Intel Disrupted: Why large companies find it difficult to innovate, and what they can do about it

In the 21st century, it’s hard for large corporations to create disruptive breakthroughs. Disruptive innovations are coming from startups – Telsa for automobiles, Uber for taxis, Airbnb for hotel rentals, Netflix for video rentals, and Facebook for media.

What’s holding large companies back? Four things:

  1. First, companies bought into the false premise that they exist to maximize shareholder value – which said “keep the stock price high.” As a consequence, corporations used metrics like return on net assets (RONA), return on capital deployed, and internal rate of return (IRR) to measure efficiency. These metrics make it difficult for a company to invest in long-term innovation. It’s a lot easier to get these numbers to look great by outsourcing everything, getting assets off the balance sheet and only investing in things that pay off fast. To do that, companies jettisoned internal R&D labs, outsourced manufacturing, and cut long-term investment. These resulting business models made them look incredibly profitable.
  2. Second, the leaders of these companies tended to be those who excelled at finance, supply chain, or production. They knew how to execute the current business model.

Intel, under its last two CEOs, delivered more revenue and profit than any ever before. It could point to record investment in R&D for more expensive chip fabs; yet today the writing is on the wall that Intel’s leading days are over. Why?

Over the last decade, Intel missed two important disruptive trends. First, the shift away from desktop computers to mobile devices meant that Intel’s power-hungry x86 processors weren’t suitable. ARM, a competitor, not only had a better, much lower power processor, but a better business model – it licensed its architecture to other companies that designed their own products. Intel attempted to compete, (and actually owned an ARM license) but fell victim to a classic failure of ignoring a low-end disruptor and hobbling its own chances by deciding not to cannibalize its own very profitable x86 business. All of Intel’s resources – fabs, manufacturing strategies, and most importantly executive mindset — were geared towards large, expensive x86 processors, not low-cost mobile cores of someone else’s design.

The result, Intel just laid off 12,000 people, 11% of its company.

But it’s not over for Intel. Its most profitable segment is very high-end processors used in data centers in servers and the cloud. Today that’s built on the premise that an x86 architecture is the one best suited for big data. It’s becoming clear that extracting intelligence from that big data requires machine learning architectures that are better implemented with non x86 chips from companies like Nvidia. It’s possible that, by the end of this decade, history might repeat itself in Intel’s most profitable segment.

  1. The third reason companies find it hard to innovate is explosive shifts in technology, platforms and markets that have occurred in the last 15 years – personal computers moving to mobile devices; life science breakthroughs in therapeutics, diagnostics, devices, and digital health; and new markets like China emerging as consumers and suppliers.
  2. Which brings us to the fourth reason it’s harder for large corporations to offer disruptive breakthroughs: startups.

For the first 75 years of the 20th century, when capital for new ventures was scarce, the smartest engineering talent went to corporate R&D labs.

But starting in the last quarter of that century and accelerating in this one, a new form of financing – risk capital (angel and venture capital) — emerged. Risk capital has provided financing for new ideas in the form of startups. Capital is returned to these investors through liquidity events (originally public offerings, but today mostly acquisitions).

Startups have realized that large companies are vulnerable because of the very things that have made them large and profitable: By focusing on maximizing shareholder return, they’ve jettisoned their ability to do disruptive innovation at speed and scale. In contrast, startups operate with speed and urgency, making decisions with incomplete information. They’re better than large companies at identifying customer needs/problems and finding product/market fit by pivoting rapidly. Their size lets them adopt flatter and more agile organizational structures while providing incentives that reward risk-taking and collaboration.

Startups are unencumbered by the status quo. They re-envision how an industry can operate and grow, and they focus on better value propositions. On the low-end, they undercut cost structures, resulting in customer migration. At the high-end they create products and services that never existed before.

As we’ve seen, corporations are very good at maintaining, defending, and refining existing business models, and they’re pretty good at extending existing models by identifying adjacencies. But corporations are weak, and have become weaker, in identifying new disruption opportunities.

