Rob C. Wolcott and Kaihan Krippendorff - The Proximity Revolution - The Innovation Show

Episode Transcript
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Aidan McCullen (00:00):
What if you could have whatever you want produced and
provided immediately and affordably,no matter how customized with
minimal environment al impact.
Products services andexperiences on demand.
Just in time anything, anytime, anywhere.
This radical change is already on the way.

(00:21):
Digital technologies push theproduction and provision of value
ever closer to the moment of demand.
Today's guest provide an indispensableguide to the proximity revolution
showing how it's transformingevery industry and our lives.
Offering unparalleled foresight forleaders and innovators they reveal

(00:41):
how pervasive this trend will be.
Proximity represents an entirely newway to serve customers with critical
implications for corporate strategy,investing, public policy, supply
chain, resilience, and sustainability.
Incremental changes to existingbusiness models will no longer suffice.

(01:02):
It is a pleasure to welcome theauthors of, "proximity how coming
breakthroughs in just in time transformbusiness society and daily life, Rob C.
Wolcott and friend of the innovationshow and regular guests Kaihan
krippendorf welcome to the show

Kaihan Krippendorff: Great to be here, you. (01:20):
undefined

the.
Endorsements are just absolutelystellar for your book and the preface
written by professor emeritus ofmarketing at the Kellogg school of
management, Phillip Kotler wrotean absolute killer endorsement.
I'm just going to give you a littletaste of this and Rob, maybe you'll
build on this "proximity, he said isone of those big transformative concepts

(01:45):
that make studying, teaching, anddoing business worldwide so fulfilling.
As one who has seen many business books idare say you'll enjoy reading this book.
As you discover our proximate futures,the implications of proximity will
be felt for years to come opportunitysays, what a brilliant brilliant

(02:07):
endorsement by him but also opensthe question what is proximity,

Rob C Wolcott (02:12):
,thanks Aiden for having us.
And , thanks for quoting professor Kotler.
He's been a huge presence in my life, amentor to many throughout his long career.
We were so pleased when heagreed to write this preface.
Well, what's proximity.
You said it anything, anywhere, anytime.
And that's not metaphorical.
If you look at where things havecome from just in the past decade and

(02:35):
how much more we have access to ondemand anywhere, anytime, , imagine
where we'll be in another decade.
And so it's coming and this isnot a, we think this might happen.
The book is not, we think you shouldtry this cause it'd be better.
Instead, what Kaihan and I are saying,this is where the world is going.
We don't know who exactly is going to win.
We don't know how long it's going to take,and it's going to roll out differently

(02:57):
in each environment, each industry, butthis is the direction the world is going.
And that direction is digital compelsvalue creation ever closer to the moment
of actual demand and time and space.
it pushes the production and provisionof value ever closer to that moment
when you actually have a customerand then you produce and provide,

(03:17):
which is fundamentally differentfrom the industrial age model,

Kaihan Krippendorff (03:21):
A nice way to think of that is, talk about
waiting for the last minute.
Often you create value whenyou combine things, right?
One of the cases that are availabletoday that we talk about in the book is
the Coca Cola freestyle machine, whichis a soda machine that you can go to.
And I was actually seeing planet of theapes with my daughter this weekend.

(03:41):
And, , and she ordered, a freestyle soda.
I would not let her pick this, butsome people do pick diet, vanilla,
cherry, caffeine free Sprite, right?
Now, if you were to make that in abottling plant far away and then ship
it, you may find somebody who wantsthat, but the probability is low.
One plus one can equal three.

(04:03):
That's new value.
But sometimes one plusone doesn't equal three.
One plus one equals zerobecause nobody wants that.
So by waiting for the last minute tocombine things, we can provide people what
they want, when and where they want it.
Right?
So now you can apply that to anyindustry and we'll see that same.
Pattern, shaping howvalues gets delivered.

The idea of proximity for me made sense that it's like the
everything store, virtually but itonly is the only created on demand
when you need it and there was a coupleof little excerpts from the book that
really help me understand this you said.
In singapore dubai brooklyn and beyondvertical farms are literally rising
bringing fresh food ever closer toconsumers meanwhile rooftop solar

(04:47):
energy generation blurs the linebetween power producers and consumers.
Software literally enablesresilient local micro grids.
Neighbors producing, storing, andsharing power among themselves, helping
make widespread power outages rare.
And one of the things I thoughtabout it brought me right back to my

(05:08):
childhood . I have a, false tooth , andit used to constantly get broken.
And when it got broken, Ihave to go to the dentist.
They'd have to do a color test tomake sure it matched my other feet.
Then it would be sent off to alab to be prepared and created.
And I'd have to wait weeks or days.
And it was embarrassing going aroundwith no tooth , what it was being

(05:30):
molded and colored and then tested.
And sometimes it didn't even fit.
And I thought about howthis idea of proximity.
Today i just wait in the dentist andthey printed on demand and they actually
printed to the exact mold of what mymouth needs i thought maybe you'd riff
on that because there's so much inthere that you can it anywhere you like

quickly.
, the good news Aiden is the Global RugbyBoard already has a solution, which is
as soon as a kid signs up for rugby,they just break all of his teeth and

and bones as well do the bones while at it rob.

kaihan-kripppendorff_2_06-24-2024_124102: Get it done (06:04):
undefined

Why wait, why wait.
So there are so many examples in the book.
I mean, I'll just start with agriculturecause it's really tangible and compelling.
The largest vertical farm inthe world right now is in Dubai
and it's near the airport.
There's a brand new.
Khalifa airport that's rising.
And, , they grow leafy greens and herbs.
It's called Bustanica.

