realized that the business case had great potential, he decided to take on the challenge. He wrote a business plan, was looking for financial resources, and was forging an agreement with DSM. Reaching that agreement was not simple because DSM had no experience with this form of outbound open innovation. Furthermore, DSM researchers that had worked on the project were not happy with the project’s evolution. They felt that they had to sacrifice knowledge they had acquired over a long period of time. Thanks to his experience and management skills in a company such as Philips, Toine Janssen convinced DSM’s managers that this spinout had significant business potential. After signing a research and intellectual property contract to use the fermentation procedure in predefined areas, Isobionics was founded. Initially, the company employed four people. In addition to Toine Janssen and Rinus Broxterman, researcher Dr. Theo Soncke and project manager Dr. Marijn Rijckers were added to the team through service agreements with DSM. Isobionics immediately started joint research and development with the Plant Research International (PRI) institute at the Wageningen Agricultural University. They chose the Chemelot Campus as the location for their new business, just a few hundred meters from the DSM laboratories. This co-location allowed Isobionics and DSM researchers to communicate and interact frequently, which accelerated research and decision-making.

Toine successfully raised funding for his venture by filing for subsidies and attracting Limburg Ventures B.V. Limburg Ventures is an active regional venture capital investor in materials and life sciences in the Netherlands founded by DSM.

The first product Isobionics commercialized was Valencene, a sesquiterpene and one of the components of orange oil. Valencene can be used as a flavor ingredient and tastes like oranges. The majority of applications are found in flavors for the beverage industry, particularly citrus flavors. Although minor, Valencene can also be found in fragrances. Isobionics focused on selling to flavor and fragrance companies such as Givaudan, Symrise, and Firmenich, all of which supply flavors to multinationals such as P&G and Unilever.

The strategic decision to start by producing Valencene (and not another flavor) was made because it is a relatively small market compared to flavors such as vanilla and menthol, where Isobionics would certainly face head-to-head competition of large established companies such as BASF. Furthermore, this product could generate quick cash without major investments. Moreover, by producing Valencene, Isobionics achieved proof of principle and generated knowledge and insights needed for further steps. Isobionics patented the process of producing Valencene (Valencene-synthase), but the patent on the microorganism from which Valencene was formed was DSM’s property. Isobionics, however, had an exclusive licensing agreement with DSM for it in the domains of flavor and fragrances, pharmacy and agrochemicals.

Isobionics has been growing fast and by 2015 it was also investigating the market for nootkatone a flavor characteristically associated with grapefruits. Although the company was growing fast, Toine Janssen continued to use an asset-light model for the growth of his company. He relied to a maximum on skills and assets outside Isobionics. R&D was executed with a growing number of universities around the world, tapping in the best expertise available. The technical collaboration with DSM decreased over time as Isobionics became more knowledgeable on the specific technology for produce F&F using microorganisms. Production was outsourced: Isobionics worked through contract-manufacturing with two fermenters, one in Eastern Europe and one in India. The choice for the manufacturer is a function of their skiils and specific installations. Production included three stages: fermentation, distillation and packaging. A different type of company executed each of the stages. In this was, Isobionics could produce the flavors without investing in production capacity and without the fear that a contract manufacturer could ever become a competitor on the market. As Isobionics was growing fast, it has to distribute products effectively on a global scale. Here again, Isobionics relied on an external partner—DSM—who had already the logistic expertise and infrastructure to deliver products to B2B clients worldwide.

Isobionics next had the ambition to grow further in the valencene and nootkatone market and to start developing other flavors and flagrances that fit the size of the startup. Isobionics focuses on the markets that are small enough to avoid direct competition with established multinationals. The relationship with DSM changes over time but the chemical company remains important for the startup (see logistics for instance). Toine Janssen is also very positive about the Chemelot site. As the company continues to grow, it has to change the location of its offices, but Isobionics will look for a location on or close to Chemelot.

Text originally published as a case in the Exnovate blog by Wim Vanhaverbeke, researcher at the Institute for Innovation and Knowledge Management

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