Can urban innovation ecosystems be developed with little broadband infrastructure?

We are witnesses the surge of tech startup ecosystems in cities globally.  This is happening in both developed and developing countries.  In my previous blog post I showed this trend and the studies that confirm it. Among the questions we are looking for in our research to map urban innovation ecosystems is whether there is a minimum set of requirements for these ecosystems to emerge.  A minimum set of infrastructure or skills of the population, for instance.  What we are encountering is that, although you need a minimum level of infrastructure, e.g., there must be at least some broadband connectivity and mobile phone networks, this level is much lower than many people expect.  A city does not need to have 4G mobile broadband or fiber optic fixed broadband widespread.  It is enough to have broadband connection in some key points (particularly hubs and collaboration spaces) and basic mobile phone coverage and use, e.g., 2G mobile phone service.  A similar conclusion is applicable to the skill level of the population.   The results of the study of New York tech ecosystem shows that almost half of the employment created by the ecosystem do not require bachelor’s degree.  In this blog post I present the case of Nairobi and the tech start up ecosystems emerging in Africa and how these ecosystems can not only surge, but compete internationally despite having limited broadband connectivity (both mobile and fixed).  This is also part of the paper I am working out and the research we are doing on urban innovation ecosystems.


Map of Accelerators and Collaboration Spaces in Nairobi. Source: Manske, Julia. 2014. Innovations Out of Africa. The Emergence, Challenges and Potential of the Kenyan Tech Ecosystem.

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4 Challenges to Reaching 3.8 Billion Mobile Internet Users in 2020

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According to new data released by GSMA Intelligence, 3.8 billion people or half of the world’s population will be using mobile devices to access the Internet by 2020. And where will almost all of the additional mobile Internet users come from? The developing world!

Mobile Internet users in the developing world will double from 1.5 billion in 2013 to 3 billion by 2020, rising from 25% today to 45% of the developing world population that will be accessing Internet services and consuming mobile data for everything from email and web browsing, to social networking and online gaming. Read more

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The Internet-Connected Engine Will Change Trucking

It’s happened to all of us. You’re driving down the road and the “check engine” light appears on your dashboard. It could be something simple, like time for an oil change, or it could be something bigger. What do you do? Lose your car for a day while you take it to a service station? Keep on driving and hope for the best?

If you’re a commercial truck driver, the stakes are higher. An unplanned repair visit means losing a day of revenue, and potentially hurting your delivery schedule, for a condition that might be very minor. But if you decide to keep driving, you risk something far worse happening to your engine – and your livelihood.

This kind of uncertainty is a fact of life for many drivers. But Daimler Trucks North America (DTNA) is using the Internet of Things to resolve the uncertainty. DTNA is the largest heavy-duty truck manufacturer in North America, selling trucks under brands such as Freightliner, Western Star, Thomas Built, and Detroit Diesel through more than 1,300 dealers. In 2013, the company released a service called Virtual Technician to help existing drivers while also enabling new business models and revenue streams. According to CIO Dieter Haban, whose team identified the idea and led product development, “the innovation combines telematics, mobility, central mission control, big data analytics, and a seamless process from the truck to the driver, fleet manager, and ultimately to an authorized service outlet.”

DTNA’s engines continuously record performance data and send it to their Detroit Diesel Customer Support Center (CSC).  When a fault occurs, a team of CSC Technicians examine the data in real time and offer a recommendation. If it’s just a routine repair, technicians can help the driver schedule a service appointment for some convenient time and location. But if it’s a more severe condition, they might say “You need to bring your truck in for service right away. There’s a service station 75 miles down the road. When you get there, we’ll have a service bay open and all of the parts we need on hand. You should be in and out in two hours.”

This kind of service is more than just convenience. It brings certainty to a situation where uncertainty can drive tension into the driver/manufacturer relationship.  By capturing information that formerly was available only from an in-person diagnostic test, Daimler Trucks North America creates customer loyalty and reduces risk for commercial drivers.  It’s like driving a truck with a team of technicians on board.