(06:27):
It's a partnership with Emirates airlines.
And so I visited there in, in Decemberof 2022, doing research for the book.
And first of all, the leafy greens areas good as any, any farmer's market.
, but the more exciting thing Aidan is thenext day I got on my Emirates flight back
to New York and the lettuce in my salad.
Was picked at thatbuilding the night before.

(06:47):
Now on a unit basis, clearly the lettucegrown in that building is far more
expensive than the lettuce they mightgrow in Spain or North Africa, of course.
But here's the thing.
When Emirates airlines started todoing, started doing the overall math.
Of the whole system, growing the lettuceat a distance, harvesting it in advance,
putting it on a ship, a lot of it goes towaste 38 percent of all the food we create

(07:12):
in the world every year goes directly towaste and then putting it in a warehouse
and hoping I have a good product.
Compare that to what they do now.
It, they, they pick it afew miles from the airport.
They put it in my salad andI'm on, and I'm on my way.
So as an overall equation of quality.
As well as cost increasingly,it makes perfect sense.

(07:33):
And to put a fine point on that Emiratesairlines bought the whole company.
Originally it was a partnership.
And in February of this year, theyannounced they're buying Bustanica.
And rolling it into Emirates catering.

Talk about foresight and reinventing yourself as an organization.
I know that's a lot of thework that both of you guys do.
I was thinking about that, theidea of the, the proximity of food
and beyond the fact that there'sthe logistics and the supply chain
resilience and the air miles that youadd onto food, all that kind of stuff.

(08:05):
I was thinking about somethingas a child, I grew up in a
very small village in Ireland.
And we had a field, we had greenergreen fields all around us.
We grew potatoes and carrots and broccoliand cabbages and stuff like that.
And at dinnertime, my mom used tojust go, Hey, go out and pick some
carrots and potatoes and bring them in.

(08:25):
And of course that was a joy fora child to do something like that.
But the benefit, not just theenvironment of that, but to me.
Because you're picking the food whenit has its life force still inside it's
still alive it's still full of nutrientsand that's one of the other things we
we miss with all this with all this foodbeing traveled monoculture around the

(08:48):
world, we lose so much nutrients in thefood as well as damaging the environment.

Yeah, that's right.
I mean, the tomato that you didn't pickbecause you don't need it right now.
is still growing.
The tomato that you didn't getfrom the grocery store because
you don't need it is rotting.
So you have the reductionin, food shortages.
, and then you were also right.
The non proximate food model where wehave big farms centrally producing, as you

(09:14):
say, one type of potato, that's risky.
And so we need greater bio, diversity.
And so this model can afford that.
Not to mention the environmental,impact of creating greenhouse
gases, shipping food around.
, so we think that the proximatemodel in a way can go back to the

(09:36):
way , we did live in a much moreproximate world and now we can start
returning to that proximate world.
But thanks to technology, we cando it in a more advanced way.

Sticking with the picture of agriculture, which is
obviously important to all of us.
I think most of yourlisteners probably eat.
So I'm guessing.
, but one of the things that'sexciting to Kaihan and me about
distributed agriculture or controlledenvironment agriculture, think
very advanced greenhouses, is thatthe key to proximate agriculture.

(10:05):
is proximate power, proximate,renewable, dependable, affordable energy.
And the more we solve that problem,the more we'll be able to have
small scale, small footprint, foodproduction closer and closer to demand.
The more we'll be ableto solve food deserts.
I don't know if you have this problem inIreland, but in the United States, we have

(10:28):
Entire swaths of urban areas where peopleliterally have no access to fresh produce.
They end up defaulting to highlyprocessed packaged foods because
they're cheap and they're available.
And that's not their fault.
They just have no access.
And so as we improve the energy picture,we actually can dramatically improve the
food access, nutrition access picture.

(10:50):
And to return to your original point,Aiden, the more we can do nearby, the
more we individually can do like you.
Mention the story of you as a smallchild going out and picking the carrot.
That there's an experience of thatin life that enriches our lives.
And the more we can do proximateto where each of us is in the
world, the more we can customize.

(11:11):
Our lives and experiences in wayswe could never have imagined before.

You can say that distributed energy is a fundamental
enabler of proximity because weneed to be able to power these
small factories and small farms thatare closer to the point of demand.
And then we have, distributed, otherdistributed models, distributed
data models like blockchain,distributed computing, edge
computing, those also enable it.
On addition to that, there are threebig drivers that are increasing the

(11:38):
payoff for companies or entrepreneursor innovators that are pursuing it.
Number one is changes in the cost ofsustainability, these externalities
are becoming intranalities in partdue to regulations that are being
introduced that are forcing companiesto only privatize profits and socialize

(12:01):
environmental impacts, but those.
Environmental impacts arestarting to hit the bottom line.
Another one is geopolitical uncertainty.
We do see clear signs of a formof de globalization supply chains
need to start getting shorter.
So you have got that, and thenyou've just got expectations.
People expect more personalized,customized experiences, products

(12:21):
when, and where they need them.
So you got the enablers andthe drivers that are making
it economical to pursue these.

One of the great stories you share in the chapter on food.
And I'm skipping ahead here.
Cause I want to come backto talk about why proximity?
Why now that's a big question butlet's finish food because the guys
introduced the concept of proximity,the lens of proximity, and then
at look at all these major shiftswhere proximity is taking place

(12:50):
throughout society from food toeducation to work but let's stay
on food for the moment i loved theproximity of food challenge that was
set by Haier with the Peking Duckchallenge because this unravels some
of the challenges that we can solvewith proximity and using different
technologies like iot for example.

Peking duck is delicious and it's very hard
to make, which is why the way thatyou get it is you walk out of your
house, you walk down your stairsand you get in a car and you go to a
restaurant and, it's cooked there,,not in great proximity to your home.
Now, what happens is a COVID hitsand now people can't get out of
their homes and restaurants aren'topen and they want Peking duck.

