DIG­I­TAL REIN­VEN­TION

Forbes - - Bezos Unbou - By Leonard Brody

FROM TRAC­TOR MAK­ERS TO LI­BRARIES, SMART OR­GA­NI­ZA­TIONS ARE TURN­ING DIG­I­TAL THREATS INTO OP­POR­TU­NITY

ohn Deere’s dig­i­tal tech­nol­ogy lab in San Fran­cisco some­times raises eye­brows.

“There’s a Wework space not too far away, so startup peo­ple walk by our of ce and say, ‘Hey, what’s John Deere doing here?’” said John Stone, se­nior vice pres­i­dent of Deere’s In­tel­li­gent So­lu­tions Group.

Now and then, some­one pops in look­ing to buy a trac­tor.

Set amid tech com­pa­nies like Linkedin and Sales­force is ex­actly where Deere wants to be. Count­less com­pa­nies, large and small, have been blown to bits be­cause they un­der­es­ti­mated the im­pact of dig­i­tal dis­rup­tion, the changes in

Jcus­tomer ex­pec­ta­tions it has cre­ated and the un­ex­pected com­pe­ti­tion it can bring. The 181-year-old trac­tor maker has turned to soft­ware, con­nected sen­sors, ma­chine vi­sion and deep learn­ing so it can keep de­liv­er­ing value to the farm cus­tomers it serves.

“We opened that of ce out there to get our­selves plugged into the startup tech scene,” Stone said. Af­ter it opened in San Fran­cisco, Deere ac­quired Sil­i­con Val­ley ma­chine-vi­sion startup Blue River Tech­nol­ogy. Its “see and spray” sys­tem uses cam­eras and AI to let ma­chines in the eld rec­og­nize and tar­get in­di­vid­ual weeds with her­bi­cides, in­stead of spray­ing a whole eld. It can re­duce use of chem­i­cals by 80 per­cent or more. Stone feels he has a strong pitch to ma­chine­learn­ing en­gi­neers who want to make a dif­fer­ence: “You can ap­ply your ex­per­tise to build­ing a bet­ter spam lter, or you can ap­ply your ex­per­tise to re­duc­ing her­bi­cides in farms. It’s pretty com­pelling, I think.”

There’s no paint-by-num­bers play­book for mas­ter­ing dig­i­tal dis­rup­tion, but there are solid guide­lines. A rst step is to un­der­stand your core value to cus­tomers — and strengthen it us­ing emerg­ing tech­nolo­gies. It may be a prod­uct line or ser­vice. Of­ten it’s about a re­la­tion­ship, a trusted brand.

“My group is sup­posed to push bound­aries. We’re sup­posed to iden­tify and in­vest in lead­ing-edge tech­nolo­gies,” Stone said. “But the value is still con­nected to the ma­chine that turns the soil, plants the seed, cares for that crop as it grows, and har­vests that crop and turns it into in­come for the farmer.”

Then it’s about at­tack­ing your­self as oth­ers would. “Look at the land­scape for star­tups that are en­croach­ing into your space. Think about how you might cre­ate a part­ner­ship or move to ac­quire them. Smart or­ga­ni­za­tions launch in­cu­bated teams and/or services that could can­ni­bal­ize their own sta­tus quo busi­ness,” said Steve Hill, global head of in­no­va­tion for KPMG LLP. “These startup ef­forts may in fact shine a light on a lifeboat for the fu­ture.”

Across the coun­try in Prince­ton, New Jersey, lead­ers of the pub­lic li­brary saw users’ needs shift­ing dra­mat­i­cally in the early 2000s.the World Wide Web was ren­der­ing ref­er­ence books ob­so­lete. Did peo­ple even need li­braries?

“We said, ‘Let’s kind of explode the whole con­cept of what a li­brary is,’” said Leslie Burger, who was li­brary direc­tor dur­ing the re­boot. The li­brary re­built it­self as a com­mu­nity space and “life­long learn­ing part­ner” for fam­i­lies. A oor was turned into a cowork­ing space, where free­lancers can re­serve con­fer­ence rooms and use of ce equip­ment, with gi­ga­bit in­ter­net ac­cess. There’s a café, a used­books store and mul­ti­ple daily events, from lms to classes.

“I think it’s about pay­ing at­ten­tion to your cus­tomers,” Burger said. “That’s as true for a li­brary as it is for a tech­nol­ogy com­pany or a re­tailer. How to po­si­tion your or­ga­ni­za­tion to be an in­te­gral part of the lives of the peo­ple you want to serve.”

