innovation's information problem chris hartshorn, ph.d. chief research officer lux executive...

Innovation's Information Problem

Chris Hartshorn, Ph.D.

Chief Research Officer

Lux Executive Summit Asia

October 21, 2015

Agenda

Madness and methodOptimizing for moneyControlling your information destiny

4

Method

Many only had a moderately high level of intelligence

All:excelled in rule-based disciplines

had elevated AQ scores with respect to attention to detail

had an unlikely number of autistic relatives

All had working memories in the 99th percentile

5

Method and Madness?






Highly creative people have a lower than expected density of D2 receptors in the thalamus – the same as people with schizophrenia

A lower degree of signal filtering..

…leads to a barrage of uncensored information…

…ignites innovation.

Thinking outside the box is easiest with a less intact box 6

Agenda


7

One view of the industrial innovation process

8

One view of the industrial innovation process

How do we optimize our R&D portfolio based on this?

9

Challenging one view of the industrial innovation process

Is this the best we can do?

Is this even the enough data to decide?10

Lux has been evaluating emerging technology developers for years…have we learned anything?

We looked at how effective our methodology has been in finding then evaluating start-up companies.

The process of down-selecting, then analyzing through the Lux Take improves overall probability of success by 5 to 7 times versus start-up companies overall

11

Lux has been evaluating emerging technology developers for years…have we learned anything?

The resulting scorecard also has individual metrics indicating up to four times the probability of a successful outcome.

These prognoses are statistically significance to at least 99% confidence in all cases

12

Get more insight from a higher quantity and granularity of data

What’s the asset we have in hand?

3,666 individual entities analyzed since 2011 (although many on multiple occasions)

It’s all new to them: Clean dynamics around new product development

Not blips in a BU swamp: Clean financial metrics around the outcomes

Granularity around the underlying factors

What should we optimize for?

Money would be nice…a.k.a. How can new products reach profitability fastest and more consistently?

The proxy: Time to profitability from founding date of the developing company 13

The elusive goal: Accelerate the outcomes from R&D or see the inflexion points and act

14

Almost 20% of start-up companies currently five years or less since founding are profitable

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

Profitability versus Maturity

Overall

North Amer-ica

Europe

Years since founding date

Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

15

Any patterns we can extract and try to replicate?

Technology Value Partnership Quality0%

5%

10%

15%

20%

25%

Profitability Probability 5 Years After Founding

Low (1 -2)Medium (3)High (4-5)


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

16

Quick success is more dependent on reaching out than what you have

Low (1

-2)

Med

ium

(3)

High

(4-5

)

0%

5%

10%

15%

20%

25%

Low (1-2)Medium (3)

High (4-5)

Profitability by Technology and Partnerships in 0-5 years

Partnership Quality

Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

Technology Value

17


Low (1

-2)

Med

ium

(3)

High

(4-5

)

0%

5%

10%

15%

20%

25%

Low (1-2)Medium (3)

High (4-5)


Partnership Quality

Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

Technology Value

18


Low (1

-2)

Med

ium

(3)

High

(4-5

)

0%

5%

10%

15%

20%

25%

Low (1-2)Medium (3)

High (4-5)


Partnership Quality

Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

Technology Value

19

A services mentality drives speed to profitability and a focus on partnerships

Services overall Services through products

0%

5%

10%

15%

20%

25%

30%

Profitability Probability 5 Years After Founding

NoYes

Business ModelPro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

Services overall Services through products

2

2.2

2.4

2.6

2.8

3

Partnership Building through Services

NoYes

Business Model

Pa

rtn

ers

hip

Qu

ali

ty

20

What about over the long haul?

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%Profitability versus Maturity

Overall

North Amer-ica

Europe


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

21

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%Profitability versus Maturity

Overall

North Amer-ica

Europe


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

So profitability going up over time as the bad weaker technology dies, right?

Low (1-2)

Medium (3)High (4-5)

22

Technology Value

As it turns out, the quality of technology is important eventually

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

Profitability versus Technology Value

Low (1-2)Medium (3)High (4-5)


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

23

Technology Value

The services model drives profitability early, but eventually becomes less critical

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

Acceleration to Profitability through Services

No servicesProvides services


Pro

po

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n o

f C

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pa

nie

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ita

ble

24

For simplicity’s sake…a unified view

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Profitability versus Lux Take

Caution -Wait & SeePositive +


Pro

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rtio

n o

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pa

nie

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ita

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25

Lux Take

Better metrics to review success are the basis for better metrics to predict it

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Profitability by 'Industry'

OverallResourcesElectronicsBuildingsMaterialsHealth & WellnessInformation Meets Mat-ter


Pro

po

rtio

n o

f C

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pa

nie

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ble

26

Drilling down into resources, specifically water

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Profitability by 'Industry'

OverallRe-sourcesWater


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

27

Doing the walk on water

22

t0

Water technology developers profiled in 2009

Not yet profitable

High technology value

At least a ‘Positive’ take

22 entities matching this description

?

t0 + 5 years

28

Doing the walk on water

22

Not Profitable

Profitable

29

t0 t0 + 5 years

The elusive goal: Accelerate the outcomes from R&D or know the inflexion points and act

30

Right place, right time?

