How should business leaders approach deep tech?

Hello Tomorrow and BCG have been building the deep tech narrative since 2016, and  are the most quoted reference on the wikipedia page for deep tech.

Together, we have released 5 reports analysing emerging technologies, their impact, ecosystems bringing them to the market, and how to better finance them.

Recently, two of the main authors of these reports, Arnaud de la Tour and Massimo Portincaso, came together to share insights and answer questions on our latest report: Deep Tech: The Great Wave of Innovation, and specifically how it relates to industry leaders everywhere. You can watch a replay of the session here, or read on for a recap of what was covered!

Deep tech is in vogue. But what really is it and how does it relate to the corporate world? Normally when we talk about deep tech we talk about startups…

When we talk about deep tech, we’re not talking about technologies. We’re talking about a different approach to innovation: a ‘post-digital’ innovation wave, where bits and atoms start to work together.

The first thing that is important for corporations to realise about deep tech, is that it’s about a shift towards fundamental innovation, rather than the less risky, less scary incremental innovation they’re used to.

Fundamentally innovating requires you to really broaden the option space, and to identify a problem that you’re trying to solve.

Tell me more…

The main forces behind this kind of innovation is the convergences of different areas.

First, the convergence of approaches
With deep tech, we have science, engineering and design all coming together. This makes it possible to solve big problems that were not solvable before, because they were being looked at within separate approaches, and with an incremental rather than a fundamental approach.

The convergence of technology
On one side, the option space is expanding, and on the other, timelines are shrinking, because we are applying the design-build-test-learn cycle. This in itself is nothing new, but each stage is becoming more powerful as we apply things like AI for design of new drugs or new materials, robotics and IOT for building, testing and generating more data. With more data you can learn better, which leads to better design, and the whole cycle becomes much quicker. Things that used to take 20 years can now take only 2. This is where large companies need to focus their efforts: bringing this multidimensional approach to innovation.

That sounds great, but I still can’t relate to deep tech and how I can leverage it for my business.

Another way to look at it, is that it’s also the convergence of traditional R&D with digital. In other words, it’s not about creating an alternative R&D, it’s just bringing the existing pieces together.

If we look at industries like nuclear, chemistry or food and agriculture: there is an extremely high level of R&D capability there. Deep tech would represent the convergence of this ‘traditional R&D’ with digital technologies (AI, big data, etc.), business models (service instead of product), and mindset (agility and client-centric).

If we look at the software space, it’s more about looking at where the convergence between atoms and bits will happen. Google, with Alpha Fold, managed to dramatically increase the efficiency of protein folding modelling and revolutionise biotech. Microsoft is exploring what it can do with biological data storage and computing. Whether companies start with high level skills in traditional R&D, or in software, this convergence needs to happen. It needs to happen with the purpose to solve a major issue which can’t be solved with today’s technologies and approaches.

So is this what you mean by ‘problem orientation’?

Yes. This is one of the main differences between startups and big corporates. Very often, the original problem to be solved gets lost in a broader corporate environment while people are focused on optimising margins. Startups however, start with a problem, and this approach is at the core of the deep tech approach. Look at the problem, and reframe it taking into account all the different technologies that are at our disposal, including their combination.

Deep tech investments grew from $15 billion in 2016 to $60 billion in 2020. How do you explain this sudden jump in investments in this short period of time?

‘The digital wave’, which was driving the majority of investments up until now, is starting to reach a plateau. The GAFAs already exist, so it’s now more about growing and spreading that technology into the economy. On the other hand, we have new, emerging technologies that are just starting to reach the market and find concrete applications. All at the same time as our planet and society are facing huge challenges like never before, for which these technologies can bring solutions.

In short, there’s pressure to address fundamental problems facing humanity, and investing in deep tech is one of the ways to do this.

Also, people want to either be the ones building the next GAFAs of deep tech, or at least have a piece of the cake!

We should keep in mind though, that while the rise in investments seems like a lot, it’s still less than 10% of the overall investment that is happening in technology, so the vast majority is still going towards digital.

So, yes investment has grown a lot. But it is all still very far from reaching its potential, and that is the topic of our latest report released this month! Check it out here 🙂

We know that startups led the digital wave, and big companies had difficulty catching up. This deep tech wave is not only digital but very much accompanied by physical products. What is the role of startups in this deep tech wave?

It is the combination of their strength and innovation power with the capital and engineering capabilities of large companies. However, what often happens is unfortunately the opposite. The fragility of a startup meets the bureaucracy of a corporate. This is one area we strive to improve in the coming years. Not the technology itself, that will happen on it’s own, but it’s how corporations learn how to absorb external innovations and leverage this potential that they offer.

Nuclear fusion, for example, epitomises the power and the potential of deep tech. We have a field that used to be a domain of states, not companies. It was seen as a scientific endeavour rather than a solution to a problem. But recently we have seen how that has changed. It started with a problem to solve: How do we leverage nuclear fusion to put energy in the grid? We now have multiple startups with different approaches working on nuclear fusion, enabling us to make huge advances, not because of the physics of it but because they had materials to enable high temperature superconducting, that enabled different magnets, that enabled better steering of the plasma, and they are applying interactive processes. You can see how the different parts have come together.

What do you see coming in the next few years?

The next big wave that is coming is that of Nature Co-Design. And we published a report all about that, which you can read here, or a recap here.

In a few words, this is something that businesses everywhere need to understand:

  • For the first time, we are able to leverage nature as an engineering and manufacturing platform. This allows us to operate at atomic level, which allows us to shift from exploitative to generative. We use organisms to grow things at atomic level.
  • This shift is comparable to when humans went from being hunter-gatherers to farmers. We are now becoming farmers of the atomic level, using it to harvest what we need without exploiting the resources.

If you would like to ask any questions, continue the discussion, or explore how Hello Tomorrow can boost your innovation strategy, do not hesitate to send an email to Vincent Durand who will be more than happy to discuss with you.

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