Some­times you need to dive into a dig­i­tal re­make, not just dip a toe. “A toe in the wa­ter al­lows you to test and pivot and iter­ate, but you may not have time for that,” said Fiona Grandi, na­tional leader for strate­gic in­vest­ments at KPMG LLP. “Or­ga­ni­za­tions should cre­ate en­vi­ron­ments that re­ward ‘suc­cess­ful fail­ure,’ where new ideas are ex­plored and de­vel­oped, in­clud­ing rede ning “ROI” in in­no­va­tion terms.”

Brett Bon eld, ex­ec­u­tive direc­tor at the Prince­ton Pub­lic Li­brary, agrees: “You should con­stantly be try­ing things and have an ap­petite for fail­ing. If ev­ery sin­gle thing we do is work­ing, we’re not try­ing hard enough.”

Deere has a long his­tory of dis­rupt­ing it­self. The com­pany is cel­e­brat­ing the 100th an­niver­sary of mak­ing its plows ob­so­lete by adopt­ing in­ter­nal com­bus­tion en­gines. “To­day, that means sen­sors and soft­ware and data,” Stone said.

Ev­ery one of Deere’s large agri­cul­tural ma­chines leaves the fac­tory to­day with a 4G LTE mo­dem to con­nect to other ma­chines, the cloud and mo­bile de­vices. Ve­hi­cles have in-cab touch-screen dis­plays and Gps-based auto-steer­ing systems. Farm­ers can ac­cess data about their crops and equip­ment at MyjohnDeere.com, and the com­pany has built a dig­i­tal ap­pli­ca­tion plat­form with 90 soft­ware part­ners.

“We’ve got com­puter-vi­sion systems now, in­ter­nally de­vel­oped, on ba­si­cally all of our large ag equip­ment,” Stone said. “It’s on trac­tors, on our sprayers, on our har­vesters. These vi­sion systems have deep neu­ral nets un­der­neath them. That is de nitely the fu­ture of our equip­ment. I think ma­chine learn­ing is go­ing to be as core to John Deere as the diesel engine.”

week­ends, Courte­manche found progress on the house mov­ing at a glacial pace. So he did what he knew best and coded his own pro­gram to keep track.

By 2004 Courte­manche had signed up con­trac­tors for Hol­ly­wood stars like Ed­die Mur­phy, Ben Stiller and Bar­bra Streisand to mon­i­tor their home ren­o­va­tions with Pro­core. Courte­manche spoke the lan­guage of con­struc­tion uently. Grow­ing up in the a uent La Jolla area of San Diego, Courte­manche was an indi er­ent stu­dent, more in­ter­ested in girls than school­work. But con­struc­tion was an­other story. A er school he’d sweep out the oors of a cab­i­net shop, and by 17 he’d be­come a jour­ney­man car­pen­ter a er com­plet­ing a 6-month ap­pren­tice­ship.

A dis­as­trous year at the Univer­sity of Ari­zona, where he un­ked out with a 0.3 GPA, led to a se­cu­rity guard job and then com­mu­nity col­lege, where Courte­manche got the grades to be ac­cepted into a premed pro­gram in San Fran­cisco. Once north, he got caught up in the con­struc­tion boom of the early 1990s, “swing­ing a ham­mer” for two years. Feel­ing burned out, he took up a fam­ily friend’s o er to learn the tele­phony so ware busi­ness, then taught him­self HTML. By 1993 he was a so - ware en­gi­neer; by 1996 he’d founded a tech con­sul­tancy.

When Courte­manche built the pro­to­type for Pro­core

ve years later, he was shocked. Con­struc­tion made up nearly 10% of Amer­ica’s econ­omy, but even as late as 2002 its work­ers barely used the in­ter­net. “Holy crap, I’ve been given a time ma­chine,” he thought.

For a edgling so ware busi­ness, Santa Bar­bara was no San Fran­cisco. But what it did have was plenty of well-heeled refugees from the Bay Area and Los An­ge­les look­ing for a qui­eter life. One in­vestor, Steve Zahm, who had founded and then sold the e-learn­ing com­pany Dig­i­tal ink for $120 mil­lion, joined Pro­core as pres­i­dent in 2004 (a role he still holds to­day). A big­ger sh, Dou­bleClick co­founder Kevin O’connor, wrote Pro­core’s rst in­sti­tu­tional check, lead­ing a $950,000 seed round and join­ing the startup’s board.

Pro­core grew, but more mod­estly than hoped. ere’s a say­ing in investing: If you’re early, you’re just as good as wrong—and Pro­core was very early. In 2006, four years a er Pro­core was found-

“HOLY CRAP, I’VE BEEN GIVEN A TIME MA­CHINE.”

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