Haban described the savings: “From the time a fault is realized, ordering parts, to getting the truck in the shop and repaired, we eliminated all wasteful steps.  This cuts down the time tremendously.”  But the savings go beyond efficiency. The service gives drivers confidence, and that’s important for a driver who operates alone, often hundreds of miles from home. Drivers are willing to pay for that certainty.

DTNA’s new service offers a number of important lessons for delivering IoT solutions, and digital transformation in general:

Look beyond the limits of the pre-digital age. Why is repair service so maddening? It’s because technicians can only diagnose and recommend services when your vehicle is actually in the shop. Daimler Trucks North America executives saw how IoT technology could fix this fundamental flaw in the design of the repair process, making the process smoother and more efficient for drivers and technicians alike.

Build and share a transformative vision. To the senior leadership team, this wasn’t just about telematics or new revenue. Putting a virtual technician on board each truck was just the start of a much broader process of changing the relationship between drivers or fleet operators and the company. DTNA leaders created this vision, communicated it widely inside the company, and then listened to ideas that could extend the vision.

Lead from the top. Digital transformation often crosses organizational silos, meeting many types of inertia and conflict along the way.  It takes strong top-down leadership — a combination of persuasion, incentives, mandates, and examples — to make this kind of change happen.  Virtual Technician touches many parts of DTNA, from IT to engineering to customer centers to dealers. Building the service required decisive leadership to invest in the innovation, negotiate across boundaries, address issues, and engage hundreds of people in making the vision real.

Ensure that you have a strong digital platform. DTNA executives had to build a platform that connected engines on the road, engineers and technicians in the control center, and systems in the dealers into a unified process. Failing to connect a link in the chain would lead to service failures and unwanted delays. For example, if dealer service systems were not part of the solution, a driver might arrive for service only to have to wait for a bay to open, or for parts to arrive.  Building a platform that spans different organizational units, and even beyond the boundaries of DTNA, is challenging, but it is the foundation for everything else.

Foster close collaboration between IT and business leaders. In Daimler Trucks North America, the CIO is responsible for innovation, not just for IT. Business and IT leaders work closely together to identify and implement ideas. According to Haban, digital transformation is “a joint effort of IT and business. Nobody says ‘I’m the digital guy.’” This is important; neither IT nor business can do it alone.

Stay attuned to new possibilities.  The Virtual Technician capability is becoming the centerpiece for new service offerings. For example, fleet managers are willing to pay for a service that lets them know, in real-time, where every truck is, how well it’s working, and when it will next need repairs. The data can also help DTNA understand how to improve its engines, help customers choose the right equipment configurations, or optimize inventory management. And management is paying attention to many other opportunities.

Looking forward:

To date, more than 100,000 trucks have activated the Virtual Technician service. More than 85% of users have already received a notification of needed services, and 98% were satisfied with the notification process. Customers report higher satisfaction and higher uptime on their vehicles equipped with Virtual Technician.

DTNA’s new capabilities make many other services possible for the company and its corporate family. Daimler could offer these services to commercial drivers and fleet managers in other parts of the world. It could extend its engine-focused service to other parts of the truck, like wheels or suspensions. And who knows — Mercedes drivers may someday get the same type of service for their passenger cars.

The internet of things is enabling new possibilities for digital transformation in every industry. It is creating new opportunities that were only dreams a decade ago. Take a look at your business.  What can you do that you couldn’t do before? Start to do it now, before someone else does.


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The next industrial revolution

Power_Mast_Framework_Markus_Grossalber_Flickr

If you Google “next industrial revolution,” you’ll find plenty of candidates: 3D printers, nanomaterials, robots, and a handful of new economic frameworks of varying exoticism. (The more generalized ones tend to sound a little more plausible than the more specific ones.)

