AI, robotics, deep learning, automated delivery… how Amazon, Google, Tesla, and startups use these Edge Strategies to punish slower rivals
Plus eleven ways that firms with fewer resources can leverage Edge Strategies, too
Elon Musk (Tesla, Solar City, SpaceX); Jeff Bezos (Amazon, BlueOrigin, Washington Post); Mark Zuckerberg (Facebook); Larry Page (Google, Alphabet). All are CEOs. All are entrepreneurs. All remain disruptive. All are Edge Strategists.
Each operates a core business that has “about-faced” an entire industry … or two. Each continues to invent at the Edge, ignoring old-fashioned industry boundaries. The “former Google, Inc.” operates 11 core subsidiaries: Deep Mind, Access, GoogleX, Jigsaw, Calico, Google, G Ventures, Google Capital, Self-Driving Car Projects, Sidewalk Labs, Nest, Google, Verily. Entities like Youtube live beneath Google itself, two layers down. Google invests in and acquires startups — like Deep Mind and YouTube — to build this ecosystem.
Bezos, Musk, Page, and Zuckerberg are disrupting multiple industries at once: tech (cloud computing, AI), automotive, entertainment (production, streaming), space (re-usable rockets), health…. (Note: watch the Blue Origin and WagonBot videos below.)
Challenges Faced By Older, Traditional Companies
Each companymentioned above are teenagers. They were simple startups 10 to 22 years ago. They behave like Millennials (Gen Y) and Gen Z’s.
For survival’s sake, older companies — born before 1980 and molded in our grandparents’ era — have developed cultures that need to adapt to the Millennial world. This new corporate world is defined by exponential innovation (versus linear) and by disruptive hyper-adoption (think Uber, AirBnB, AWS, Amazon Prime, Pokemon Go).
If you work in an older firm, your team might be constrained by corporate culture. Your team may work as a “incrementalist” … continually tweaking your core revenue streams. Thankfully, your company needs “incrementalism” … like Amazon needs its Weblab. But a singular focus on core incrementalism is short-sighted. Below are suggestions that might help your company maneuver into an Edge Strategist position.
The Edge Strategist’s DNA + Psyche
To survive over the next 5 to 10 years, your organization needs to do be an incrementalist AND an Edge Strategist. As Amazon, Google, and Facebook prove, The Edge can be accessed by inventing internally (intrapreneurs), licensing advanced technologies from startups, or acquiring startups. But — above all — to succeed, your CEO needs to carry the “Innovation Torch”.
The most disruptive Edge Strategists are a handful of well-capitalized CEOs who double as entrepreneurs: Bezos (Amazon), Musk (Tesla), Zuckerberg (Facebook), Page (Google), Ma (Alibaba).
One great example of Edge Thinking, is Blue Origin, the space company that Bezos dreamt up in high school, and founded in 2000. Its rockets land upright (see video):
Retailers, media companies, NASA, and tech companies (like HP) — all — have to keep a watchful eye on Bezos’ Edge-moves. His companies iterate on the core (Amazon’s Weblab) … while (b) inventing at the Edge.
To grasp how ingrained “Edge Thinking” is in Bezos’ psyche, look at the timing of Blue Origin. It was founded in September 2000 — while Amazon’s stock was dropping 67% (from $106 to $25).
Imagine “having the courage” to ask Amazon’s Board for permission to start a spaceship company (on the side) in 2000. Bezos has backed Blue Origin with $500 million of his own money, demonstrating his capacity for patience and bold moves.
Today’s New Forces: Hyperadoption and Techno-Exponentialism
Executives need to embrace “The Edge” today more than 10 years ago because new forces exist. Forrester calls one of them hyperadoption. Singularity University calls the other exponentialism … the advancement and convergence of many technologies all at once.
Last Mile Supply Chain is likely to completely change as Edge Strategists combine AI with robotics. 20% of package deliveries may not involve people by 2020 (in just 4 years). McKinsey predicts 80% of all packages will be delivered autonomously within 9 years (2025). Starship‘s self-driving WagonBots (below) are possible solutions. These Edge Inventions are being tested today in DC, Europe, and San Francisco!
