Why China is banking on AI

When it comes to the march of technology, the accepted narrative ranks Silicon Valley at the forefront of discovery and innovation, while relegating China to the subsidiary role of mass fulfilment. It’s a view that’s supported by the operational companies like Apple, whose Cupertino campus incorporates the R&D base that allows it to badge products with the ‘designed in California’ legend, while delegating the assembly of the majority of its iPhones to Foxconn’s vast Shenzhen manufacturing plant.

In many ways, artificial intelligence (AI) has followed the same trajectory, with the people at the cutting edge of research all operating from North America. But while the US is leading the field in AI advancement, China is way ahead in terms of its practical implementation – which plays to the country’s strengths in data gathering, as well as in the quality, speed and execution of manufacturing. Industry expert Kai-Fu Lee has recently written about this topic at length, somewhat controversially predicting that it will be the companies who are able to use AI’s deep learning and pattern recognition powers to make viable products that will triumph – not those who are driving the initial breakthroughs.

Bringing innovations swiftly to market

It’s easy to see why China has a lot of success in bringing tech to market with speed and efficiency. It has a huge domestic market and a business climate that encourages the kind of willing-to-fail behaviour that is essential for a healthy start-up culture. Kai-Fu uses ride-sharing as an example of China’s approach to market-making, outlining the rapid exploration of a number of ride-share concepts from bicycles to concrete mixers which quickly – and, some would argue, inevitably – led to the creation of companies including successful unicorn, Mobike.

The so-called ‘fail fast’ approach in which prototypes are developed and adapted to suit commercial ideas – all the while accepting that the price of success will necessarily be a bunch of failures along the way – makes it simply more likely that successful businesses will ultimately emerge. So, while a particular technology – face-recognition, for instance – might be flagged as the basis for hundreds of applications, it only needs to hit the mark with one to become a billion-dollar solution. And, rather than being a hindrance to progress, the fierce competition that is part and parcel of the Chinese business ethos fuels the speed of development even further.

Leveraging China’s vast consumer base

In China, the early adoption of new technologies isn’t confined to a small percentage of savvy users, in fact the swift and widespread acceptance of the latest developments means that tech companies usually find a willing market for their ideas. This approach is evidenced by the population’s widespread transition to mobile payments over the last few years which is rapidly replacing other payment forms to become the dominant tool. 

Naturally, the size and scale of China’s domestic market makes it more cost-effective for tech providers to address. But it also offers a rich source of data that allows AI engineers to inform and improve their solutions. Whereas the US may be squeamish about the privacy issues that go hand in hand with data mining, China has no such compunction. If the big shifts in the practical application of AI can be attributed to having access to massive amounts of data, China already has the advantage by dint of the fact that it is – according to The Economist– ‘the Saudi Arabia of data’.

Banking on government support

China’s AI developers also benefit from a deep well of government support. This isn’t simply about taking a protectionist approach that subsidises Chinese operations at the expense of foreign competitors. It’s also about creating an environment that provides a fertile growing medium for business – from the cities and roads that are primed for tech upgrades, to the low-regulation policies that enable new and unproven tech to enjoy a frictionless launch without getting bogged down in bureaucracy. The government has also invested heavily in research at China’s universities, increasing funding each year as it prioritises science and tech advancement. 

Beijing continues to launch wave after wave of AI initiatives in a bid to boost an industry that is estimated to be worth north of $150bn over the next decade or so. China has committed more than $2bn to build an AI technology park in West Beijing that will house more than 400 companies and provide a platform for research and development. 

Meanwhile, China’s tech giants – including Baidu and Tencent – are investing heavily in AI; Alibaba recently announced plans to earmark $15bn to build international labs focused on quantum computing and AI. Time was when China’s tech engineers would have headed for Silicon Valley to pursue their careers, whereas now there are increasing incentives for them to stay at home and transform China’s own AI industry. It’s an exciting time for China’s techpreneurs and for MBA students and executives looking to learn from practices at the cutting edge of the AI industry.

 

What makes Silicon Valley different?

As Facebook comes under tough scrutiny lately and Mark Zuckerberg has to apologise to the world, Silicon Valley and technology companies are making the headlines again. The road to stardom is not smooth but it requires more checks and balances and ultimate accountability as the Silicon Valley behemoths clearly can influence users in surreptitious ways. 

Artificial intelligence is what many companies in the valley like Facebook, Google and Microsoft are chasing frantically. "AI is the brains of the future and data is the new oxygen", Stanford University professor Dr. Burton Lee .