22

Not Profitable

Profitable

tave = 11.0

Technology4.2

Competitive Landscape

2.7

Partnerships3.0

Management Team3.4

Technology3.8

Competitive Landscape

2.3

Partnerships3.4

Management Team3.8

31

tave = 6.4

Can we use and optimize for venturing?

0-5 6-10 11-15 >150%

10%

20%

30%

40%

50%

60%

70%

80%

Profitability versus Maturity

OverallNorth Amer-icaEuropeAsia (ex China)


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

32

The best backlog of derisked ideas

0-5 6-10 11-15 >150%

5%

10%

15%

20%

25%

30%

35%

40%

Incremental Profitability versus Maturity

Overall

Resources

Electronics

Buildings

Materials

Health & Wellness

Information Meets MatterYears since founding date

Pro

po

rtio

n o

f C

om

pa

nie

s P

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ita

ble

33

Making the odds always in our favor

6-10 years since founding…

…with strong technology…

…and a ‘Lux Take’ of Positive or better

34


35

Dialing up the risk profile by industry

0-5 6-10 11-15 >150%

5%

10%

15%

20%

25%

30%

35%

40%

Incremental Profitability by ‘In-dustry’

Overall

Resources

Electronics

Buildings

Materials

Health & Wellness

Information Meets Matter


Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

36


0-5 6-10 11-15 >150%

5%

10%

15%

20%

25%

30%

35%

40%


Overall

Resources

Electronics

Buildings

Materials

Health & Wellness



Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

37


0-5 6-10 11-15 >150%

5%

10%

15%

20%

25%

30%

35%

40%


Overall

Resources

Electronics

Buildings

Materials

Health & Wellness



Pro

po

rtio

n o

f C

om

pa

nie

s P

rof-

ita

ble

38


0-5 6-10 11-15 >150%

5%

10%

15%

20%

25%

30%

35%

40%

Incremental Profitability by 'Industry'

Overall

Resources

Water

Ag

E&P


Pro

po

rtio

n o

f C

om

pa

nie

s P

rofi

tab

le

39


Name DescriptionSells

Products

Provides

Services

Licenses Tech

TyraTech Biopesticides targeting biological receptors unique to insects and invertebrates

Trana DiscoveryAnti-viral, anti-microbial, and anti-fungal discovery platform for human health and agricultural applications

Force-A Agricultural sensor developer and diagnostic services provider

aWhere Global weather information and data management platforms for agriculture

Arcadia Biosciences

Development and deregulation of crop genetics for stress tolerance

OxitecGenetically modified insects for control of agricultural pests and mosquito-borne illnesses

Senesco RNAi approaches to enhanced plant growth, stress tolerance, and disease resistance

Primus Green Energy Catalytic conversion of syngas to gasoline

LUX Assure Ensuring optimal corrosion inhibitor dosage for oilfield applications

Velocys Microchannel reactors and catalysts for small-scale liquid fuel production

Synodon Airborne detection of leaks and imagery of oil and gas assets

40

Agenda


41

Innovation's Information Problem

Chris Hartshorn, Ph.D.



October 21, 2015

Innovation's Information ProblemInformation's Innovation OpportunityChris Hartshorn, Ph.D.



October 21, 2015

Dialing up the working memory






44


Leverage the learning of others

45



46


Intelligence Consulting

Services

Retained Intelligen

ceAnalytics

Services

47


Dialing down the D2 receptors in the corporate business development thalamus

Highly creative people have a lower than expected density of D2 receptors in the thalamus – the same as people with schizophrenia

A lower degree of signal filtering..

…leads to a barrage of uncensored information…

…ignites innovation.

Thinking outside the box is easiest with a less intact box 48


Less signal filtering…operate in a less intact box

Information

generation

Services business models

49


Invest in it:

50

Invest in it:


51

Technology Bets IT Platforms

Invest in it:


52


Invest in it:

Acquire it:

53

Summary

A services culture drives partnerships, partnerships drive speed to profitability of new products

An increasing number of high potential concepts merge information and matter.

Consistent methodology enables analysis of innovation and a higher chance of making the right bets

54

Lux Research Asia-Pacific PTE, LTD · www.luxresearchinc.com 75 Tanjong Pagar Road, #03-01 Singapore 088496 +65-6592-6978Kanda Park Plaza, 5th Floor · 2-2-2 Kaji-chou · Chiyoda-Ku, Tokyo 101-0044, Japan +81-3-4520-5490

Thank you

Chris Hartshorn, Ph.D.Chief Research [email protected]+1.617.502.5313

http://www.luxresearchinc.com/

mailto:[email protected]

innovation's information problem chris hartshorn, ph.d. chief research officer lux executive...

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