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Businesses should ‘follow the money’ when adopting AI

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A June report from the McKinsey Global Institute (MGI) found that, overall, artificial intelligence adoption is still slow; only 20 per cent of “AI-aware” businesses say they are adopters.

The MGI report on AI discussed the difference in AI investment and adoption, with investment in AI technologies experiencing a threefold external investment growth since 2013. Compared to that figure, 41 per cent of firms told MGI that they are uncertain about the benefits, and within that 20 per cent of adopters, 10 per cent are adopters of three or more AI-backed technologies.

new report from Harvard Business Review on the two major business potentials of AI said that while this may be the trend on average, “senior executives know that AI isn’t just hype.”

HBR attributes some of the hesitancy to adoption to business leaders not being sure where they should be applying AI, and after McKinsey researchers Michael Chui, Nicolaus Henke and Mehdi Miremadi took a closer look at 400 AI use cases from 19 different industries, and nine business functions, they found that the question of where to put AI to work in a business is a matter of playing “follow the money.”

“The business areas that traditionally provide the most value to companies tend to be the areas where AI can have the biggest impact,” the report explains.

The two areas that HBR found to the implementation of AI to have the biggest impact are: supply-chain management/manufacturing and marketing and sales.

Chui, Henke and Miremad also found that another way for businesses to find an area to introduce AI is “to simply look at the functions that are already taking advantage of traditional analytics techniques.” Meaning that business leaders should look to apply AI to parts of the company where neural network techniques could provide a higher performance, or “generate additional insights and applications.”

According to the MGI report, companies that have a low AI adoption rate are in the education, health care, and travel/ tourism sectors.

In a previous Digital Journal article on how hospitality brands can undergo digital transformation, it was stressed that “hospitality brands can use new technologies to make their businesses hyper guest-focused.” Utilizing AI for marketing and sales purposes is just one way of making that happen.

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Events

Canada’s next big act is training scaleups

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Julia Kassam, Managing Director, CIBC Innovation Banking
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By Jack Derricourt & Chris Hogg

Jack Derricourt is the Managing Editor of Digital Journal and a contributing editor to DX Journal. Chris Hogg is the President of Digital Journal Group.

The Canadian technology landscape is booming.

Canadian companies took in $2.5 billion in funding in the first half of 2018, the strongest first half since 2000. Corporates have announced large-scale investment plans to invest in innovation and digital technology (CAE recently pegged $1 billion for the efforts) and post-secondary institutions are breaking ground to house future generations of talent (the University of Toronto is building a 14-storey building to be completed by 2021).

The Canadian technology landscape is ripening and readying for an influx and growth of more mature, internationally-focused ventures.

While scaleups make up less than five percent of Canadian companies, they create half of all new jobs in the country.

On September 26 in Toronto, Elevate ScaleUp will seek to provide helpful insights into the problems facing scaling companies. Presented by CIBC and Osler, the event features startup veterans sharing their experiences.

DX Journal spoke with Julia Kassam, Managing Director, CIBC Innovation Banking, to find out more about the next big act in Canada’s innovation space.

DX Journal: With innovation ecosystems forming across Canadian cities, what excites you the most for startups in Canada?

Julia Kassam: From coast to coast, we’ve hit our stride as a community. The Canadian startup ecosystem has never been stronger and it is launching Canada into the global spotlight. Success stories about scaling companies of all sizes, in different industries, are generating the attention of investors and aspiring entrepreneurs. We are gaining a reputation for being diverse, collaborative and competitive.

This means that Canada is no longer an occasional destination, but a critical location for international investors to regularly visit, and for global brands to establish roots and drive their own corporate growth.

DX Journal: Canadian policymakers have made strengthening the venture capital sector a priority, with the launch of Venture Capital Action Plan (VCAP) and Venture Capital Catalyst Initiative (VCCI) underway. What does that mean for startups and scaleups?

Kassam: After years of lobbying by the Canadian Venture and Private Equity Association (CVCA), the previous government took our sector’s advice and launched VCAP as an arms-length funding strategy. VCAP worked as designed; venture capital funds benefited from the capital raised and invested in several early-stage companies. The new funds that should be raised under VCCI will capitalize on that success and strengthen the sustainability of Canada’s venture capital ecosystem.

What this means for entrepreneurs is that the federal government recognizes that VCAP was an appropriate initiative, and that to fuel the innovation economy, companies need a robust venture capital ecosystem to move from startup mode to scaleup mode.

It’s a really strategic and exciting initiative because later-stage capital will help accelerate the growth for companies who need to overcome commercialization hurdles, expand into new markets and compete on a global scale.

DX Journal: Many startups struggle to scale because they don’t have the right senior talent. What is your sense of how well positioned Canada is with experienced leaders?

