The leadership in the new digital age carved by the fourth industrial revolution of IoT and AI

© 2016 NTT DOCOMO, INC. All rights reserved. 1
Mick Etoh
12/19/2016
Leadership in the new digital age
carved by

the fourth industrial revolution

of IoT and AI
All night stars & Galaxy pictures are courtesy of Nori Yuasa except this sunset from Oakland(taken by Lynn Shi)

Head of Innovation Management Dept. SVP, NTT DOCOMO
Guet Professor, Cyber Media Center, Osaka Univ.
Former CEO of NTT DOCOMO Ventures
CEO of Mirai Translate, Inc.
Research Supervisor of CREST “AI” Area

of Japan Science & Technology Agency
Mick Etoh’s Affiliation

© 2016 NTT DOCOMO, INC. All rights reserved.
Part 1

Let’s deﬁne and identify

Fourth Industrial Revolution.

AI

AI 1st Wave: Search and Reasoning
19561960s
AI 2nd Wave:Knowledge Representation
1980s-1990s
3rd Wave-Present:Machine Learning & Big Data
2010s
Cold Winter Ara
Deep Learning(2006)
Japanʼs 5the Generation
Computer Project
IBM Watson in Jeopardy(2011）
Google AlphaGo（2016）
Computer Vision > Human Vision2015）
The Emergence of “AI”(1956)
Big Data（2010)
Industrial
Applications
6
AI(Artificial Intelligence)

Japan & MassMedia US & Engineers

http://events.technologyreview.com/video/watch/dileep-george-vicarious-ai-work/
Dileep George,2016

http://redwing-don.jugem.jp/?eid=855
Please attach the candle to the wall
and turn on the light.
9
Symbol Grounding (Stevan Harnad,1990）
Can you image
how those should work?

Medical Dignose
Cyber Security
HR Management
NL Agents
10
Active Learning
Robotics
Forseen AI Applications in Five Years

https://www.youtube.com/watch?v=24Hz9qjTDfwhttps://www.youtube.com/watch?v=24Hz9qjTDfw

https://www.youtube.com/watch?v=w7NgejZMSsA

Orbital Insight, Inc. Proprietary Information
Building Height Oil Tank Farms Ag Areas and Yield Tract Housing
Clouds & Haze Development AirplanesWater
ORBIRAL INSIGHTS
Courtesy:

Orbital Insight, Inc. Proprietary Information
Nanjing
Pyongyang
Courtesy:

Blue River

Blue River
https://www.youtube.com/watch?v=yCPe9Sy0TFY

Uber

https://www.youtube.com/watch?v=U9A86Nh75xQ

The Power of 1%

McKinsey Global Institute
The Internet of Things: Mapping the Value beyond the Hype (June 2015)
Peomising?
21

http://seekingalpha.com/article/3387605-assessing-ges-software-opportunity?page=2

https://www.youtube.com/watch?v=QUpHVuXEYA0

IoT = ICT + OT (Operational Technology)

Revolutional Impact: ICT+OT＋AI

the fourth

industrial revolution

ICT+OT+AI

Cloud

Hardware v.s. Software
Which is your perception about “Cloud?”

Simple

Web Service
Speech Agent（Cloud-native）
Programmable, Copyable and Commodiﬁable
Data Analytics Platform

（On premise-hybrid）

Early 21st CenturyMid 15th Century

=
31
Power of Software

layers of the full stack
Server, Network, and Hosting Environment.
Data Modeling
Business Logic
API layer / Action Layer / MVC
User Interface
User Experience
Understanding what the customer and the business need.

Startups

Empathy
smart risk taking
Seeing the big picture.
Hunger to achieve.
Entrepreneurs 0->1
MAXIMIZES STAFF UTILIZATION
PURSUES THE FINANCIAL PERFORMANCE
Managers Elite 100->110

• Want to increase
innovation?

• Lower the cost of
failure.

AWS Re:Invent 2014
36
Keywords

•Institution No vs.
Individual Yes.

