This was originally given as a keynote by Jonathan Downey at the Commercial UAV Expo, slides from the keynote are available here.
Every industry is facing the same challenge: the old, analog way of doing things is not keeping companies competitive, employees safe, or customers happy. Enterprises must digitize their businesses in order to survive. They need to disrupt, or they should expect to be disrupted.
This is going to require companies to reinvent themselves. In many cases, they are going to have to change everything; technologies, processes, business models, even organizational structure.
This isn’t just about optimization or incremental improvements. This is about survival. Ten years from now, the enterprises who didn’t digitize their companies successfully won’t exist, because nearly every industry is facing major challenges.
Take construction. The construction industry is among the least digitized, and has been especially slow to adopt process and technology innovation. As result, it should come as no surprise that a June 2016 report by McKinsey shows that large construction projects typically take 20 percent longer to finish than scheduled, and on average, come in 80 percent over budget.
As other industries have increased productivity, the construction industry has been left behind. One reason for the industry’s poor productivity is that it still relies on paper to manage its processes, work products, and progress reports.
Facing a similar fate, the mining industry is 28 percent less productive than just a decade ago. This is the result of an inability to measure productivity in a way that allows managers to see if, and when, progress is being made.
The insurance industry, on the other hand, is one of the most digitized. But it is also one of the most competitive, with competition putting downward pressure on pricing. According to EY’s 2016 US property casualty insurance outlook, losses and expenses are growing faster than revenue. To add to that, customers are more likely than ever to switch providers. A study by Accenture shows that 40% of insurance buyers are likely to change providers within the next year. A major driver for that switch is the time it takes for their provider to pay out their claim. In the case of a rooftop claim, that may include a human climbing on the roof to take pictures and measurements, which is both inefficient and dangerous.
From the comfort of our offices, it is easy to forget that many people have incredibly dangerous jobs.
Consider cell tower climbers. According to OSHA, there were 14 deaths among cell tower climbers in 2013, making it one of the most dangerous jobs in America. Ten years from now, we’ll look back at 2016 and think how archaic it was that we had people climbing on roofs, towers, and other infrastructure, literally putting people in harm’s way… in many cases just to get an accurate view.
There has to be a better way.
What if we had a completely accurate view of the world? Imagine how much easier it would be to improve it. What if we knew the condition of every building, the state of every job site, and the extent of a city’s damage after a disaster, all without putting anyone in harm’s way?
That is the promise of commercial drone technology. It is why I started Airware. It is why Fortune 500 companies are looking to our industry to help them solve complex problems.
At Airware, we have been fortunate enough to work with several Fortune 500 companies who saw the promise of drone technology early on. It has been quite a journey, and I’d like to share with you eight lessons we’ve learned while putting drones to work for these enterprises.
Lesson 1: Know which business you’re in.
There are two common business models: Volume and Value.
The first model, Volume Operations, is focused on acquiring a large number of customers by making the product extremely accessible in order to have a very low customer acquisition cost. Products are low-cost or even free, often with fees added later for certain features. This is the company offering an app you download on the App Store. This model requires a low-touch, transactional sales process, typically offers little support, and works best for consumers and prosumers, sometimes even small businesses. But it does not take into consideration the complex IT infrastructure, operational challenges, and high-touch needs of an enterprise.
Which brings us to the second business model, Value. Companies following the Value business model focus on delivering substantial value to a smaller number of customers by solving the customer’s pain point, even if their complex problem requires a complex solution. While a company in the Value model may have fewer customers, the value being delivered is greater and deals are much larger – often six or seven figures. This model requires a high-touch, consultative sales process, typically some customization, and a deep understanding of the customer’s problem.
Both of these can be winning models, but they are opposed in most every way. Companies are typically good at one or the other, but almost never at both. There is no third model that scales. In fact, failing to focus on one of these two models often results in landing in the middle, a no man’s land. You can’t successfully serve enterprises, and you get beat by competitors at either end.
I don’t know much about the Volume model. I’ll leave that one to be explored by others. But I’ve spent the last couple years focused on using the Value model to serve enterprise customers.
Lesson 2: To deliver value, drive business outcomes.
If you want to drive value for an enterprise, if you want your technology to be worth more than the bits and bytes it’s built from, you’re going to need to solve a big problem for the enterprise.
It is not about the drone. It isn’t even about the data. For enterprises, the only thing that counts are business outcomes. This means lowering operational costs, enhancing safety, and decreasing customer churn.
As an example, one of the major drivers of customer churn in the insurance industry is how long it takes to pay out a claim. That’s a problem. If you can delight the insurance customer by handling the claim more quickly, that’s a business outcome. If you can do so while lowering costs, even better. If you can do so without ever putting an inspector on the roof, that’s a business outcome.
Lesson 3: To drive business outcomes, provide an end-to-end solution.
Enterprises typically have a business process for everything they do in a repeatable fashion. If you’re providing new technology to drive a business outcome, that means you’re probably going to need to transform that existing business process. You’ll need to consider the full workflow, from the need for data, to the delivery of insights. Enabling the workflow with technology makes the process repeatable, ensures accuracy, and enables scalability.
Drone operations in a silo without an enterprise workflow offer little value. One organization we’ve spoken with flew so many times with drones, that they actually stopped their drone operations because they couldn’t manage all of the data they were collecting. Another ended up with data siloed in three different systems, disconnected from the rest of the organization’s existing IT, and was unable to scale up their operations. Finally, another company couldn’t get their drone program off the ground at all because they couldn’t gain visibility into their operations, control data permissions, and ensure corporate and regulatory compliance.