Kassam: Although Canada has established a reputation for developing world-class academics and innovators, we do need to attract experienced executive talent. Everything moves at an accelerated pace in a scaleup, and the business will bend and flex in ways it never has. Canada needs more leaders who know what it takes to grow globally and ensure scaleups are well-equipped to navigate and accelerate growth.

One big benefit Canada has that helps here is as a result of our proactive immigration policy – the ability for Canadian scaleups to attract skilled talent is getting easier; our country realizes that to keep pace with scaleups, concentrated efforts are needed to establish Canada as a global technology powerhouse.

DX Journal: Canada has also been able to attract tech titans such as Google to open up offices in Toronto. What role do they play in the scaleup economy?

Kassam: They serve as training ground, but also as a competitor for talent. In the best case, people learn what it takes to be part of a leading innovator while being trained by experienced executive talent at the local divisions of firms such as Cisco or Google. For scaling companies, the opportunity to pilot their innovation becomes a realistic opportunity which can flourish into a partnership that may lead to an acquisition. A big opportunity that emerges as a result of large tech companies choosing to set-up an office in Canada is an acceleration of human capital development for the ecosystem.

What we are also seeing more of is that global innovators are setting up their R&D centres in Canada. A great example this summer was Samsung announcing an AI Centre located within MaRS, led by a Toronto-based academic. Again, another opportunity for scaleups to be close to the heart of global innovation. That is huge potential waiting to be unleashed.

DX Journal: How is the Canadian startup ecosystem helping to train talent?

Kassam: Serial entrepreneurs and investors share mistakes and success stories which help shape and accelerate scaleups through collective learning. What truly makes the Canadian tech ecosystem unique is our mindset to foster entrepreneurial spirit; and a great example of how we do that is by bringing the startup community together.

Elevate, Canada’s largest tech festival and one that CIBC Innovation Banking is sponsoring, is the perfect example of creating the right information and network opportunities so that we can collectively benefit from the existing momentum in Canada’s innovation ecosystem and drive our entrepreneurial culture forward.

DX Journal: What’s the next step for the Canadian scaleup story?

Kassam: Canadian scaleups will continue to tackle the unique challenges that come with scaling a business; however, they will think in a global context earlier than ever before. Scaleups need to strategically choose the right capital partners for their growth – ones that open doors to new markets. There needs to be an emphasis on attracting top talent earlier in the growth cycle to help drive international perspectives and opportunities.   

To hear more from industry leaders who have scaled real businesses (and have the scars to prove it), get a ticket for Elevate ScaleUp, happening September 26, 2018 in Toronto. Presented by CIBC Innovation Banking and Osler, the event will provide real insights from entrepreneurs and tech veterans who have spent years in the field, on everything from hiring, to financing, to distribution.

 

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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Investment

Bumble launches fund for investing in female founders

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Bumble
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The popular dating and social networking app Bumble announced a new initiative Wednesday that will see it investing in women-led businesses.

Announced via a blog post from Bumble HQ, the new fund will focus on early-stage investments to women-led startups, particularly those run by women of colour and women from other traditionally underrepresented groups.

“The gender gap in venture capital is staggering, particularly for women founders of color. (B)umble, a tech company (with) an 85% female workforce, wants to be part of the solution, wrote Whitney Wolfe Herd, the CEO of Bumble, on Twitter. “Today we launch Bumble Fund to invest in women ignored by the establishment.”

The point of the fund is to help those founders raise capital for their ventures.

According to Forbes, Bumble has committed over $1 million so far, and says it will invest anywhere between $5,000 and $250,000 in the companies it selects as part of the fund.

Some businesses that the new fund has already committed to are: BeautyConCleo CapitalFemale Founders FundMahmee, and Sofia Los Angeles.

Mahmee is a “Headliner” from Backstage Capital, a VC firm run by founder Arlan Hamilton that invests in “underestimated” and underrepresented founders.

According to the Bumble blog post, the company isn’t stopping at the five commitments they’ve listed — they’re continuing to look for businesses to support, and recommend that interested parties download the Bumble app and get set up with the networking platform within, Bumble Bizz.

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Culture

#ScaleStrategy Q&A: Managing the Growth Bandwidth

Tech veteran Dean Hopkins on what it takes to scaleup — and down — in both startups and enterprise organizations

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Dean Hopkins, OneEleven
Dean Hopkins, Chief Growth Officer at OneEleven. - Photo by DX Journal
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#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. Read the first part of the interview with Dean Hopkins here. 

While working at McKinsey in the 1990s, tech veteran Dean Hopkins first stepped into the world of the internet.

“This was 1993. No internet existed as we know it,” says Hopkins, now the Chief Growth Officer at OneEleven, recalling how he discovered the work of Marc Andreessen. “At that point in time, he was demonstrating his early browser concept and talking about how the future of the internet was going to be huge. I caught the bug and decided I would leave McKinsey and start my first company called Cyberplex.”