Innovation can come from inside the corporation, by adopting Lean Startup language and methods, developing intrapreneurship, and fostering innovation-driving behaviors such as GE’s FastWorks program. And corporations can foster innovation from the outside by promoting open innovation and buying startup-driven innovation. Google has bought close to 160 companies in the last decade. Its acquisition of Android may have been the biggest bargain in corporate history.

So to succeed, corporations must rethink and then reinvent their corporate innovation model, replacing a static execution model with three horizons of continuous innovation: This requires a corporate culture, organizational structure, and employee incentives that reward innovation. It requires establishing acceptable risk level and innovation KPIs for each horizon.

And it also requires understanding the differences between executing the existing business model, extending the business model and searching for and disrupting the business model.

Lessons Learned

  • Even the most innovative companies eventually become yesterday’s news
  • To survive, companies need to run three-horizons of innovation
    • Horizon 1 – execute their existing business model(s)
    • Horizon 2 – extend their existing business model(s)
    • And for long-term survival – Horizon 3 – search for and create new/disruptive business model(s)

Article courtesy of VentureBeat

Microsoft to buy LinkedIn for $26B in cash, makes big move into enterprise social media

Huge news today in the world of M&A in enterprise and social networking services: Microsoft has announced that it is acquiring LinkedIn, the social network for professionals, for $26 billion, or $196 per share, in cash. The transaction has already been approved by both boards .

LinkedIn is keeping its branding, and it will become a part of Microsoft’s productivity and business processes segment. LinkedIn’s CEO Jeff Weiner will report to Satya Nadella.

“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” Nadella said in a statement. “Together we can accelerate the growth ofLinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”

“Just as we have changed the way the world connects to opportunity, this relationship withMicrosoft, and the combination of their cloud and LinkedIn‘s network, now gives us a chance to also change the way the world works,” Weiner added in the statement. “For the last 13 years, we’ve been uniquely positioned to connect professionals to make them more productive and successful, and I’m looking forward to leading our team through the next chapter of our story.”

And as you can see from the photo above, Reid Hoffman, one of the co-founders and current chairman, is behind the deal.

“Today is a re-founding moment for LinkedIn. I see incredible opportunity for our members and customers and look forward to supporting this new and combined business,” said Hoffman in a statement. “I fully support this transaction and the Board’s decision to pursue it, and will vote my shares in accordance with their recommendation on it.”

The acquisition is a big one for both sides. For Microsoft, it’s bringing a key, missing piece into the company’s strategy to build out more services for enterprises. Today, the company is focused squarely on software (and some hardware by way of its very downsized phones business). LinkedIn will give it a far bigger reach in terms of social networking services and professional content — developing further along the lines of the communications products that it spearheaded with its acquisition of Yammer.

For LinkedIn, it puts to rest questions of how the company would ever compete with companies that are building more software on top of their social graphs that would put it into closer competition against LinkedIn. For a while, it looked like this was the direction that LinkedIn hoped to develop, but more recent problems with user and revenue growth, and a subsequent drop in share price, has put the company on the defensive.

Article courtesy of TechCrunch

UK Tech startup hiring ‘up 49% year-on-year’

There are now nearly 50% more tech startup vacancies in the UK than last year – and City investment is fuelling that economic surge, new research from Adzuna and Silicon Milkroundabout (SMR) claims this week. Most of those new jobs, adds the research, remain in London and the South East.

The SMR research was released as tech companies gathered at Europe’s leading recruitment event for the 11thtime – and SMR celebrated its fifth birthday by ringing the (digitised) bell at the start of trading at the London Stock Exchange on Wednesday.

Surprise guests at the Stock Exchange reception were chancellor George Osborne and Conservative London mayoral candidate Zac Goldsmith. Osborne said the tech opening was “a sign of the success of the City, but also the whole country.”

Marcus Stuttard, LSE’s head of AIM, said recent IPOs, including cyber-security firm Sophos, remittance platform WorldPay and biotech business Circassia, showed the success of the tech sector in stock market offerings.