(13:33):
So how do we bring Peking duck in greaterproximity to where people are given that
they're not leaving their apartments?
And so this company Haier, theymake, , appliances and they've got.
Kind of smart appliances.
And they said, okay, what does ittake to deliver the experience of
a Peking duck at your home quickly?
And they created thisecosystem of, of partners.
They've got farms that,that produce ducks.

(13:56):
They've got processing plantsthat produce the process them.
They've got chefs, they've gotdistribution, and then they, the chefs
will provide a recipe and then you candownload the recipe into your oven.
And so what you experience you get isyou want to Peking duck is delivered.
And you put in your oven and the recipeis downloaded and the oven just takes care

(14:18):
of it, and then you have your Peking duck.
And so like two, things to mention there.
One is, COVID forcedus to advance proximity.
It's kind of where we were headed, but itforced us into proximity and we realized,
wait a second, this actually can work,so, , , it advances by, several years.
Right.
And the, and the second thing Iwould say is proximity is enabled
by the ability of these complimentsto coordinate with each other, to

(14:41):
create more immediate experiences.

And just to emphasize the example that Kayan just shared,
Haier the Chinese company, Haieralready had been playing around with
the idea of maybe, , automating theirautomated ovens could make Peking
duck, but they weren't that serious andthen COVID happened to catalyze them.
And here's the exciting point.
From the point that Haier said, youknow what, we're going to do this,

(15:05):
which was at the very beginning of 2020.
To the end of 2020, less thana year at, by that point, they
had 20, 000 ducks that had beenpurchased , and created by consumers.

And as you say, we're possibly going to see the streaming
service of recipes in the future.
We're actually, you'll just beable to download these recipes.
You'll have the connectedoven or connective appliance
to be able to execute.
The recipe of choice for you.
So you can be your own JuliaChilds at home as well.
There's three, three different trends thatyou talk about, and I'd love you to share.

(15:39):
One of the things that dawned on me whenI was reading the book is that for us
that are reading about this all the time,professors in college teaching about
this, giving keynotes, et cetera, there'smany, many terms that people don't know.
And one of the things I'd lovepeople to get from this episode is
just some of the terminology and.

(16:00):
Some of the imagination thatyou could use to go, actually,
I could do that in my country.
For example, there was three trendsyou talked about in the food chapter.
One was CEA and Rob, you alreadyalluded to this controlled
environment, agriculture.
The second was customization via automatedmoment of use, production and preparation.
And then the last was.

(16:21):
Alluding to Kaihan mentioned earlieron transparency, prediction and
matching of supply and demand.
I'd love you to describe those threeat a high level, because they're
so important to get, because theydon't inspire so many entrepreneurs
. Rob C Wolcott: I'll start with moment of use.
, that's a concept that Kaihanand I invented for this book.
And it, and there are examplesalready out in the world.

(16:42):
So, any, a moment of use system issimply something that creates or modifies
a product, service, or experience.
At the moment of use.
And so it's sitting there with thecapability doing nothing waiting until
Aiden wants something very specific.
So the obvious way to think aboutthis, and it's much broader than

(17:02):
this, but an obvious way to thinkabout this would be a 3d printer.
Um, most of your listeners, I'm sure areaware of, or maybe even use 3d printing
where it's sitting there with polymersor metals, doing nothing until you throw
a design file in and push a button.
And then it starts to make thatone part or product to order.

(17:23):
And to give an example of how,powerful this kind of a model can be.
, it allows you to do things youcould never have done before.
, so a slightly different exampleof this is from Levi Strauss,
the, , apparel producer.
, so they have a capability,, called laser finishing.
You can look it up.
And they've used it successfully.
They had it in some of theirleading edge stores, right?

(17:43):
As COVID was hitting.
, but you can look it up and , whatthey do is , they can create stonewash
effects, rip jeans effects, anykind of stylistic effect you want.
And instead of taking five daysplanned in advance at the factory.
They take a standard pair of pants.
They throw it into this piece ofequipment, and 90 seconds later, it's
finished exactly the way you want it.

(18:06):
Now, what's exciting about this isnot only the customization allows
you to have, but the dramaticallylower cost of serving your customers
because you don't have to do the demandplanning months and months in advance
to see how many Pairs with stonewash.
How many pairs ripped like thisin this distribution center?
You send thousands of copies of the samepair of pants out all over the place.

(18:28):
And they're finished atthe very last minute.
But even more than that, Aiden, if youwalk into the store and you say, I
want a picture of my kids on my pants,well, they can do that with this.
, laser finishing technology.
And yet there's no scenario where ademand planning team at a company a
year ago was sitting there saying, howmany copies of a pair of pants with

(18:50):
Aiden's pictures of his kids on hispants should we produce for next season?
That that conversation hasnever happened before because we
couldn't do it and now we can.
and my kids would be going crazy with that.
That is not happening.
That, that is not happening on my watch.

Think about it.
Think about it.

Yeah.

aidan_1_06-24-2024_174101: Kaihan, you mentioned (19:09):
undefined

earlier on the idea of transparency and predictability, including
things like blockchain that we know of.
This becomes part of the changethat we're seeing now with the
access to data, even that ishappening in the agricultural shift.

Yeah.
I think that a lot of this 38percent of food that gets wasted is
due to a inefficiency or a lack ofpredictability in the supply chain.
We have very long supply chainsas that gets, , as controlled
environment, , cloning, controlledenvironment, agriculture becomes
more adopted, supply chains get.
Shorter, but still thereis a massive inefficiency.

