Artificial Intelligence: How 'Deep Tech' Can Help Your Business

In early 2020, when scientists rushed to develop a vaccine against the SARS-CoV-2 coronavirus that causes COVID-19, it seemed like a really roundabout way. The fastest vaccine ever developed was for mumps in the 1960s, taking 48 months. Yet just nine months later, in December 2020, American pharmaceutical giant Pfizer and his German deep tech startup BioNTech developed the first his COVID-19 vaccine, a new technology for mRNA-based vaccines. verified the use of

The first research on DNA vaccines began 25 years ago, and the science of RNA vaccines has evolved over 15 years. One of his achievements was mRNA technology. This required a blend of advances in synthetic biology, nanotechnology and artificial intelligence that transformed the science and business of vaccines. Pfizer made about $37 billion in sales from its COVID-19 vaccine last year, making him one of the most profitable products in the company’s history.

Several companies in other industries rely on deep technology, like Pfizer and Moderna in pharmaceuticals, Tesla in automobiles, Bayer in agrochemicals, BASF in specialty chemicals, Dia in agricultural equipment and Goodyear in rubber. . What we call deep tech is making big, hairy, bold and evil by combining new physical technologies such as advanced materials science with sophisticated digital technologies such as AI and soon quantum computing. It is a problem-driven approach to tackling challenges. .

Deep tech is coming to the fore because of business’s urgent need to develop new products faster than ever before. Develop sustainable products and processes. And to be more future-proof. Deep tech can create enormous value and provide new advantages for companies. In fact, deep tech will disrupt incumbents in nearly every industry. Because the products and processes enabled by these technologies are transformative, creating new industries or fundamentally changing existing ones.

Early prototypes of Deep Tech-based products are already available. For example, the use of drones, 3D printers, and syn-bio kits is booming, while no-code/low-code tools are making AI more accessible. They are paving the way for companies to combine new technologies to drive more innovation. Not surprisingly, incubators and accelerators are popping up all over the world to facilitate development. Not only are more deep tech startups being founded today, they are launching successful innovations faster than ever before.

It is dangerous for the CEO of an incumbent to rely on a wait-and-see strategy. They need to figure out how to quickly harness the potential of deep tech before it disrupts their organization. Just as digital technology and start-ups disrupted business a while ago. However, unlike digital disruption, the physical and digital nature of deep tech presents an excellent opportunity for incumbents to shape these technological evolutions and leverage them to their advantage. .

By leveraging its engineering and manufacturing scale-up expertise and providing market access, the established giants are helping deep tech start-ups, which can be particularly complex and costly for physical products. We can help you scale your product. And because incumbents are already at the heart of a global network, they can also respond to government regulations, influence suppliers and distributors, and move infrastructure to support new processes and products. Doing so unlocks enormous value, as the Pfizer-BioNTech example shows.

Most incumbents will find that deep tech initially presents two daunting challenges. One is that identifying and evaluating business opportunities created by new technologies is not easy. Second, developing and deploying deep tech-based solutions and applications is equally difficult, which typically requires participating and catalyzing collective action with ecosystems. . To manage his two agendas in deep tech, the CEO should keep in mind his three starting points.

back casting

Despite its sophistication, traditional technology forecasting creates linear forecasting and siled thinking. It doesn’t take into account how technologies change and converge. As a result, most forecasts underestimate how quickly technologies will evolve and when businesses will be able to use them. As such, companies should use “backcasting,” a method outlined by John Robinson at the University of Waterloo in the late 1980s.

Businesses are better off starting by focusing on the world’s greatest needs and pressing problems, rather than tracking developments in many technologies. We then need to define the desired future where those problems are solved, and work back to identify the technologies and their combinations that make the solution possible and commercially viable. Backcasting helps companies understand short-term and long-term technological change and is ideal for managing deep tech.

Anglo-American think tank Rethink X, for example, uses a backcasting-based technology disruption framework to highlight what it means to create a sustainable world. Analysis shows that ongoing technological change in the energy, transport and food sectors, driven by a combination of just eight emerging technologies, could reduce net greenhouse gas emissions by more than 90% within 15 years. I have. The same technology also makes the cost of carbon capture affordable, so we may not need more breakthrough technology in the medium term.

Changes in gauging

Companies must consider the scope of change that technology brings when evaluating the business opportunities that deep technology opens up. It is determined by the complexity of the technology and the ability of the business to scale solutions based on it. As his Arnulf Grubler, director of the International Institute for Applied Systems Analysis, based in Austria, and his co-authors argued six years before him, new technologies could bring about changes on four levels: I can do it. You can do the following.

1. Improve existing products. For example, sustainable biodegradable plastics can replace traditional plastic packaging.

2. Improve existing systems. For example, nanomaterial-infused paint and AI-enabled smart home systems can dramatically transform homes.

3. Convert the system. From hydrogen production to refueling stations, developing a hydrogen vehicle ecosystem can transform urban mobility.

4. Convert the system of systems. Creating purification technologies that transform current water supply and management systems will also change the way water-consuming sectors such as agriculture, alcohol, beverages, paper and sugar work.

Knowing which of the four levels of change is likely to result helps companies better assess market size and growth trajectory. For example, BCG recently estimated the size of the market for deep tech solutions in nine sustainability-related sectors and found that technology improvements in existing value chains could generate more than $123 billion in additional revenue annually, while systemic 20x or more that bring significant change. Or as much as $2.7 trillion a year.

Fostering an ecosystem

Few companies have all the technology and capabilities necessary to deploy deep tech in-house. Developing these capabilities requires the support of the tech ecosystem, which ranges from academic institutions and university departments to investors and governments. The type of collaboration that results will depend on the business opportunity and the maturity of the ecosystem.

Various kinds of collaborations can be formed. Some incumbents have apparently teamed up with startups to develop new products and processes, as Bayer did in 2017, and joint ventures to synthesize microbes that enable plants to produce their own fertilizers. Established business with Ginkgo Bioworks. What Hyundai Motor Group intends to do in the mobility space by working with several deep tech start-ups will be some companies coordinating systemic changes. In addition, similar to the work of SSAB (formerly Swedish Steel) in Sweden, Vattenfal and LKAB in Finland, to scale up sustainable steelmaking processes where fossil-free electricity and green hydrogen replace coking coal, Others may focus on cultivating deep technology to mature themselves. .

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Joshua Siegel of Michigan State University said that deep technology was impossible yesterday, almost impossible today, and so quickly pervasive and so influential that it’s hard to remember life without it. points out that there is a The future may belong to companies that not only track deep tech, but invest in its development and engage with the ecosystem to drive adoption and force a losing battle to catch up with their competitors.

read more luck A column by François Candlon.

Francois Candron is Managing Director and Senior Partner at BCG, Global Director of the BCG Henderson Institute.
Maxime Courtaux is BCG’s project leader and ambassador for the BCG Henderson Institute.
Antoine Gourevitch is a Managing Director and Senior Partner at BCG.
John Paschkewitz is a partner and associate director at BCG..
Vinit Patel is a BCG project leader and ambassador for the BCG Henderson Institute.

Some of the companies featured in this column are past or current clients of BCG.

Opinions expressed in commentary articles on Fortune.com are solely those of the authors and do not necessarily reflect the opinions or beliefs of Fortune.