“We are here to continue to support your growth, not just from a capital markets perspective,” he told tech businesses, adding that LSE supports broader initaitives like the launch of investor Sherry Coutu’s Scale-up Institute, and the LSE ELITE programme, offering businesses mentoring and investor access.

Silicon Milkroundabout joined forces with Adzuna, the leading search engine for classified ads, for the research, the findings of which they say demonstrates the economic value of City backing for the tech sector. “Startups and venture activity in the UK will create tens of thousands of new jobs in Britain this year,” said the pair.

With over £3bn invested in UK technology organisations last year, SMR and Adzuna say that “startups and established companies alike are on a hiring spree to attract Europe’s top talent”.

The research, conducted April 2016, analysed over 1m UK job advertisements and the hiring patterns of over 1,000 startups and tech companies, to determine the number of vacancies being created. Adzuna then benchmarked that data against its similar studies in preceding years.

The research finds that tech startups around the country are hiring for a total of 17,895 positions, which is up 49% from 12,003 a year ago.

London and the South East region maintain the biggest pull for entrepreneurial employees, says the research. But it adds that the proportion of tech startup jobs is on the rise in other regions, notably Eastern England, North West England, South West England and the West Midlands.

 

At this weekend’s Silicon Milkroundabout event at Truman Brewery, BBC Digital tops the list of companies hiring for the most roles, with 31 vacancies, evrythng with 24 roles, Cloudreach with 24, Thoughtworks with 22, and Worldpay with 20 roles.

Fashion tech recruitment is also well represented at #SMR11, with Net-A-Porter Group topping the list with 25 roles, with ASOS on 22, Farfetch on 16, Metail on 18 and M&S Digital on 13 vacancies.

Adzuna co-founder Doug Monro said the figures showed that “the technology space in the UK has never been hotter. Startups in the UK are raising money like never before and this is leading to significant job creation around the country and, similarly to the Silicon Valley, UK tech companies are now increasingly able to stand toe to toe with the City competing for Britain’s top talent.”

Silicon Milkroundabout co-founder Cristiana Camisotti added: “The UK tech startup ecosystem is continuing to evolve, with well-funded and profitable companies emerging with a need for top talent and the financial clout to take on the banks and Corporates. Startups and scale-ups are continuing to attract top talent with stock and the excitement of a fast-moving, entrepreneurial environment.”

Silicon Milkroundabout’s twice-annual events, in May and November, attract over 6,000 candidates a year to meet with 400 startups offering 4000+ jobs.

FreeWheel Inc select Jurupa for Advisory Services hire

FreeWheel Media Inc, a leading provider of advertising technology and services for global media companies have selected Jurupa to oversee the search campaign for a highly specialised vacancy in their Advisory Services business unit.

Tariq Gazoulit, formerly of the History Channel and Sony Computer Entertainment Europe joins FreeWheel as of April 2016 and will be responsible for managing major clients in both the UK & Southern Europe.

A complicated brief (owing to multiple touch points across various parts of the business and additional language requirements) was ultimately brought to a successful conclusion following a 7 stage interview process.

Jurupa would like to offer Tariq a warm welcome to the London team and hearty congratulations on this exciting career move.

Big opportunities for professionals in the back up/disaster recovery space

Jurupa are delighted to announce a new partnership with an ambitious and rapidly expanding provider of backup and disaster recovery software.

Headquartered in the US, they received a significant injection of VC funding late last year and are aggressively hiring new staff across Europe.

If you are an experienced Sales Engineer currently working in the backup, disaster recovery, storage or security space and want to learn more about a new player who are taking the market by storm, get in touch with Jurupa for an informal discussion in complete confidence.

JAMF Software utilize Jurupa to assist with key hire in Germany

JAMF Software, the leading worldwide provider of Mac OSx and iOS management have once again opted for Jurupa’s assistance in filling a critical role in their EMEIA team. Following on from previous successes, Jurupa executed a focused and targeted campaign and are delighted to announce that Michael Hiebinger formerly of ComputaCenter and Oracle will be joining the DACH team on June 1st as their Regional Channel Manager.