After a bit of a bumpy start, Cyberplex scaled quickly. “Cyberplex tripled every year and grew to 500 people with $50 million in revenue and $975 million market cap,” he says.

Then 2001 hit. “That was the peak of the cycle followed by a trough. It was the biggest learning experience of my career. I had to descale the company to survive,” he says. Over seven quarters, Hopkins took the team from 500 to 50 and brought the company back to profitability. He then  transitioned Cyberplex to new leadership and moved on to his next challenge.

For the next 12 years, Hopkins worked as a management consultant with his own boutique firm that was focused on driving global transformation initiatives for companies such as Thomson Reuters and the Ontario Teachers’ Pension Plan Board.

With both entrepreneurial and intrapreneurial expertise, Hopkins is now applying his global growth skills to transform OneEleven’s unique scaleup model into a worldwide Scale-as-a-Service model.

Read what Hopkins has in store for OneEleven’s global growth.

We recently spoke to Hopkins about tough lessons he learned at  Cyberplex, how enterprise growth is different than startup growth, and how he’s applying these lessons to expanding the OneEleven model globally.

DX Journal: When you think back to your time when Cyberplex hit its inflection point, what did you learn about scaling?

Dean Hopkins: Culture and people were the two things that allowed us to handle both the steep trajectory both up and down. Those things got us through the crazy knee in the curve and probably more importantly, helped us when we needed to descale.

Attracting amazing people that became my partners in growth was the reason we were able to scale. I couldn’t have done it alone.

Secondly, we built a culture that was accustomed to scaling and had an appetite for growth. Our culture was about resilience, and scaling, and picking yourself up and dusting yourself off. We made it okay to make mistakes, then march on.

DX Journal: Why people and culture? Why isn’t it all of the other things?

Hopkins: It’s a great question. In a culture where the decision-making takes a long, protracted time, where risk-taking isn’t there, and where people have to analyze things to death before they can make a decision, scaling is impossible. People would crumble under the weight of scale because the number of things coming at them.

To scale, it’s important to trust that people are all working toward the same goals and are empowered to make decisions.

That’s where culture comes in. It becomes a culture that can tolerate the bandwidth of needs that come with growth. If I didn’t have both of those things — good people ready to make decisions and a culture where I allow them to do it — I would have failed to scale.

The other things like technology, offices, infrastructure, are secondary when you distill it down. Companies that are successful across different geographies, industries, offices, become that way through empowering their people and building a culture that tolerates growth.

DX Journal: When you moved out of Cyberplex and into Thomson Reuters and you were managing a large-scale transformation. How did you manage scale within an environment as big and complex as Thomson Reuters?

Hopkins: The first thing I noticed was pace slowed down dramatically. What used to take me a week or a month now took 6 to 8 or 12 months. Large organizations only have the capacity for so much change. Once I did get the ship to turn in a new direction, I moved a lot of people, revenue, cost, and dollars. I had to be patient enough to let it take hold. The experience was much more of a marathon where I had to think multiple chess moves ahead and let the game play out.

DX Journal: How do you know when to modify your approach or give up when dealing with  transformation in a large organization?

Hopkins: I didn’t do a great job of it at the beginning. I pushed an entrepreneurial agenda at an entrepreneurial pace, and very quickly ran headlong into blockers. I had to adapt and use an experimentation model. I tried different levels of throttle until I got to a point where the organization was willing to accept it. I learned to read the frustration on peoples’ faces saying “okay, no more, Dean. I can’t take any more of this” and built relationships with people where they were able to tell me that.

I was able to adapt and adjust my own style to better reflect the environment. Then over 12 years, I gradually increased the tolerance for risk-taking and for change within the organization. I would work with specific people to help them increase their ability to drive change. What was first gear early on, became second and third gear closer to the end of my tenure. Ultimately, the organization became much more comfortable with making change at a higher rate.

DX Journal: What’s a scale lesson you learned the hard way?

Hopkins: I learned to hire slowly and fire quickly based on fit. One rotten apple really can spoil the bunch. As part of this, I learned to listen very closely to my people. The people on my team knew about someone that didn’t fit long before I did. By listening, and taking quick action, I saw the immediate positive impact on culture.

Finally, I learned the value of getting out of the way. By fully trusting people, providing them good direction and support when needed, it activates them to reach their full potential. All of these were learned through many failed attempts, and I have the scar tissue to prove it.

DX Journal: What signals do you use to know you’re on the right path when you start to scale something and you’re trying to measure if it’s working?

Hopkins: One of the reasons we were able to survive at Cyberplex — both the growth and the decline — is that we had very good leading indicators of the business. We had invested heavily to try and understand what our funnel looked like, what our planned capacity was, and we had the metrics dialed in. Every month and every quarter, we constantly refined our ratios so we had a really good sense of what was coming. When things started falling off the cliff, we trusted our instruments and started acting accordingly.

Read more about Dean Hopkin’s plans for expanding OneEleven globally.

 

DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.

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