•Speed

•Make organization “nimble”

•Experimental test w/
lowering the cost

Capital
SIze
Growth Stage
Incubators
Micro VC
Venture Capital
Super Angel
$50K – $200K

e.g., Ron Conway 
Keith Rabois 
Reid Hoffman 
$1M – $10M

Accel Partners 
Benchmark Capital 
Sequoia Capital 

$100K – $500K
SoftTech、SV Angel
$10K – $100K

e.g.,：500 Startups 
Y Combinator 
Plug & Play
38
Startups and Financial Supporters

1B Valuation
Years from Birth
1 2 3 4 5 6
AirBnB

Series C

(3Y8M)
Evernote

Series D

$1B (6Y2M)
Series B

Series A
Series A

Series A

Series B

Series C

4Y7M
AirBnB
Dropbox
Evernote
Examples Y Combinator Graduates
39

Top Venture Capital

Hustler
Hacker Designer
41
Innovator Trinity
I

DOCOMO Innovation Village

Airbnb

– National Innovation Initiative(NII)
(2004)
Innovation = invention x insight,

leading to the creation of social and economic value

Two Type of Insights:
Technology Social & Biz Value

–Prof. Henry Chesbrough
Innovation = Invention + Business Model

Mark ZuckerbergJack Dorsey
Elon Musk
Garrett Camp
Travis Lalanick
Drew Houston Jeff Lawson Marc Andreessen
49
Empathy- and Greed-driven.

Technology

Insights
Leadership
Business

Insights
What we need is ‘Unicorn’.

Tech. Startup = Team with

Research Expertise + Business Insight

Insights about the future → Monopoly position

Here are the seven questions Thiel writes “Every business must
answer:"

1. Can you create breakthrough technology instead of incremental
improvements?

2. Is now the right time to start your particular business?

3. Are you starting with a big share of a small market?

4. Do you have the right team?

5. Do you have a way to not just create but deliver your product?

6. Will your market position be defensible 10 and 20 years into the
future?

7. Have you identified a unique opportunity that others don’t see?
Zero to One by Peter Thiel (Founder of PayPal)

problems idenFﬁcaFon
business operaFon
conceptualizaFon
business model development
53

https://www.tuzzit.com/public/media/canevas/canvas_lean.png
1 1
2
3
4
55
6
7

Business Insights must exist
everywhere.

Let’s think about
your customer, and their pain points,
and how you can help them.

Part 2

team building

&

Culture

© 2016 NTT DOCOMO, INC. All rights reserved. 59www.bonkersworld.net/organizational-charts/
Organizational Charts (6/2011)

For outer apperance in reality
AWS
EC2 RDS S3
VPC EMR DynamoDB
… … …
Micro Services

https://vimeo.com/85490944

https://labs.spotify.com/2014/03/27/spotify-engineering-culture-part-1/
Spotify’s History of Development Style

Companies led by
Captains or Majors
Brigate Division Squad Leaders
Being Automous

Learn
Data
Nimble
Investment
Decision
Flexible
Budget
Raise
Advisors
Voice of
Customers
build
Product
Idea
measure
64
Agile
Development
Lean Startup Model

Importance of Team Building
• Most of predetermined plan may fail. Thus, nimble
and well-focused team building must come first.

• The team must identify ROLES which make team
well-focused and nimble.

• Big managers must trust the team, encourage
them, and dedicate the power to them. DON’T be
a control freak.

Innovation Ecosystem

50 : 5 : 1
US Annual ﬁnancing to VC-backed companies(start-ups) = $57 and $72B in 2014 and 2015

while Japanese VC’s ﬁnancing still remained about $1B(2015).

Global Comparison of VC Investments vs GDP by Country
・Looking at global investments by country, Japan ranks near the top. However, with a 0.02% ratio of
investment to GDP, the difference is significant to that of the US, and low when compared globally to
other developed countries
・Israel leads by a marked lead with a 0.18% ratio of GDP to total investments
Source: Ministry of Internal Affairs and Communications “Research Study Regarding the Global Strategy of ICT Industry”, 2013 
OECD Science Technology and Industry Score Board / Venture Capital Investment Trends
In Million of US$
Amount of VC investment
Amount of VC investment
ratio to GDP
US Fr
a
nc
e
UK Ger
man
y
Jap
an
A
u
st
ra
li
a
Can
ada
Swit
zerl
and
Swe
den
Isra
el
Bel
giu
m
Sou
th
Kor
ea
Nor
way
Holl
and
Spa
in
Den
mar
k
Finl
and
Irela
nd
Aus
tria
Itali
a
Port
ugal
Cze
ch
Rep
ubli
c
Gre
ek
Est
onia
Lux
emb
our
g
Slov
akia
Pol
and
Hun
gary
VC Investments by Country

Innovation Ecosystem in EU
International Journal of Technology Management vol. 66, num. 2/3
key individuals are in blue, companies in red and
ﬁnancial ﬁrms in green.

Can Tokyo become Japan’s Silicon Valley?