Commenting on the successful completion of the process, Founding Director Aaron Davies commented “Having worked in close partnership with JAMF since the early days of our business, we have been responsible for supplying both their VP Sales, EMEIA (Michel van den Berg) and their first hire in the Nordics (Regional Sales Manager, Peo Strindlund.) To be selected for assistance with what is another key hire for the company reflects positively on us. We wish JAMF the very best of luck on their continued path to IPO.”

Jurupa assist Ixia Technologies with their first hire in Italy

Ixia Technologies, a leading global provider of networking solutions for governments, service providers and the enterprise have engaged with Jurupa in order to identify and secure a Country Manager / Regional Sales Manager for Italy.

Given that the company have never before hired employees in Italy, the process was complicated by additional legal considerations. Having presented a selection of highly qualified and motivated professionals, a candidate was selected.

Joining from Riverbed, Valter Villa will be officially launching Ixia’s Italian operation on April 1st and report directly into Stephane Johnson, VP Sales EMEA South. Formerly holding Senior Sales Management positions at companies including Zeropiu, EMC and Sun Microsystems, Villa will be responsible for further developing Ixia’s two-tier channel model and increasing market share in the region.

Google self-driving car crashes

Search Engine Google said it bears “some responsibility” after one of its self-driving cars struck a bus in a minor crash earlier this month.

It might be the first case of one of its autonomous cars hitting another and the fault being self-driving car. The Mountain View, California-based Internet search leader said it made changes to its software after the crash to avoid future incidents.

In a February 23 report filed with California regulators, Google said the crash took place in Mountain View on February 14 when a self-driving Lexus RX450h sought to drive around some sandbags in a wide lane.

The Lexus was traveling at less than two miles per hour, while the bus was moving at about 15 miles per hour came in the opposite direction. Both the vehicle and the test driver “believed the bus would slow or allow the Google (autonomous vehicle) to continue.”  Everyone knows that buses and taxis do not stop for anyone, but it seemed that Google’s software did not know that.

It struck the side of the bus, causing damage to the left front bumper, front wheel and a driver side sensor. No one was injured in the car or on the bus.

Google said in a statement on Monday that “we clearly bear some responsibility, because if our car hadn’t moved, there wouldn’t have been a collision. That said, our test driver believed the bus was going to slow or stop to allow us to merge into the traffic, and that there would be sufficient space to do that.”

The Santa Clara Valley Transportation Authority will investigate the circumstances of the accident.

Google said it has reviewed this incident “and thousands of variations on it in our simulator in detail and made refinements to our software. From now on, our cars will more deeply understand that buses (and other large vehicles) are less likely to yield to us than other types of vehicles, and we hope to handle situations like this more gracefully in the future.”

Article courtesy of TechEye.net

AdsWizz select Jurupa to execute board level search in Europe

California headquartered Audio Monetization pioneers AdsWizz have chosen Jurupa to manage their search for a Senior Vice President of Engineering who will be based out of Bucharest, Romania. Competing with the likes of industry giants Michael Page during the bidding process, Jurupa were selected both for their expertise in the AdTech space together with a highly targeted, professional and diligent approach.

Jurupa’s Founding Director Aaron Davies remarked “The fact that we are aggressively competing with far larger and more established competitors and winning against them demonstrates our commitment to providing a high quality, personable and efficient service to our growing client base. We are delighted to be working with AdsWizz and their entrepreneurial management team. In our view, there is tremendous potential for continued growth in this niche market and we feel privileged to be invited to supply those very professionals that will secure that ongoing success.”

adswizz

Jurupa attending MWC 2016 in Barcelona

Jurupa will be attending MWC next week – get in touch to organise a meeting via info@jurupa.co

Further details can be viewed here:- http://www.mobileworldcongress.com/