(19:47):
You pick something, you put it on a truck,the truck pulls up at a grocery store.
The grocery store doesn'tknow you're coming.
So the truck is sitting outside andthen it's rotting or the truck gets
delivered, but the food doesn't getput into the apples will get put on.
On display because theyalready have apples.
And what they don't know is theycan't predict how many people are
going to come and buy apples tomorrow.
And because they can't, they don'tknow that they should actually chop

(20:09):
up their existing apples, createsome kind of fruit salad, and then
put the new apples on display.
So across the entire train, thereis a lack of predictability.
Do in part to a lack of transparencybecause these different databases
cannot communicate with each other.
So we see a democratization , of datathrough sharing of APIs, throw on that AI.

(20:30):
So one of the companies that we coveredis called a fresh technologies and they've
developed a kind of a software platform.
Platform, that is sold tosupermarkets and, , the delivery
trucks and down the supply chain.
And it allows them to more accuratelypredict what is coming and , what
is needed across the supply chain.
When we interviewed them, theywere in about 200 us supermarkets.

(20:53):
Now they're in well over 2000 andthey have saved millions and millions
of pounds of potential food waste.

Rob, maybe my cover controlled environment,
agriculture, one of the things,again, this was really important.
I said this to my kids and my wifeat home is quoting bits of the book.
They get sick and tired of me, apartfrom printing them on my jeans.
Rob is like stuff.
And they're like, Ohno, here he goes again.
So one of the things I was tellingthem about, I was trying to explain

(21:22):
the amount of waste that we have,the amount of food waste, we throw
away a third of what we produce,which is just so criminal, , but 40%.

38%, it's 40%.

So, so for, for a variety of reasons, we, we predict badly what's
going to happen at home that maybe thekids are away or whatever, so it even
happens at such a local level, but oneof the things you talked about and Rob, I
know you're an investor in many companies.
That I can take a mix of food waste.

(21:53):
I can use it as almost like if I thinkabout a 3d printer and the ink I need,
or the liquid I need to be able to 3dprint, I can use the food as my source
ink to create food in the future andthen and then finish it just like the
levi's Strauss story in different waysfor whoever wants it in a certain way

(22:14):
maybe it's some type of crisp or sometype of chip whatever it might be i
love you to describe this because.
This is one of those thingswere just makes people think
differently about the future food.

Let's, , put two concepts together here.
One is moment of use and the other iscontrolled environment agriculture.
So just to be clear, we didn't invent CEA.
That's been around for a long time.
You can, it's the whole industry.
Where, you can think greenhouses, but,everywhere from a traditional greenhouse,
all the way , to pretty cutting edgetechnology, , where you grow certain

(22:48):
things in controlled environments.
Now, just to show you howcutting edge this can be, and
we really do mean space age.
So in, , in 2018, I got a call froma very good friend of mine, a French
space Plant scientists and entrepreneurventure capitalists, Barbara Belvisi.
And she called and shesaid, , I would like to figure
out how to grow food on Mars.
, and I said, what?

(23:09):
It sounded like yousaid, grow food on Mars.
She said, this is what I said.
And , I said, okay.
And she asked me if I wanted to invest.
And I said, no, of course not.
I'm not a billionaire.
I can't wait 60 years fora return on my investment.
Now, she knew Aidan, I wasn't goingto invest because that's outside
my purview, but she had just gottena big grant from NASA to figure

(23:30):
out how to grow food on Mars.
And this requires high control, isolatedspace, literally millions of miles away.
, and they've made a tonof progress on that.
So actually that, that project is ongoing.
But what's great about Barbara andher company Interstellar Lab is.
She knew she had to create areal business here on earth.

(23:50):
And so what she and her team didis they made a list of all of the
very high value, very low volumeingredients derived from plants.
So really high value, very low volumeingredients derived from plants.
And guess what kind of industriesneed these, , these inputs?
Well, , pharma biotech, but especiallyskincare, Cosmetics, fragrances.

(24:15):
And did I mention that interstellarlab is located right outside Paris?
So they have this beautifulhanger just outside Paris.
They've created these podsand , the pods about the sides
of the room I'm sitting in.
You can walk into it, growing plants,each plant's growing conditions are
hyper optimized for that specific plant.

(24:36):
And then their clients.
So this isn't just a science project.
They have real paying clients.
The company's growing like mad.
, their largest client rightnow is Robertette, the
largest ingredients company.
And in January, they announceda big contract with L'Oreal,
the luxury products company.
And L'Oreal is putting InterstellarLabs pods in their manufacturing plan.

(24:59):
Barbara's company then monitorsand controls those pods remotely.
And their AI system is running inthe background to figure out how
to continually increase the yieldsof each specific kind of plant.
So why does L'Oreal care?
Well, they can produce inside theirmanufacturing facility, exactly the
amount of specific chemical inputsthey need where, and when they need it.

(25:23):
And no more.
So zero waste.
But here's the really exciting thing.
So to give you an example,one of their key inputs comes
from a plant called Vertivay.
Vertivay grows in Indonesia and thetraditional model is they rip the plant
out of the ground, cut the roots off.
The ingredient comes from the roots andthen they have to start all over again.

(25:43):
And they have to ship , theingredient to France.
With this new model, Vertivaygrows inside these pods.
The yield in these pods is over 1000percent higher than in the wild.
And most exciting from L'Oreal'sperspective, they don't care about
geopolitics, they don't care for thisingredient, at least they don't care about

(26:08):
severe climate events, problems in thered sea, they grow exactly what they need.
Where and when they need it.
And this is, this businessis growing like mad.
So you're going to see more companiesrealizing they need better resilience.
They need better accessto key ingredients.
And so we'll be seeing controlledenvironment, agriculture in the food

(26:28):
space, , but in the plant agriculturespace, but moment of use production
broadly across all industries.

