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future of leadership

Let technology lead the development

How should Danish leaders adapt to digitalization when Silicon Valley's born-digital giants are already ten years ahead in the development? There is surely still a lot to learn from Silicon Valley's tech giants.

In Silicon Valley, it is not a rare sight to spot autonomous vehicles in the streets. Google is testing their Waymo service and General Motors have their GM Cruise. The so-called transportation-as-a-service companies, Uber and Lyft, have all-together completed hundreds of thousands of commercial trips in autonomous vehicles in Las Vegas and Phoenix.

Uber became famous in Denmark in the mid-2010s, while their closest rival in the US, Lyft, is relatively unknown in Europe. Like Uber, Lyft is a ridesharing app that operates in more than 650 US and Canadian cities and is valued at $23 billion - about a fifth of Uber's value. It was the use of digital platforms to recruit and coordinate large networks of loosely connected passengers and drivers that allowed Uber and Lyft to take over the majority of passengers in every major US city. In San Francisco, it is not taxi signs that light up in the street, but the neon pink Lyft signs and the white Uber logo.

Lyft is of particular interest as it serves as a clear example of a technology-driven company that is not afraid to invest heavily in the future. In Lyft's subdivision, Level 5, they specialize in developing software for autonomous vehicles based on the platform's collected data.

At Lyft Level 5, there is no doubt that the future will be driver-less, which is why Lyft - in fierce competition with Uber - has started adapting to what lies a decade ahead. In relation to Innovation Centre Denmark's latest report on the future of leadership, we have been in dialog with Lyft Level 5. In the report, Lyft is highlighted as one of many Silicon Valley companies that are not afraid to attack their own existence. Lyft states that they first expect to see the actual impact of autonomous vehicles in ten years. It does not take long to realize that with such a lengthy timeline, the development of autonomous vehicles is a huge investment for a company that is not yet profitable.

This is surely the kind of technological vision that Danish leaders can be inspired by. Companies can benefit from seeing technologies, such as artificial intelligence, as an opportunity to explore processes and eliminate those that do not work. As Lyft puts it: "Solving the really difficult and important problems is a huge business opportunity," since it is no longer enough to invest in a new app and call it digital transformation.

Keep and use your data

At Lyft they believe there are great opportunities in looking beyond the passenger transportation industry. It is not a coincidence that they call themselves a transportation-as-a-service business, since the company aims to infiltrate all areas of the transport sector. Whether it's scooters, electric bikes or autonomous vehicles. Lyft has a huge asset in the data that is collected through the platform. It is these sets of data that must feed the algorithms behind the autonomous vehicles and be the departing point for all their future services.

The learnings taken from Lyft - but certainly also from Uber, Amazon, Netflix and especially Google - is that data is a crucial component of success. Shomit Ghose, managing partner of the venture capital firm Onset Ventures, and member of the Innovation Centre Denmark Silicon Valley’s advisory board, says that this is the reason why it is important for companies to consider themselves as computer companies rather than part of a specific industry.

In the case of Google, the strategic acquisition of the wearable company FitBit is a good example of how the tech giant is gaining access to more data. Despite a strong brand, FitBit was pressured by the huge success of other technologies, such as the Apple Watch, and it was a surprise to many in the industry when Google bought the company last year for $ 2 billion. However, from a data perspective and with Google's increasing health interest, it almost seems like a no-brainer that Google would want to gain access to such a large amount of health data and expertise. This shows that when data becomes the competing factor, traditional boundaries between industries dissolve, and companies can use their ability to analyze these data sets and suddenly gain a leading position in industries they have not operated in before.

It should prompt senior management to ask themselves: who will we be competing with in the future?

A 2018 survey of executives and board members conducted by Innosight shows that only 10 percent of respondents expect competition to come from new and unknown industries in the future. In other words, on the average board, between zero and one of the members will be watching out for the next Uber or Netflix.

The Innovation Centre Denmark in Silicon Valley has just released the report 'Future of Leadership,' which contains twelve cases from Silicon Valley, each showing new ways in which traditional management disciplines are changing. Among others, the report contains cases from Lyft, Netflix, Google and Amazon.


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