Increasing Your Odds of Funding a Winner. Lessons from The New Polymath – Profiles in Compound-Technology Innovations by Vinnie Mirchandani.
One of the most stimulating thought leaders in the world of Outsourcing during the past twenty years is Vinnie Mirchandani in roles as an industry analyst, outsourcing advisor and serial entrepreneur. Known as the Deal Architect, Vinnie presently coaches enterprises on how to exploit disruptive technologies. Several months ago he gave me a copy of his new book The New Polymath – Profiles in Compound-Technology Innovations (John Wiley & Sons, Inc. 2010), where Vinnie shows how companies are emerging from the pack by applying compound innovations rather than merely adding serial enhancements to the same old products and services.
Since a major challenge for outsourcing entrepreneurs is the creation of services with unique, sustainable advantages over other service providers; and a major challenge for investors is to back companies with the best chances of succeeding, Barry Wiegler, OA's Managing Director interviewed Vinnie about how the principles of The New Polymath could benefit outsourcing entrepreneurs and investors (and ultimately the customers of outsourcing).
BW: Vinnie, what was the primary message you wanted to convey in writing The New Polymath?
VM: “Barry, I have written an innovation focused blog called New Florence. New Renaissance for six years. There are hundred of entries across 40+ tech categories - topics from mobile computing to nanotech. Most of the technologies/vendors/projects I cataloged used to fit nicely in one of those categories. But about three years ago I started to see blog posts that I had to tag across multiple categories.
An example (that I included in the book) is the GE NetZero concept which promises to allow homeowners to end up with zero utility bills. The concept packages solar and wind energy tools for the home, next-gen batteries, LED lighting, smart appliances, energy management software and interfaces to Smart Grids utilities are building.
Another example is BASF as it bio-engineers new strains of rice and other crops. While it has some of the most sophisticated genomic databases in Berlin, Germany, a few hundred miles away in Belgium, it has a greenhouse where it tracks subtle changes in thousands of rice seedlings with RFID chips, high speed cameras and robots.
It is impressive to see how many different technologies both are packaging in their solutions. It occurred to me that we were entering an age of “compound innovation” where companies are learning to blend multiple technologies spanning infotech, cleantech, healthtech, biotech, nanotech etc. Hence the Polymath moniker, which is Greek for “Renaissance Person”. These are modern day Leonardo Da Vincis, good at many sciences and disciplines.
On the one hand you have companies that just tweak existing products and call them “new and improved”. As the world’s problems get thornier by the day, it is good to see these Polymaths focus on such compound solutions.”
BW: You have considerable experience in the outsourcing industry over many years, how do you see the principles of The New Polymath benefitting investors in outsourcing – both financial investors such as angels and VCs and customers of outsourcing services, as well as outsourcing entrepreneurs?
VM: “If you look at the last couple of decades, most outsourcing has focused on infotech – software, data centers etc. There are similar new opportunities opening up as companies implement cleantech, nanotech etc. As companies like GE and BASF develop compound solutions, they will need partners in product development and in helping customers implement their solutions.
Even within infotech, the book focuses on innovations around clouds, mobility, social networks, predictive analytics, sensory networks – each is opening up opportunities for outsourcing services.
The big challenge for a number of outsourcers (and their investors) is they keep wanting to sell services that were innovative a decade ago. Many are centered around ERP vendors, Cold-war era data centers and waterfall implementation methodologies in a world increasingly moving to social CRM, cloud computing and agile methods.
So, Barry the opportunities for new services (and new types of engineers, scientists and other tech professionals) are limitless. That should excite services investors. The emphasis is on the word “new” and that of course means risks, which of course may temper investor excitement.”
OA: Can you provide some examples of outsourcing providers whose services employ the principle of compounding that is the foundation of your book?
VM: “I profiled Cognizant as a case study because they have been fine tuning a geographical version of compounding A few years ago, their labor force was primarily in the US and India. As the book shows they are increasingly able to provide sophisticated services to a growing, global client base with talent in Argentina, Egypt, Hungary, Philippines and other parts of the world. They have invested in a significant amount of tooling and training to be able to deliver consistent services from wherever.
I also profiled smaller, newer services firms that are learning to provide more sophisticated BPO and cloud services that require a degree of compounding.
But just importantly, I profiled newer players like Salesforce.com and Amazon. They are not “traditional outsourcers” but they are giving customers alternatives as they look at application management and IT infrastructure services. They emphasize automation more than labor in their services, and represent a major threat to the current outsourcing model which is pretty labor intensive.”
OA: If you are an angel investor being presented with opportunities to invest in new outsourcing providers, how would you decide on who the future winners might be vs. the also rans?
VM: “The infotech services market is well established but it is morphing – so I would look at providers that are helping their clients in new areas like mobility. Or those that are cannibalizing traditional services with more agile methods and through automation. But there are also an abundance of greenfield service opportunities around cleantech and healthtech. So, Barry, I can see Polymath services investors emerging – someone who is just as comfortable in those disciplines as with infotech services. In the book, I profile how Kleiner Perkins, a traditional IT venture capitalist has built a cleantech portfolio over the last several years. There is no reason why we will not see something similar happen in the services investment community.”