So let's come back to something.
I planted the seed for earlier on.
I probably should have started with,which is after you described the concept
of proximity to ask the question, whynow, , what has changed that proximity?
Why didn't we think of this before?
Or were we not capable of doing it before?
What's changed?

Well, first of all, Aiden, we've always wanted, humans
have always wanted what they want,where, and when they want it.
And whoever can give it to thembest in the long run tends to win.
So that hasn't , the demand side,and the aggregate hasn't changed.
Obviously specifically what people want.
Changes all the time, but what,why now with respect to proximity?

(27:13):
Well, two things, number one,global conditions are changing
and Kaihan can, can extrapolatea little bit on geopolitics and
climate and things like this.
But, , on the, as far as technologygoes, we can do things today.
We could never have done before.
So we've always wanted to have whatwe want, where, and when we want it.
But in the industrial age,we had to use industrial age

(27:36):
technologies in order to achieve it.
So this is why we've built theglobal supply chain optimized for
scale manufacturing at a distance.
In other words, that's why we havemassive plants in China and Mexico and
some in Ireland and us and wherever.
, because the larger myplant, the lower my cost.
And that's fundamentallytrue in an industrial age.

(27:57):
But what's exciting is in the digitalage, those equations are just now
starting to shift in a meaningful way.
And just to be clear, Aiden, whatKayhan and I are not arguing is we're
not arguing in 30 years, there won'tbe any huge plants at a distance.
Of course, there still will bewhere it makes economic sense, but
what's new about where we're going.

(28:19):
Is we'll have more and more of thesesmall footprint production capabilities,
whether it's a manufacturing, small scalemanufacturing or a 3D printer at your home
or in your doctor's office or whatever.
And again, proximity is not limited tophysical products, but certainly we can do
far more approximatizing physical productsthan we could ever have done before.

(28:42):
But if you just look at digital.
It's already there.
I mean, think about Netflix.
You can watch any videoyou want anywhere, anytime.
So, all video contentis already proximate.
Now, the production of that content wasprobably months or even decades ago, but
even that is right now starting to change.

(29:02):
Think of generative AI like Sora, whereyou go and throw a prompt in and Seconds
later, you get a video of Mastodonsroaming the Arctic during the Ice Age.
Obviously that video, and that's a realvideo now, , and so video content over
the next decade or so will be increasinglycreated from whole cloth, real time.

(29:22):
Customized to needs and desires,and whether that's a good thing or
not, is another discussion, Aidan.
Kaihan, you, you talk a lot aboutthe geopolitical and the climate
aspects driving us toward proximity.

Yeah.
I think that, yeah, the geopolitical,, aspects that the, , incorporation
of climate change, costs intocompanies is driving them.
You know, we, we work a lot withchief strategy officers and that's
something that's on their mind.
Whereas before it was sort of, Oh,this would be nice to have, let's,
Put up this vertical farm and source,and maybe it'll give us some good PR.
Maybe it'll help us recruitsome customers or employees.

(29:56):
But now the question is, wait a second,we're going to have to start paying for
the carbon emissions of sourcing thisstuff from far away in the next five
years, if we incorporate that in, if wewant to reduce the cost, the future risk
costs, we need to start doing this now.
So there's actually a economic,, a very viable, reason.
Also, if we look.
Customers are becoming digital customers.

(30:19):
It used to be, you went to a bookstoreand you could spend an hour walking
around and you bought something.
Oh, and they know, oh, webought, he bought this book.
Now you could go online and you couldspend an hour on Amazon and not buy
anything and they know a lot about you.
Right?
So we've got to think that customersbecome digital customers, spitting
out information, shared through APIs.

(30:40):
Analyze through AI, allowing usto be much better at predicting
when and where it is needed.
Now, marry that with the abilityto customize a digital solution
and more products are digital, agreater portion of the products.
So we could, one of the cases that wehave in the book is, , is Domino's pizza,
they don't digitally deliver their pizza.

(31:01):
But they differ digitally deliver partof the value proposition, which is the
information that your pizza is being made.
That's been quality check.
That's being delivered.
That part is getting delivered fasterby enabling them to deliver that part
of their value proposition faster.
They have outperformed almost.
Every other product, every othercompany, other category, and in the
period that we analyze their stock pricealso outperformed, alphabet or Google.

(31:25):
And then what's really excitingis the digital products, which
we're able to sense more rapidly.
Deliver digital products more rapidly,but now with 3d printing and robotics,
now the physical products and the physicalaspects of product is getting in the game.
And you are able to have a machinethat one day produces a cup hubcap.
The next day produces a toothbrush.
The next day produces, a pinktoothbrush for people who are missing

(31:48):
a tooth because they play with rugby.
They played rugby and we can customizethose to deliver those value propositions.
So it is like a virtuous cycle.
That's why now.

Aidan,, I want to underscore something from the dominoes
example that Kaihan just shared.
It shows that, a big part of,Conquering this proximity opportunity
is continuing to go back to the valueyour customers get from buying your
product service or experience, notthe product itself, but the value,
because it's not always obvious.

(32:18):
We think we know what they want.
And if you think about thatdominoes example, Are they working
on trying to create better pizzas?
Well, maybe, I mean, arguably, , nooffense to the Domino's crew out there.
It's not the best pizza in the world.
I mean, can I say that?
Am I allowed to say that?
But you know what they do?
Not only do they get a good pizza,good enough pizza, fast, Now we

(32:40):
all know people want their pizzasfast, but they added another layer
of value, which is transparency.
They were able to show consumerswhere your pizza is in the process.
And that's a recognition of the factthat there's another set of value
propositions that nobody else was serving.
Before Domino's started doing that.
And digital technologies allowus to discover and serve new

(33:02):
kinds of value propositions.