So what makes Silicon Valley different and why is everyone racing to learn about innovation from them?

  • They build and grow companies to a global level faster – and more efficiently – than anywhere else in the world
  • They create more new jobs and industries – faster – than anywhere globally
  • They look for and reward disruptive ideas, technologies, teams and intellectual property that can be scaled globally
  • They do world class research and technology development
  • They design, build and manufacture great technology products and services

Silicon Valley is where the world learns first many (but not all) new approaches to innovation!

Silicon Valley – Tech Unlimited

A slender, horseshoe-shaped slice of real estate in the southern San Francisco Bay Area, Silicon Valley is less a geographical location and more a state of mind. So-called because of its prominence in the evolution of global tech companies such as Apple, Facebook and Google, the area has become synonymous with technological innovation, inspiring the likes of design guru Steve Jobs and Tesla’s Elon Musk to change the course of history, while elevating Palo Alto’s Stanford University to its status as one of the world’s leading research institutions.

The climate of change

Rewind to the 1960s and Silicon Valley was more agricultural than urban, a place where fruit trees outnumbered tech businesses by quite a margin. As it became the go-to location for microchip developers like Intel, the intellectual and economic climate started to shift and the Valley began to attract wave upon wave of ambitious young entrepreneurs looking for a fresh way to do business.

This focus on innovation helped to create a thriving tech cluster that boosted the network of workers, suppliers and networks needed to support the rapid growth of this highly specialised sector and added considerable value and cachet to San Francisco as the preferred location for ambitious start-ups, as well as more established companies from further afield (Europe and China, for instance) looking to sprinkle a little Silicon Valley gold dust on their operations. Today, although some manufacturing remains, the Valley functions primarily as an ‘incubator’, a forum for hot-housing ideas that lead the world.

Disrupting the status quo

Silicon Valley continues to be the centre of tech-based innovation; the cutting-edge digital developments that enabled start-ups like Google and Amazon to rapidly grow into global brands are providing a new generation of companies with fresh opportunities to challenge the status quo. Far from slowing in scope and ambition, advancements in technology are causing ripples across formerly traditional businesses. A revolution in infrastructure – and in artificial intelligence (AI) – is opening up industries such as logistics, food and hospitality to completely new ways of operating.

So-called ‘disruptors’ like Airbnb and Uber have rocked the foundations of established operators by taking a radical approach to connecting customers with services – something that’s made possible only through technologies that enable a more fluid approach to traditional transactions. This notion of a ‘sharing economy’ doesn’t only allow big players to tap into new markets, it can also benefit businesses and individuals that wouldn’t otherwise be able to access funding. Tech company Kiva – headquartered in San Francisco - sources crowd-funded micro-loans that can change the lives of people in impoverished areas of the world.

A hub for entrepreneurs

The entrepreneurial model that’s gained traction in Silicon Valley has become a blueprint for businesses across the world. This agile approach enables companies to adapt their products and services to new markets and to anticipate changes rather than to react to developments as and when they occur. This process of continuous improvement designed to reduce the risk of stagnation is a start-up mentality that’s embraced by even the largest businesses as part of a drive to stay relevant.

Interestingly, many Silicon Valley companies share a belief in the value of establishing and nurturing an entrepreneurial culture that attracts like-minded employees and benefits the business and encourages disruption. Businesses that specialise in innovative funding opportunities are a product of this kind of entrepreneurial thinking. Early-stage venture capital fund Pear has helped to seed tech start-ups like Dropbox and Zoosk, while Silicon Valley Bank tailors financial services to innovators. Start-ups that need a place to work can get the support they need at co-working facility and corporate incubator RocketSpace.

Immerse yourself in the cool San Fran counter-culture

San Francisco is one of America’s most beguiling cities. Its liberal culture and remarkable bay setting makes it an unmissable destination. Victorian buildings sit comfortably amid striking contemporary architecture, while cable cars share the road with futuristic Teslas.

There’s lots to see and do in and around the city. The Golden Gate Bridge is San Francisco’s most striking landmark. You can walk or drive across it, but the best views of the bridge can be had from the genteel residential area known as Nob Hill. Fisherman’s Wharf offers all the charm of a historic waterfront setting – check out the shops and eateries at Pier 39. It’s also a great starting point for a sightseeing cruise.

Art lovers should head straight for the San Francisco Museum of Modern Art (SFMOMA) that reopened in 2016 following a programme of renovation, though the elegant Palace of Fine Arts is also worth a visit – if only to soak up the tranquillity of its lagoon setting.

