- Plenty is a high-tech vertical farming startup
in San Francisco that grows 350 times
more produce in a given area than conventional farming
and according to its CEO and founder, Matt Barnard,
it does this while you only 1%
as much water.
So, what's Plenty's innovation?
Grow plants on the side of tall skinny towers,
arrange the lights vertically,
use gravity to deliver water and nutrients.
And since the space is far more compact,
use people and machines more efficiently.
Plenty, which is packed by Bezos Expeditions
and other investors has the goal
of building vertical farms, right next to large cities.
There would be massive savings
on the costs of energy and distribution.
There would be much less pollution
and people would get to eat
tasty, locally grown greens and fruit.
Plenty's strategy is an example of radical innovation
by re-engineering the value chain.
They have taken an existing market need,
fruits and vegetables and completely re-engineered
how the goods are services
to meet this need are produced and delivered.
Examples of radical innovation
by re-engineering the value chain are all around us.
Toyota invented lean manufacturing
and related practices
such as just in time delivery of components,
total quality management
and partner-like relationships with suppliers.
The result - much better quality cars
at lower prices than its competitors.
Or look at Amazon,
which first eliminated the physical store
by bringing books to readers directly from a warehouse
and then started to make printing presses obsolete
by bringing an ebook directly to a PC,
a smartphone or a Kindle.
Look also at Uber and Airbnb,
which have upended the taxi cab and hotel industries
and look at Skype, which relying on the internet
has reduced the price
of global video calls to zero.
So, how would you explore similar opportunities
in your current business or in a new venture
if you are looking to start one?
First, map out all of the steps in the industries
or your company's current value chain
from dust at one end to dust at the other.
You need to go well beyond what happens inside your company.
Lay out the architecture of the extended value chain,
starting from raw materials
and going all the way to the end consumer.
The biggest opportunities often lie
in overhauling the entire extended value chain.
Second, explore
how technology might offer
an opportunity to completely redesign
the entire system of how goods or services
get created and delivered.
This is the approach behind innovations
like Plenty in vertical farming, Amazon in eBooks
and Skype in telephony.
Incumbents, typically find it near impossible
to copy these types of radical transformation
of the value chain.
Their existing operations, processes and culture
become liabilities rather than assets
in mounting a counter attack.
Third,
even if you can't redesign the entire value chain,
explore opportunities to transform parts of it.
Pay particular attention to those activities
that have the biggest impact on cost,
customer value or cycle time from order to delivery.
Toyota saw that the biggest costs were not actually
in the production of cars, but in defective components
and the resulting costs of shutdowns
and extra space for parts' inventory.
This wastage create an opportunity
for re-engineering key elements of the value chain.
Finally, don't overlook
how transforming one element of the chain
may require also transforming one or more other activities
in the chain.
In order to move to just in time delivery,
Toyota had to ensure
that its suppliers will deliver 100% defect-free components.
So, Toyota had to extend its approach
to total quality management to its suppliers
and build a long term partnership with them.
It's important to remember
that today's value chains are the result of past history.
They might have been ideal for yesterday's context
but it's highly unlikely that you would do the same thing
if you were starting from scratch today.
A thorough assessment can often uncover
huge opportunities for innovation.