I don't think dominoes will ever be sponsoring
the show rob so it's cool.
And by the way, I think they'retaking all that, that 40 percent of
waste and printing the pizzas andhaven't been telling us for years.
So it certainly tastes that way.
And definitely anytime I've had aDomino's pizza, I've had the indigestion
to actually prove that as well.

(33:25):
let's, let's go backwards.
So speaking of indigestion, it's a nicesegue for medicines on demand anywhere.
So we've covered food and agriculturei thought we'd cover as a last piece
today and hopefully we'll do a part twocuz there's so much more in the book.
Is for anybody out there working inhealthcare, the healthcare revolution is

(33:47):
about to change in a massive, massive way.
And one of the scenarios, just likethe Peking duck that you posed to us
is imagine the fuel bill of drugs youcan buy at a pharmacy for only a few
dollars when they're delivered by F 16jets that has actually happened when.
The F 16s have to drop off thesegeneric drugs to war torn areas or to

(34:12):
people who cannot access these drugs.
How can that change in the future?
And the guys are going to tell you, thisis where MOU becomes really interesting.

Well, thanks for that.
The example you're pointing toAidan is one of our heroes, Dr.
Jeffrey Ling.
He's a retired army doctor.
He practices medicine at JohnsHopkins now, and he was in six
tours of duty in the middle East.
And then during that experience, theykept running out of generic drugs.
And it's not a shock that you'd runout of generic drugs in a war zone.

(34:42):
But what is shocking to me, I didn'tknow this until he shared this with me.
We have generic drug shortagesat hospitals and clinics all
over the United States every day.
And so Dr.
Ling came back from one of his toursof duty and he got a big grant from
the Defense Advanced Research ProjectsAgency, DARPA, worked with a team
from MIT, and they figured out how tomake drugs from a piece of equipment

(35:05):
from raw materials anytime, anywhere.
So it's called, the company todayis called On Demand Pharmaceuticals.
You can look it up.
Their equipment is, , the coreequipment is about the size of
a refrigerator and it sits therewith carbon, hydrogen, and oxygen.
And for your friends in the pharmaindustry, and I know there are a
lot of them , in Ireland, obviouslythere are some APIs and other stuff.

(35:27):
Just set that aside.
Basically it's sitting there with carbon,hydrogen, and oxygen waiting until a
medical professional says, I need athousand doses of atropine, or I need 300
doses of ciprofloxacin and hours lateroutcome, 300 doses of ciprofloxacin.
Exactly as you would get at the pharmacy.
And by the way, the Food andDrug Administration in the U.

(35:48):
S.
has already confirmed that the drugsthat come out are 100 percent the
same as they are at the pharmacy.
Now, here's what's mindblowing about this.
It transforms the modelof what's possible.
So, right now, the U.
S.
government, and I imagine theIrish government does as well,
has a stockpile of ciprofloxacin.

(36:09):
And by the way, I'm justusing Cipro as an example.
They can make drugs.
hundreds of different kindsof drugs from this equipment.
Now, ciprofloxacin, , has a shelf life.
Of three years and so the government hasCipro and stockpile in case of a public
health emergency every three years.
We have to throw them all outand make millions of new pills.

(36:29):
Now think about on demandpharmaceutical solution.
What is the shelf life of carbon?
That's right.
It's not a trick question.
The shelf life is forever.
So when you start to do the math, yourealize it, there's no comparison at all.
, and just to give a really hopefulsign, even since Kaihen and I finished

(36:50):
the book, the manuscript for thebook in January, On Demand announced
their first commercial application.
So the U.
S.
military is already usingOn Demand a little bit.
In their systems, but on demand hasits first commercial implementation
in Tupelo, Mississippi, a chronicallyunderserved, low income community,

(37:11):
they selected six injectable drugsto start after all it's healthcare.
They have to start slow.
They have to get it right.
So they chose six injectable drugs.
And from the point they switchedon the system in January to
today, this health system.
Has had zero stock outsof any of those drugs.
And here's the exciting part.
That's the first time in their history.

(37:33):
So we can do things today.
We could never have done beforea last point about healthcare.
This is my second favoritechapter in the book, by the way.
My, , as Aiden and I talked aboutbefore we started recording, my
father died of an aortal aneurysmat the age of 63 back in 2004, and
he had just had a complete physical.

(37:53):
The doctor said, Bob, you're doing great.
Keep up the good work.
You're great health.
Two months later, he was dead.
I imagine in five years, 10years health monitoring, you
know, I'm wearing a Garmin.
You might have an Apple watch.
There you go.
Whatever.
, it's still pretty rudimentary, but whatabout five years or 10 years from now when
we're monitoring every aspect of our list,the lip system, finding weak signals.

(38:16):
There's an AI system in thebackground, analyzing everything.
And then it sends you a note.
It says, Hey Aiden, lookslike there's a problem.
Talk to your doctor.
And the doctor says, Hey, you'vegot the stage zero cancer.
No big deal.
We can fix it.
Here's what you do.
Compare that to today.
Where you wait until you're doubledover in pain, you go to the doctor

(38:37):
that he or she runs diagnosticsand they say, Oh, gee, you've
got stage four pancreatic cancer.
There's nothing we can do about it.
So here's the punch line.
The exciting part for healthcare proximity compels.
We're not saying it makes it easier.
We're not saying it's better.
We're saying it compels health carefrom curing things to preventing things.

(38:59):
Because we'll discover problemsbefore they're even a problem.

