New Industrial Revolution and Implictations for CFOs

Navigating the New Industrial Revolution(s)

---Implications for CFOs

Professor Robin Teigland Stockholm School of Economics

www.slideshare.net/eteiglandrobin.teigland@hhs.se

@RobinTeiglandNovember 2016

Thx to R. Wieselfors, Ericsson for photos

Thx to R. Wieselfors, Ericsson for photos

2015

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next

ten.”

- Bill Gates, The Road Ahead, 1996

Human-like face with social intelligence

2016

http://www.furhatrobotics.com/furhat/

Valuecreation

People• “Net generation”• 24x7 “mobile”

workforce• Knowledge via MOOCs• Sharing not owning• Sustainability• Gigs and not jobs

Technology • Broadband• Smart phones• Cloud• Internet of Things • Big Data• Cognitive

computing• 3D printing• Robotics/AI• VR/AR/ Holography

Open Source IP

• Software • Hardware• Physibles

Convergence of…..

Finance•

Microlending/microfinance

• Crowdfunding/equity/P2P

• Cryptocurrencies• Blockchains• Mobile

money/payments • M2M payments

http://marketrealist.com/2016/01/fourth-industrial-revolution-need-know/

https://www.youtube.com/watch?v=jfd3k4VUYh4&t=1075s

https://www.youtube.com/watch?v=jfd3k4VUYh4&t=1075s

https://www.youtube.com/watch?v=jfd3k4VUYh4&t=1075s

FIRM YEAR FOUNDED NO. EMPLOYEES MKT CAP

BMW 1916 116,000 $53B

UBER 2009 7,000 $60B

MARRIOT 1927 200,000 $17B

AIRBNB 2008 5,000 $21B

WALT DISNEY 1923 185,000 $165B

FACEBOOK 2004 12,691 $315B

KODAK 1888 145,000 $30B (heyday)

INSTAGRAM 2010 13 $1B (acquisition)

2016 Parker & Van Alstyne, with Choudary – licensed under Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).

Something fundamental is changing

Pipeline – Traditional linear value chain

Supply-side economies of scale

• Launched June 2010• 519 cities in >68 countries

• Limited physical assets• 7000 employees

• USD 62.5 bln valuation

(BMW, 1916, 116,00 empl, USD 53 bln)

“Doing more with less” through a global platform

Network EffectsValue rises as more people

use the platformMetcalfe’s Law

Platform-based business models

PIPELINES PLATFORMS

Create Innovation COMPANY ROLE Enable interactions

Consume innovation CUSTOMER ROLE (Co)-create innovation

Supply-side economies of scale

SCALING ADVANTA

GEDemand-side economies of scale (network effects)

Optimize value chain and run more efficient

operationsSCALING FOCUS

Optimize interactions and build more networking

effects

CONSUMERS COMPANY EXTERNAL INNOVATORS

COMPANY

Thomas Kohler, 2016

Community platform

Hierarchical firmVS

Microsoft~ Created by employees within

organizational boundaries

E.g., eZ Systems~ Created by community collaborators regardless of affiliation

Teigland, Di Gangi, & Yetis 2012

The Flipped Firm: New model of value creation?

Platforms enable ecosystems

Local Motors to print 3D cars in its micro-factories

Converging technologies

3D printing Robot

Blockchain/AI

Drones/IoTSocial Robots

The Blockchain is the glue that is going to drive a productivity revolution across the

globe on par with what Henry Ford did with the automobile.

— Paul Brody, Americas Strategy Leader, Technology Sector, Ernst & Young

All our knowledge is about the past, but all our strategic decisions are

about the future.

What we don’t know we don’t know

Most of what we need to know to make good

decisions today is outside our comprehension: We

don’t even know it’s there.

What we know

What we know we don’t know

Looking into the future?

Forecast−How we think the future will be

Vision−How we want the future to be

Scenario−What the future can be

Scenarios: Memories from the future

????

Galina Shubina 2016

ExploitationImproving

existing value creation activities

ExplorationDeveloping new value creation activities

Adapted from March 1991

Reallocating capital

The heads of many companies are not skilled at capital allocation.……But today, capital allocation is Job 1. And investing in today’s

digital business models is critical.— Warren Buffet

https://hbr.org/2016/09/investors-today-prefer-companies-with-fewer-physical-assets

Four faces of the CFO

https://www2.deloitte.com/us/en/pages/finance/articles/gx-cfo-role-responsibilities-organization-steward-operator-catalyst-strategist.html

Robin Teiglandrobin.teigland@hhs.se

www.slideshare.net/eteigland@robin.teigland

If you love knowledge, set it free…

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