The Rise of Deep Tech
18/01/2022
(This article originally appeared in Ambition, the thought leadership publication by the Association of MBAs (AMBA) – in print and online – and has been republished on this website with the permission of AMBA.)
Everything leaders need to know…
Deep technologies are now creating a revolution which has implications for every aspect of an organisation, resulting in new opportunities to thrive in the most technologically important era since the industrial revolution. The term ‘deep tech’ was coined in 2014 by Swati Chaturvedi to define a new category of startup which are built on tangible scientific discoveries, and which have the ability to disrupt several markets.
Early-stage investment in deep tech startups has now reached billions of dollars, with the potential rewards in the order of trillions. This new era of the digital economy is built on advanced innovation such as blockchain, automation and robotics, 3D printing, the internet of things, artificial intelligence, data analytics, cloud computing and high-speed networks. Deep tech also includes developments in the life sciences such as genetic modification, nanotechnology, quantum computing and new materials.
Purposeful technologies
The impact of these technologies means that the dynamics of the digital economy have reduced the relevance of Porter’s traditional Five Forces model of competition. The New 4Ps of platforms, purpose, people, and planet are now helping executive teams understand their organisations from a systemic perspective and how they will now deliver elevated forms of value to customers in a manner which can scale and achieve impact. It’s essential that this is done in a way that benefits people and our planet through solving our most pressing social and ecological challenges.
Purpose renders our experience of products and services as meaningful; Platforms extend our reach into any place; People are the promoters of those brands which make a difference to their lives; and Planetary damage is no longer a price we are willing to pay. For this reason we can no longer think of an organisation’s goals in relation to unqualified exponential growth. Organisations in the digital economy will grow through the elevation of their core value propositions, scaling through the power of deep tech platforms and the amplification of authentic solutions.
Platform-based business models
Businesses with platform-based business models now dominate the global economy. Rapid advances in deep tech innovation mean that leaders must now understand the essential role those digital platforms play in the digital economy, how they function and how they generate, amplify and sustain value. Despite their impact, however, there is still widespread misunderstanding about platforms and their relation to digital economy dynamics.
The digital economy operates under a different logic to traditional economics because of the complex architectures of deep tech platforms, the new offers and services that platforms are enabling and the transformation of digital operating models. To fully understand how the digital economy has evolved to its present state, it is essential to understand the impact that the past three economic crises – the 2000 internet dot-com bubble, the 2008 world financial crisis and the 2020 COVID-19 pandemic – had on the birth of new sectors.
Memory lane
Between 2000 and 2008, online portals offering e-commerce transformed into marketplaces. Following this, new business models such as Software as a Service and global mediators such as Uber and Airbnb emerged. The scale and extension of platforms were made possible through their value propositions and the evolution of financial funding mechanisms. Early startups received risk capital through angel and private investment. Once the big-tech sector started to form, the structuring of investment in the digital economy became more sophisticated with the development of large venture capital investment funds. As digital infrastructure reached global mass, a new order of protocols, standards and applications were developed, such as Google Workspace and cloud computing, that are now in use today.
New digital markets emerged, for example, markets as a service (e.g., software as a service, platforms as a service, infrastructure as a service). These new markets created a further impact on businesses in relation to the design of organisational structures and business processes. Organisations are now transforming by basing their structures on the logic of platforms resulting in hybrid organisations with management systems that are primarily digital and highly fluid.
Fluidity and changing contexts
Fluidity provides an organisation with the ability to react rapidly to changing contexts, mounting and dismounting agile teams as necessary. This fluidity comes from the organisational structure and executive teams having the requisite level of platform vision. Without a clear understanding of platform architectures and their component elements, an organisation will be constantly challenged, never reaching its potential in the digital economy.
Given that our conception of deep tech platforms within the digital economy takes into account the perspectives of purpose, people and the planet, we help leaders understand platforms by defining them as an enterprise strategy which integrates human and digital dimensions:
Platforms are an open, flexible and extensible set of digital interactions, services and human networks that elevate, scale and amplify value in the digital economy. We use the word elevation in relation to the lifting of a concept to a higher level; you transcend what you have done previously and create something far more inclusive. Our conception of deep tech is therefore dynamic, consisting of three design movements: the elevation of value propositions, scaling through platform services and amplification through new waves of innovation. The ability of platforms to scale represents a significant opportunity to raise the quality of life for people. Due to the low marginal cost of scaling, once a value proposition has been elevated, it can then be scaled globally at a minimal cost.
The role of leaders
Leaders can transform their businesses into amplified organisations by facilitating a systemic understanding of the mindsets, platform architectures, and conceptual definitions of deep tech. This is achieved through an innovation process we call ‘Deep Tech Discovery’ which integrates ideation for new technological solutions with initiatives to transform the employee experience, training programmes, talent strategies and organisational culture. By seeing discovery as an educational, as well as innovation process, leaders gain the following benefits:
- enterprise-wide agility through the integration of strategy, value propositions and platform development;
- an appreciation of the many different mindsets that operate in organisations, for example, the managerial, the entrepreneurial and the visionary;
- demystification of the core concepts relating to complex platform architectures;
- an expanded discovery process with a focus on the voice of the customer to the voice of stakeholders;
- alignment of deep tech platform architectures with the organisation’s strategy and digital operating model.
Deep Tech Discovery works by integrating problem specification and ideation activities with educational sessions based on developing organisation-wide alignment around core concepts and definitions. The result is a more agile form of design and development with engaged contributors for all parts of the organisation.
A multi-dimensional concept
Deep tech is a movement which is transforming the way we understand technology and which is shaping our world in ways we have never seen before. Those leaders of the future who will be successful in the design and application of deep tech will not just be those who focus on the technological dimension but understand it as a multi-dimensional concept, managing new forms of collaboration between artificial intelligence-based applications which operate at brain scale and human expertise, cognition and decision-making. This will be achieved through the emergence of amplified organisations – intentional regenerative businesses which are purposeful, engaged and hyperconnected, continually evolving themselves guided by their north star of the New 4Ps.
This is an adapted version of an article that was published on AMBA’s website, written by Simon Robinson; co-author of ‘Deep Tech and the Amplified Organisation’ and CEO (worldwide) of business consultancy Holonomics.
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