I love that man and you know again i was saying to you my
condolences for your dad but there'sso many stories of that there's a
guy regular listen to the show gregyou know i'm talking about i wear a
garment as well he wore an apple watch.
And he said the apple watch actuallysaved his life because it told him
that he had some type of arrhythmiaand he's only in his, he's not even 40.

(39:25):
And he got, went to the doctor.
They put a stent in and actually savedhis life because of the apple watch.
And there's so many stories of that.
And as you said, if you thinkabout the cycles of Moore's law.
Apple watch or a garment is in it's inprehistoric times as where it's gonna
be in the future what are the utopiasenvisage is that i take you know we take

(39:48):
pills anyway some of us take creatinetake whatever digestive enzymes is that
you can have just some nanotechnologyconsistently inside scanning.
Giving data.
And then that data says, these arethe vitamins you're actually deprived.
And these are the ones that can actuallymake a huge difference to your energy.
I also noticed this.
I don't know about you guys, buttaking vitamins, even something as

(40:11):
simple as a B vitamin can have adramatic impact on your mentality
and how you feel your positivity.
And you think about how many of us aretaking antidepressants, for example,
and that it can be circumvented.
With no bad side effects by justhaving the right vitamin intake.
These are the utopian visions I seeof this chapter in particular, this

(40:34):
is why I love this chapter as well.
Kayan, perhaps you you'll riff onthat a little bit from the health care
perspective, because again, the, theidea of predictive analytics of machine
working with human and actually freeingup the human to be more human, to put
more care into the other human, tobe able to have empathy and actually

(40:54):
speak to the other person rather thanfocusing on the admin side, for example.

If you don't mind, I'll bring us first, as a more
immediate step towards that future.
Because sometimes when we talk aboutthis stuff, people think, Oh, one day.
In the future, that will be someone whocan afford to invest and wait 10 years.
, but even a small step in proximity andhealthcare can make a huge difference.
There's a company in the United Statescalled pill pack, and you can say

(41:22):
their whole innovation was just this.
Let me not deliver the drugs that youneed until I know all the drugs you need.
And I'm going to put it into a littlepacket that says 8am and Monday.
These are the threepills you have to take.
So we give you what youneed when you need it.
Now for decades and decades and decades,it was understood that the way you
deliver prescription drugs is You put itinto a pharmacy, people come, you then

(41:48):
fill up a bottle, they take the bottlehome, they try to open it, sometimes
they can, sometimes they can't, andthen they have to combine it themselves.
But instead now the experience is, Ijust get the drugs I need in a packet,
label with when I want to need it.
So , there's one guy, second generationpharmacy, he comes up with this idea.
Which is a proximate idea anddoesn't require predictive analytics.

(42:10):
It doesn't require even softwareis just a packaging innovation.
And he builds the company and sellsit to Amazon for a billion dollars
after six years, a billion dollarsin value creation from taking
one small step towards proximity.
So, when we talk about these futures,know that this is a direction,
but even a small step in thatdirection can be hugely valuable.

Kaihan did I just figure out that you and I should have,
rather than spending all this timeto write the stupid book, we should
have just started packing pills.

pills.
Yeah, we

I thinking the same thing, man,

kaihan-kripppendorff_2_06-24-2024_124102: have. (42:43):
undefined

bring it to innovation and there, there's a piece where you
say, what's different from the past.
And I think.
You're talking through the lens ofproximity here proximity strategies
but i think these proximity strategiesare so valuable for any organization
that's grappling with change in thebusiness environment you say here that

(43:08):
proximity strategy strategies differ fromtraditional approaches by at least five
characteristics and please riff on thesemaybe expand on them for audience the
first is they radically outperformed thestatus quo from the customers perspective.
Number two they tend to open traditionalconstraints three they build presence

(43:28):
before markets have been clearly defined.
Very difficult for a traditionalcompany to do that because where is
the return on my investment for theenable adaptation as conditions change.
I'm five there designedwith ecosystems in mind.
These five points are massivewhen it comes to strategies and so

(43:49):
alien for so many organizations.

I want to pick on one comment you made about, um,
positioning before a market risesthat, that that's, you know, high risk.
It doesn't have to be.
And then I'm going to turn it over toKion cause he, he and I have built this.
Proximity strategy workbook, theappendix of the book where you
can go through some exercises and,and Kion's been implementing these

(44:13):
with some of his clients in theOutThinker network and elsewhere.
But, um, I want to pick on thisnotion of it's higher risk.
It doesn't have to be.
So what do I mean by that?
Um, pick cases, look for cases where Youalready know what customers are going to
want in the future, if they can have it.
And then when you have confidencethat if humans can have that,

(44:36):
they're definitely going to want it.
Then what you do is you builda business in the meantime,
that can make you some money.
You can learn, you can get into thegame and positions you to be the winner.
Long run.
The best example of this,and there are others.
The best example of this is Netflix.
So back in the mid nineties.
Mark Randolph and Reed Hastings said, youknow what we think humans are going to

(45:00):
want whatever video anytime, anywhere.
Now think about that.
You don't need to do research todiscover that humans are going to want
to watch any video anytime they want to.
Do you really need a focusgroup to figure that out?
Of course not.
It's definitely going to happen.
Now the question in the mid ninetieswas who's going to be able to do it.

(45:20):
The technology wasn't ready.
The bandwidth didn't exist.
The content owners.
Weren't ready to play ball.
So Mark and read, and I don't know read,but I've interviewed Mark a couple of
times about this strategic journey.
And he confirmed that this wasexactly what they were doing.
They said, we know this is coming,but we can't do what became

(45:40):
called video streaming becausethe tech isn't good enough yet.
So let's get in the game.
And that's where DVDs by mail came from.
So was it risky?
Sure, it was risky, but there was abusiness model with a real product
and service and dollars behind it.
So they were able to build a realprofitable business, very profitable
that positioned Netflix to be the leader.