Enterprises need an end-to-end solution that fits into an enterprise workflow to enforce the interactions between each step.
Tall order, I know. That’s what brings us to the next lesson.
Lesson 4: Build, partner, license, and acquire your way to the solution.
As someone who has been accused of trying to boil the ocean, I’ve learned, perhaps the hard way, that you don’t have to build everything yourself. In fact, if you try to do so, you’ll either move too slowly or do your customers a disservice. In many cases, you can, and you should, build, partner, license, and acquire technology to offer the best end-to-end solution for an industry.
That doesn’t mean you’re off the hook if a third-party component doesn’t work. Serving the enterprise means being responsible for customer assurance. It means ensuring that your customer gets successful outcomes, and that every piece of technology and every service works every time.
Lesson 5: It takes more than just technology.
So you’ve set out to drive a business outcome for your customer. You’re ready to deliver an end-to-end solution, and you’ve pulled together the best technology available, but in an early market, your customers will likely not know what they really need to be successful with this technology. It can be challenging and slow for enterprises to take a new technology and figure out how to best utilize it. So there is typically a wide gap between the act of making technology available, and helping enterprises drive business needs.
Enterprises are most successful when buying technologies from companies that can provide not only the technology itself, but the training, support, and consultative sales process to drive business transformation. If you aren’t willing to fill this gap, you won’t be able to solve their challenges. If you do this successfully, enterprises will want to take you to scale.
Lesson 6: Deliver first, then automate as much as possible.
Drone operations for an enterprise are only scalable if you can automate processes in a cost effective way.
Generating 10x more data cannot require 10x more people to look at it. That’s where machine learning and computer vision comes in. The drone industry talks about machine learning a lot, but too often we focus on the wrong thing. I often hear that we need new algorithms to achieve our goals. But the right algorithms already exist, and in many cases, they have existed for years. The challenge is getting the training data to inform those algorithms.
We should be focused on proving that we can solve the business problem in the first place. We need to get out into the field and consistently collect the data our customers need, even if we have to do so manually at first. Then, use that data to train algorithms to automate processing and make it cost effective.
Lesson 7: You will not be “Uber for drones”, yet.
I hear a lot of companies pitching that they are going to be the ‘Uber for drones,’ and while it is certainly the case that many large enterprises want access to an aerial perspective without operating drones themselves, there is a big difference between the market that we are all serving and the market that existed for Uber to disrupt.
Uber tackled a market where there was a mature and existing demand for a safe ride, on demand, from one location to another. There was also a mature and existing supply of both taxis and black cars. Uber developed technology that made the connection between supply and demand far more efficient, and leveraged a rating system to drive quality of service higher. Later, they fought to increase supply by onboarding drivers to keep up with demand.
With any marketplace, one side is typically much harder. Uber and other ridesharing services like Lyft have gone to extraordinary lengths in many cities to get access to drivers, in their efforts to ramp up the supply side of their marketplace.
I believe that many have made the mistake in our industry of thinking that we have a mature demand for drone operations and a mature supply of operators, and that the only thing missing is the ‘Uber for drones.’ This is far from the case. We are still in the early innings of making enterprises successful in their use of aerial data, and driving substantial business outcomes.
We first need to make large enterprises successful with this new technology. Ladders must be replaced with drone inspections. Monthly, manual land surveys must be replaced with drone surveys weekly, or even daily, the insights of which are shared throughout an organization.
Then, and only then, we will be in a position to ramp up networks of operators who can meet this burgeoning demand, and finally, like Uber, control and ensure the quality of service by implementing technology that makes it easy for the operator to show up and deliver high-quality data in a repeatable and scalable fashion.
Lesson 8: Customers do not buy platforms, but platforms will help you deliver solutions faster.
There are countless potential use cases and applications for drone technology. But how many of them should you seek to address? While everyone would love to provide a complete solution that is broadly applicable for just about any industry, I’ve done my best to show just how much it takes to make large enterprises successful with a transformational technology.
There are two ways you might try to get there. You can start with a thin layer of technology that is broadly applicable. A camera is broadly applicable. Generating a map is broadly applicable. But you’ll probably find that you need to start by focusing on volume operations. You’ll often be built into solutions by other companies, and you may not own the relationship with the end customer. From there, it can be difficult to extend the capabilities of your technology towards a full solution without hurting your volume business and ending up in no man’s land.
The alternative is to build a solution that may only address a certain use case or application, and then build out a second and third solution, leveraging economies of scale and shared technology between the solutions to go faster. Eventually, many companies may call this shared technology a platform, and open it up to others to develop capabilities and solutions on it as well.
There are many more lessons to come, but those are the eight most important lessons we’ve learned so far. I am sharing these because I believe our industry is poised to help countless others transform their businesses.
And don’t just take my word for it. A PwC global report says that there is a $127 billion global market for drone-powered business solutions.
Enterprises are no longer just testing and talking about drones. They are deploying them. They are looking for ways to improve operational efficiency, increase worker safety, and make better decisions. They believe in the promise of this technology.
Let’s answer that call. Let’s drive business outcomes. Let’s get productivity back on track, improve operational efficiency, and keep workers out of harm’s way.
Let’s be the industry that transforms the rest.