The phrase came up several times at a track I chaired during our Strata + Hadoop World conference on big data. The talks I assembled focused on the industrial Internet — the merging of big machines and big data — and generally concluded that in the next industrial revolution, software will take on the catalytic role previously played by the water wheel, steam engine, and assembly line.

The industrial Internet is part of the new hardware movement, and, like the new hardware movement, it’s more about software than it is about hardware. Hardware has gotten easier to design, manufacture, and distribute, and it’s gotten more powerful and better connected, backed up with a big-data infrastructure that’s been under construction for a decade or so.

All of that means it’s an excellent way to extend the reach of software into the physical world, so people who have spent their lives in software are turning toward hardware now, hoping to build little rafts that will carry their code out of the comfort of the server room and down the unexplored rivers of the physical world.

The problems of the industrial Internet are particularly interesting because they require an enormous amount of domain knowledge in addition to clever software thinking. Our first speaker at our Strata + Hadoop World Industrial Internet session, Daniel Koffler, described aluminum smelting pots that use 600,000 amps of current — enough to disable electronic equipment and magnetize cars nearby. Our second speaker, Ami Daniel, described the lengths that smugglers and savvy merchant captains go to in order to obscure the data streams that come from oceangoing ships, and the skepticism and precision that his team uses to outsmart them.

In my closing panel with executives from Accenture, GE, and Pivotal, we spent the most time talking about integration and skills — how to draw together a lot of experts to work on extraordinarily complicated systems. If you approach these kinds of problems unilaterally as a software generalist, you won’t get very far.

For a few more thoughts on the next industrial revolution, I encourage you to watch my colleague Jenn Webb interview Nate Oostendorp, a co-founder of Sight Machine (and another speaker in my industrial Internet program). Sight Machine uses computer vision and other software techniques to help factories and other physical environments improve their operations. (Full disclosure: O’Reilly’s sister firm, O’Reilly AlphaTech Ventures, is an investor in Sight Machine.)

The Strata + Hadoop World All-Access Pass includes the Industrial Internet Day all-day session and all sessions in the Connected World track. — get your pass here.

Cropped image on article and category pages by Markus Grossalber on Flickr, used under a Creative Commons license.


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Expanding the Mobile Apps Market: Making Mobile Work at the Base of the Pyramid

Arne Hoel/The World Bank

The diagram of a horizontally sliced triangle, with its wide base and pointy tip, has been used to represent socio-economic data for decades. The lowest and largest portion represents the poorest and most populous segment of society – living “at the bottom of the pyramid.” In the context of mobile innovation, we prefer the alternate term, “base of the pyramid,” which is closer to signifying the foundational, fundamental role of this demographic group in the health of an economy.

Regardless of semantics, the phrase has been widely used by researchers to consider the effects of various phenomena on this group of people (see select references related to digital entrepreneurship here). While many of these studies have produced insights for the development community, few have contributed practical knowledge for the entrepreneurs who live among and serve this critical group.

In 2012, infoDev commissioned country case studies on the use of mobile devices (then still mostly simple phones) at the base of the pyramid in Kenya and South Africa, with funding from the Ministry for Foreign Affairs of Finland and DFID (UK). Relying in part on a diary methodology and household surveys, the team was able to collect a rich set of qualitative and quantitative data to describe how mobile technologies were being used by the poor in their daily lives, as well as recording a series of videos with users.

They showed, for instance, that users in Kenya were willing to forego basic necessities such as food, transport or toiletries to pay for mobile credit in the knowledge that this would give them better opportunities to find work. In other words, we found that mobile phones are highly valued by and influential in the lives of people at the “base of the pyramid,” and decided to deepen our knowledge further in a way that would benefit entrepreneurs who create applications that serve this population.

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Technological Leapfrogging in Agriculture

“To harness the globally available technologies, African leaders will need to take into account the multisectoral dimension of African agriculture and pay particular attention to the urgency of investing in rural infrastructure, higher agricultural training and creation of regional markets.”


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