(46:02):
When streaming eventually rose andit did so with proximity and with
digital technologies, there are so manythings that we can say, you know what?
Humans are going to want that.
It's just a matter of beingproperly positioned to give it to
them better than everybody else.
, Kion, share with some of the experiencesof, , , maybe one of the exercises
that we propose to help peoplediscover their proximity strategy.

Recognizing that, , it doesn't have to be risky and that there
could be near term moves that you can makethat will be immediately valuable., , it
is worth starting right now to do this.
And we found four stepsthat are really helpful.
Step one is what we callenvision P equals zero.
This is this hypothetical momentin your industry when need arises
and you are already there with thesolution, creating the solution then.

(46:49):
Let's take food, hunger arisesand you, , want a cracker, right?
What has to happen?
Right?
The, the, the, the.
The, the wheat has to get grown.
It has to get picked.
It has to get processed.
It has to be formed.
It has to be shaped.
It has to be baked and ithas to be provided to you.
. How could all of that happen now?
So that vision P equals zeronext is identify the barriers.

(47:10):
There's some barriers that are physicalbarriers that are physics barriers.
Some of their biological barriers.
How long does it take for wheat to grow?
For example, where doesit grown, et cetera.
, and some of them are justindustry norms, right?
All the farms exist here.
, we ship it on this type ofthing and it takes this long.
, some of our regulatory barriers,we generate all the barriers that
stand in the way of the currentstate to this ideal future state,

(47:33):
hypothetical, perfect future state.
And then you say, what are thetechnologies that are available?
Proximity technologies or trendsthat will remove those barriers.
Wake where could 3d printing play a role?
Where could.
Controlled environment, farming,, agriculture play a role, right?
And you can map those two.
, you can come up with thoseand then you map the two.

(47:55):
Where is there a technologythat can address a barrier?
And that gives you a long list ofpotential innovation opportunities.
And then you sort through them and thenyou identify what the high priority,
what are the, what's the easiest, highestimpact ideas that we could pursue.
And then, You start moving early on those.
, and then you also have a big backlog ofinnovations that you could be working on.

(48:18):
But this is a way to stop you fromthinking, gee, one day, you know, when
we go to Mars to here's a list of verypractical things we can start doing
now and a longer list of things that wecould have in a pipeline for the future.

yeah, and it's critical for business leaders, , clearly to
have practical things they can do inthe near to medium term future, but
it's also critical that they spend sometime thinking far out about the crazy
future, not because they're going towaste a bunch of time and money on it,
of course, not having better foresightis spending a little bit more time

(48:53):
thinking about the further future.
, and then as Kaihan said, this helps leadyou to a whole bunch of very practical
things you can do in the near term.

I'm bringing a full circle to your work as an investor as well as
that you know when you dabble in investingin some of these call them horizon
three technologies that are far away.
I'm not yet mature you may get aposition on that board or you may get
some more knowledge from that becauseyou have to because you've invested in
it and you can learn by dancing withstartups for example or change their

(49:26):
shifted in the environment beyondyour own capabilities i think that's
one of the things Many organizationsmiss is the idea of the ecosystem, , so
playing with startups and playing , withbudding entrepreneurs and backing
their early ideas to learn from them

Absolutely.
Well, and I take some with the notionthat I'm dabbling in my, uh, my wife hopes
that I'm not just dabbling, but, uh, Butover, over the past decade, we've built a
portfolio of now over 30 companies, most,not all, but most of whom, most of which
are leading the proximity revolution.

(50:01):
And one of the things I look for whenI'm looking at potential early stage
investments is the two criteria.
They're the obvious criteriathat everybody looks for.
Like, do I trust the team?
Do I think they have the, the attitudeand the skill and the capability to
really turn this into something, thatsort of thing, but to proximity related.
Questions.
One is.
Are they doing something that'sdriving the proximity trend?

(50:25):
And two, is it something thatincumbents in that industry would
find very hard to do on their own?
If I look at something and say, yeah,yeah, that's driving proximity, but
you know what, if Coca Cola decidedto do that, or if IBM decided,
I'm going to do that next week.
Then I'm less interested, but thereare lots of examples of things where

(50:47):
could Coca Cola do it if they want it.
Sure.
But would they probably not, you know,because it's going to be a huge risk.
It's going to be a lot of capital,a lot of iteration on stuff.
That's not their core.
So, uh, so yeah, venture investing inthis environment for an established
enterprise is a strategic weaponand companies need to get better

(51:07):
at understanding how to do that.

Before I finish, I just want to tell our audience, I have a copy
of the brilliant proximity up for grabs.
Just sign up to our sub stack where youwill be in with a chance to win a copy
of proximity also to let you know i ama subscriber to kaihan sub stack it's
a brilliant sub stack, and i linked toit from the innovation show sub stack,
robin kaihan where is the best place forpeople to find you to find out more about

(51:32):
the book but also find about you guysand indeed rob you mentioned there for
example you're venturing that you don'tdabble and that you take very seriously,

So, uh, the book you can find at proximitybook.
net, proximitybook.
net or Amazon, anywherefine books are sold.
, myself, I'm always on LinkedIn, Robert C.
Walcott and at twinglobal.
org.

I think the best way to reach me is on LinkedIn and I'd look
forward to connecting with you there.

Authors of proximity, Rob C.
Walcott and Kaihan Krippendorf.
Thank you for joining us.

Thank you.

Thank you.

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Rob C. Wolcott and Kaihan Krippendorff - The Proximity Revolution

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Rob C. Wolcott and Kaihan Krippendorff - The Proximity Revolution