Historian Melvin Kranzberg’s first law states: “Technology is neither good nor bad – nor is it neutral.” This seems increasingly relevant even after 30 years. The future is, in many ways, made by those who fund it. The traditional model of relying on R&D to generate new ideas within large corporations and government agencies, and in partnership with universities and public research institutions, remains, but it is startups and investors looking at their blend of risk, return and impact that is creating opportunities and disruption.
Corporate venturers are an increasingly important part of this future, providing nearly a third of the innovation capital in some sectors, such as life sciences, and probably more in others (see World of Corporate Venturing next month for a full analysis of the year). Their decisions about who and what technology and business models to fund matter, and so there is increased attention on who they are and how they are structured (see comment).
The near-$100bn SoftBank Vision Fund has this year drawn most attention. The rate of deployment and focus on the sensors, data and algorithms driving towards “singularity” – self-evolving artificial intelligence – and the source of capital as a mix of individuals, corporations and governments is probably unprecedented in the tech industry.
A look through the scores of answers from the heads of corporate venturing units in this year’s annual survey (see special report) identifies the main technology trends that occupy their minds – artificial intelligence and machine learning, blockchain and cryptocurrencies, Crispr and the convergence of life sciences and tech, quantum computing and autonomous technology, and cybersecurity to protect it all. As Bonny Simi, president of JetBlue Technology Ventures, said: “These technologies will transform entire industries.“
Within the next 15 years, nearly 15% of the global workforce may need to switch jobs, according to a report by consultants at McKinsey Global Institute. By 2030, McKinsey estimated 75 million to 375 million workers will change occupation categories while another 400 million to 800 million could be displaced by automation and will be required to find entirely new forms of employment. “While new jobs will be created during that same period, the big question is if workers will have the necessary skills to transition into these new roles effectively,” the report said.
Vivek Wadhwa, distinguished fellow at Carnegie Mellon University Engineering at Silicon Valley, has written in his next book – Your Happiness was Hacked – due out in May, that the “technology that was supposed to bring us together, increase freedom and democracy, and make us content and happy is doing the opposite”. He believes the next consumer tech “revolution” will “reduce our choices even further and make us dumber – and this will consolidate power in the hands of the big providers, Amazon, Google and Apple [plus SoftBank, Tencent, Alibaba, Baidu and Huawei], by providing them with a larger treasure trove of data that can be abused”.
But perhaps it is worth reminding ourselves of Kranzberg’s fourth law: “Although technology might be a prime element in many public issues, nontechnical factors take precedence in technology-policy decisions.” Effectively, the question is less about what can be accomplished but what should be and who, or what algorithm, decides.
Margrethe Vestager, European commissioner for competition, told Europe’s biggest tech conference, Web Summit: “Competition drives us to get better. It helps us achieve things we had no idea we could do. And that means it is a problem when successful companies, which dominate the market, decide to use their power to shut down competition, because that can end up closing the door to innovation.”
Corporate venturers, therefore, could take it as an indication that the ties and minority holdings they have with startups will be increasingly scrutinised even before a potential acquisition is made. This will flow through the limited partnerships, too, as has already started with those from whom SoftBank and VCs have raised money. Tech has the power to influence societies, whether through so-called fake news, or longer-term through gene editing or human-machine interfaces.
Vestager added: “But more and more, we are being asked to put our trust not just in other people, but in computers and algorithms – algorithms most of us do not fully understand. Whose workings might be a mystery even to those who use them to run their businesses. So today, the biggest challenge to the future of innovation is not whether we have enough ideas. It is whether that new technology can succeed in winning the public’s trust.”
The history of dominant companies and platforms has been one of anti-trust breakups, such as Standard Oil in 1911 after 40 years, or the East India Company in 1874 after nearly 300 years, and failed leaps to new platforms, such as those by Xerox or Kodak.
Governments recognise technology helps to shape or break their societies and people, and this year has been a period when the implications of the work, neither good nor bad, of innovation capitalists has become clearer to see.
To download the Global Corporate Venturing December issue please click here.