Startups in Tokyo has two options:

•Come to the Bay Area, or

•Stay in Tokyo but focus the unique product.
No.

Market
VC

Ecosystem
Talent
Source:2016 Silicon Valley Index
Interlock of investment, talent, and market creates
an unsurmountable barrier for others.

https://www.cbinsights.com/blog/increasingly-crowded-unicorn-club/
The Crowded Unicorn($1B+) Club (as of August, 2016)
171

Source: SparkLabs Global Ventures
1. Funding & Exits

2. Engineering Talent

3. Active Mentoring

4. Tech Infrastructure

5. Startup Culture

6. Legal & Policy Infrastructure

7. Economic Foundation

8. Government Policy & Program
Start-up/VC Ecosystem

6. Boston

7. LA

8. Beijing

9. London

10. Berlin
Source: SparkLabs Global Ventures
1. Silicon Valley

2. Stockholm

3. Tel Aviv

4. NY

5. Seoul
10 Hottest start-up Ecosystem

India China Japan Israel Bay Area
Market size ○ ◎ × × ◎
Language ○ △ × △ ◎
Regulation/ 
Market fairness
△ △ △ △ ○
Excellence or
Uniqueness of
Talent
○ ○ △ ○ ○
Life/Weather* × × △ △？ ◎
Overall △ △ × △ ◎
*Don’t laugh. It DOES matter.
India and China receive large amounts of VC money due to their market size. However, there are only a few
companies in those countries that succeed globally.
Which countries are best for startups?
Can Tokyo become Japan’s Silicon Valley?

Startup Nation
Advantage

Strong relationship to Military and Defense
Industry (AI, Communication, Security, Devices)

Famous Startups

Waze, Viber, Fiverr

VC circumstances

20-30 VCs, 4000-5000 startups, 6B exit in 2015,
Chinese-backed VCs(40%?)

London as Gateway
Advantage

London as Gateway to EU and US，Fin Tech demands

Famous Startups

Shazam, Powa, Skyscanner

VC circumstances

>1000 Fin Tech companies with GBP20B size revenue

3200-5400 start ups in UK

Tech City in London

The Nordic countries
Advantage

Social Demands by Low Carbon, Medical Care,
Digital Government.

Famous Startups

Spotify, Supercell

VC circumstances

Stockholm Innovation & Growth(STING),
Governmental Agency for Innovation Systems 
- VINNOVA

Tokyo & Japan
Advantage

Animation, Media Contents(e.g., PockemonGo),
Gaming, Bio & Devices

Famous Startups

Gumi, Mercari, Cyberdyne, Euglena

VC circumstances

Rising CVC money into AI, IoT, Robotics, etc.

$1B (2015) -> $1.6B (2016)

Gaming/Net Media
Biotechnology, Device
Japanʼs Strength

Way Forward

Talent
Market
VC

Ecosystem
Innovation Engine of Bay Area

Manufacturing
Market
Production

Ecosystem
suggested by H.Tamura@Re:Public
Innovation Engine of China

Shenzhen Tianjin

Society
Citizen Experiments
Innovation Engine of the Nordic Countries

credit to H.Tamura@Re:Public
IKEA@Denmark

Hungry
Drought Resilience
Innovation Engine of Israel(Joking Version)

Skill
Urban

Infra-

structure
Quality

Conscious

Market
Innovation Engine of Tokyo

https://www.youtube.com/watch?v=VgSPGB_q7tg

https://www.youtube.com/watch?v=FVAkuBSkaw0

© 2016 NTT DOCOMO, INC. All rights reserved. 92• http://www.scootman.bike/
• https://39meister.jp/selection/selection005/
Let’s take your time

to consider your coutory’s

innovation engines.
Less spent on essentials, more for “luxuries” or “unique
ones”

ChotoKool Fridge
https://www.changemakers.com/health-on-the-ground/entries/safe-and-affordable-drinking-water-everyone-everywhere
water purifier
Frugal Innovations
Mobile Banking

Innovations

are not only from high-tech

engineering.

Take Aways
• The Fourth Industrial Revolution = ICT+OT+AI
• Startups: Innovation Driver
• Innovations = Invention + Business Model
• Successful Startups = Tech Insights +
Business Insights + Leadership
• Autonomous Organization
• Unique Innovation Engines in Each Region
All night stars & Galaxy pictures are courtesy to Nori Yuasa

The leadership in the new digital age carved by the fourth industrial revolution of IoT and AI

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The leadership in the new digital age carved by the fourth industrial revolution of IoT and AI