 

Berlin – Europe’s burgeoning tech hub

Berlin is undergoing a quiet revolution. A city that was once scarred by a physical and political schism has cast off its grim cold-war legacy and is being transformed into a buzzing European capital by an avalanche of investment and the influx of talented tech-preneurs from across the world.

Earlier this year, a Savills study awarded the city its global top spot for ‘buzz and wellness’ – a metric that takes account of social, cultural and environmental factors such as entertainment and commuting times. 

Technology is in Berlin’s DNA

Berlin’s technology focus is nothing new. A hundred years ago, the city was something of a prototype Silicon Valley, dubbed ‘Elektropolis’ thanks to innovations pioneered by homegrown electronics manufacturers Siemens and AEG.

Flip the dial to 2017 and Berlin’s thirst for cutting-edge tech is now driving the advancement of the fastest-growing startup eco-system in the world, attracting impressive venture capital inflows and providing exciting investment opportunities for entrepreneurs.

Berlin’s success is due, in part, to its economic agility. Relatively low living costs, coupled with affordable office and studio spaces and a relatively bohemian culture has made it an attractive prospect for digital freelancers and progressive startups everywhere. The explosion of an ambitious, relatively young professional population has, in turn, created a vibrant community of artists and entrepreneurs that is sparking a new wave of innovation in Germany’s uber-cool capital.

Tech startups are leading the way but others are hot on their heels

It’s estimated that a startup business is being founded in Berlin every twenty minutes, with inward investment out-performing traditional business hubs, including London. This traffic is being given additional impetus by Brexit, as foreign investors look for fresh and fertile business locations on the European mainland.

International tech giants like Google and Facebook are at the vanguard of investment; Google already funds the Factory Berlin tech hub and is set to open a campus in Kreuzberg later this year. Locally grown companies like incubator Rocket Internet, music streaming service SoundCloud, food delivery firm Delivery Hero and Auto1, an online used car marketplace, are also making headlines with record levels of market capitalisation.

Berlin’s social and cultural highlights

A visit to Berlin is a must for anyone who’s interested in the anatomy of a successful startup but there’s plenty to enjoy away from the boardroom.

Berlin’s built environment speaks of its political history, as well as being informed by the input of modern architects such as Mies van der Rohe, Le Corbusier and Walter Gropius. No visit to the German capital is complete without a walk along what’s left of the Berlin Wall, more than twenty-seven years after the reunification of Germany.

A trip to the Holocaust Memorial, located just south of the Brandenburg gate, is also time well spent. The memorial pays tribute to the Jewish victims of the Holocaust; the five-acre site features 2,711 concrete ‘stelae’, arranged in a grid pattern on a sloping field in a poignant reminder of lives lost.

 

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How to Make the Most of Your Next Innovation Tour

Whether you are an MBA joining your class on your next international trek or an entrepreneur looking for the optimal environment to start a business – innovation tours can be extremely valuable in providing insight and knowledge into the world’s business and innovation ecosystems.

Our innovation immersions will involve planned visits to a series of notables companies and academic lectures, pitch events, guided tours and conferences with panel discussions. The problem is, these innovation ecosystems are extremely complex and their structure are not easy to grasp. To get at their true essence, it is paramount to go beyond appearances and delve deep into these complex environments by constantly observing, questioning and listening.

Visible activities such as start-up incubators and angel investor meetings merely provide detail to the outer layer and more obvious aspects of the ecosystem. To gain vital insight deep into the core of these ecosystem and understand the real drivers of entrepreneurship, a focus on the subtle elements is needed.

For example, an innovation tour to South Korea would benefit greatly from a visit to a military camp to observe young South Koreans undergoing military exercises. With military service being mandatory in South Korea, our innovation programme will give precious insight to the culture and mindsets of the people there.

Entrepreneurs alone do not reflect the whole entrepreneurship ecosystem. Researchers, investors, non-profits and government officials are just a few of the actors that help make up the network within the ecosystem. Focusing on different actors will help you understand the different motives for innovation in the ecosystem. Look for the conflict and collaboration between these actors and revel in it, not only will it give you a broader view of the whole landscape but will also directly reveal their entrepreneurship culture.

Optimizing the value and knowledge you gain from your innovation immersions requires a degree of susceptibility and inquisitiveness from your part. Innovation tours are not a place for re-active learning – you must be pro-active. As Einstein once said: “the important thing is to not stop questioning. Curiosity has its own reason for existing”. So be curious and be engaged. The responsibility lies on to you have the desire to unearth information from all angles which will be crucial to your quest in understanding these complex entrepreneurship and innovation ecosystems.

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