Click the video … you’ll see that WagonBots (AGV’s — autonomous ground vehicles) can navigate sidewalks and travel for a few miles to deliver your pizza, your medicine, a new pair of shoes. Maybe Amazon will use them to deliver from the 2,000 Amazon grocery stores it’s building. Or maybe Amazon will use drones Or maybe a combo of tools.
McKinsey & Company, September 2016: “Get ready for a world where … Autonomous vehicles including drones will deliver close to 100 percent of X2C and 80 percent of all items. Only ~ 2 percent will be delivered by bike couriers in the relatively small instant delivery segment. Traditional delivery will account for the remaining ~ 20 percent of all items.”
This graphic below is from that McKinsey report (how customer demands are reshaping last mile delivery):
The WagonBots are point solutions. But … combine autonomous deliveries with an Amazon Dash Button (another Edge Strategy) … and combine those with Private Label products like Amazon batteries … and the economics become dangerous. Costs plummet. First movers gain advantages. The dynamics of Edge Strategy start to appear as many Edge Inventions coming together, harmoniously.
Imagine a button summoning a Drone …(this is Edge Strategy):
Imagine your voice, using Echo Dot, to summons the WagonBot:
Legislating the Edge
Amazon invests $9.5 million per year to educate the U.S. government … to influence regulation affecting The Edge … which is one more reason why Amazon is dangerous.
If you look at Gur Kimichi’s LinkedIn Profile (Gur is VP of Amazon Air), you will see that Amazon started working on Commercial Drones in 2012 … giving Amazon a four-year head-start on the U.S. Government it seems.
Contrast Amazon’s Drone launch in 2012 with the White House Drone-announcement in 2016. In August 2016, the White House set up two of groups — the FAA’s new Unmanned Aircraft Safety Team and their new Drone Advisory Committee. As they set up those committees, Amazon was lobbying and conducting real life Drone tests in the U.K. (blessed by the British Government).
When the U.S. Government says, “Go” on Drones, Amazon will be prepared to be first-mover … AGAIN.
” Pursuits of Imagination” requires CEO support and blessing
Edge Strategy is disruptive by nature. Thus, for it to succeed inside large organizations that value collaboration and predictable process, “Innovation” (with a capital “I”) and intrapreneurs need CEO level backing. Tommy Knoll says it well:
“The key to innovation management, and (a supportive culture) … is to have the innovation function report directly the CEO and/or the Board. The risks increase for the innovation program being cut/divested with a bad earnings call if the function reports any lower in the org.”
CEO as Chief Edge Strategist (CES)
Bezos is arguably the most commercially-dangerous Edge Strategist. As he tinkers with 4.4 MPH rocket landings at Blue Origin (below), his Amazon troops work on Drones.
As Bezos invests over $500 million of his own money in Blue Origin, Amazon plows part $15 billion into R&D aimed at Voice technologies, AI, and Deep Learning. Then, similar to with Blue Origin, Amazon “works on our government” to mold policies while patiently and continuously conducting R&D with a long-term outlook.
Amazon “Thinks at the Edge” … because its CEO expects it
This Blue Origin behavior is consistent with the way Bezos behaves at Amazon. This is Amazon.com’s “innovations” page …
Soon, new grocery formats may be added to the Amazon Innovations page. The new Grab-n-Go store format includes a cocktail of Edge technologies — from Deep Learning to Visual Computing to advanced Sensors.
Using startup technologies, Iterate.ai (my company) helped build technologies like this by March 2016– no lines, no checkout — with Twyst. Many retailers have been excited to see it — but tentative on trying it. Too futuristic.
But, as demonstrated in many areas, Amazon likes creating the headwinds, and they tend to just GO:
In the end — Edge Strategists create the headwinds that “Followers Firms” are forced to face. Edge Strategists, like Bezos and Jobs, enjoy headwinds. These people consistently pursue the unexpected. The undoable. The unimaginable. The world scoffs at them. But, that’s okay (and they expect it).