In the year In early 2020, as scientists raced to develop a vaccine against the SARS-CoV-2 coronavirus that causes Covid-19, it seemed like a long needle. The fastest vaccine ever developed was for measles in the 1960s – an effort that took 48 months. And yet, just nine months later, in December 2020, American pharmaceutical giant Pfizer and German deep-tech startup BioNTech developed the first Covid-19 vaccine, proving the new technology of mRNA-based vaccines.
The first studies on DNA vaccines began more than 25 years ago, and the science of RNA vaccines has been developing for more than 15 years. One result was mRNA technology, which combined advances in synthetic biology, nanotechnology, and artificial intelligence and transformed the science and business of vaccines. Pfizer generated nearly $37 billion in sales from its Covid-19 vaccine last year, making it one of the most profitable products in the company’s history.
Like Pfizer and Moderna in the pharmaceuticals sector, many corporations in other industries – such as Tesla in cars, Bayer in agrochemicals, BASF in specialty chemicals, Deere in farm machinery and Goodyear tires – rely on deep technologies. Deep Tech, as we call it, is a problem-based approach to tackling big, hairy, bold and wicked challenges, combining them with modern digital technologies like AI and, more recently, quantum computing. .
Deep tech is increasingly at the forefront because businesses need to develop new products faster than ever before; to develop sustainable products and processes; And to be more future proof. Deep Tech can generate enormous value and provide companies with new sources of profit. In fact, Deep Tech will disrupt incumbents in every industry. Because the products and processes resulting from these technologies will be transformational, creating new industries or fundamentally changing existing ones.
Early examples of Deep Tech-based products are already available. For example, the use of drones, 3-D printers, and syn-bio kits is proliferating, while no-code/low-code tools are making AI more accessible. Companies are opening up more ways to integrate new technologies and encourage more innovation. Incubators and accelerators have sprung up around the world to speed up their growth in a surprising way. Today, many deep tech startups are not only ready, but launching successful innovations faster than ever before.
It is dangerous for CEOs of incumbent companies to count on a wait-and-see strategy. Companies need to find ways to immediately tap into the potential of deep tech before they are disrupted by them – just as digital technologies and startups disrupted business not too long ago. Unlike digital disruption, the physical-cum-digital nature of deep tech offers incumbents a golden opportunity to shape the evolution of these technologies and use them to their advantage.
Established giants help deep-tech startups scale their products, especially complex and costly physical products, by leveraging their expertise in engineering and manufacturing at scale and providing market access. And since incumbents are already at the center of global networks, they can navigate government regulations and influence their suppliers and distributors to move to an infrastructure that supports the new processes and products. As the Pfizer-BioNTech case shows, doing so unlocks enormous value.
Most incumbents recognize that Deep Tech poses two serious challenges at first. First, it is not easy to identify or evaluate the business opportunities that new technologies create. Two, it is equally difficult to develop and deploy deep tech-based solutions and applications, which often require engaging and encouraging collective actions with the ecosystem. To master the twin challenges of deep tech, CEOs should keep three starting points in mind.
Back molding
Although complex, conventional technology forecasting leads to straightforward predictions and tacit thinking; It does not take into account how technologies change and accumulate. For this reason, most forecasts estimate the speed at which technologies will migrate and when a business will be able to use them. That’s why companies need to use “retrospection,” a technique described by John Robinson of the University of Waterloo in the late 1980s.
Instead of following the progress of many technologies, business is better off focusing on the world’s greatest needs and pressing problems, identifying the long-standing conflicts and controversies that have remained unresolved until now. They then describe a desirable future in which those issues are resolved, and identify the technologies and their combinations to make the solutions feasible and commercially viable. Backcasting helps companies capture both short-term and long-term changes in technology, making Deep Tech easier to manage.
The Anglo-American think tank Rethink X, for example, has used a framework of predicted technological disruption, prioritizing hindsight, to highlight the implications of creating a sustainable world. The analysis suggests that a combination of eight new technologies and emerging technological changes in the energy, transportation and food sectors could eliminate more than 90% of net greenhouse gas emissions within 15 years. Similar technologies make the cost of carbon removal affordable, so in the medium term additional new technologies may not be needed.
Measurement change
As companies assess the business opportunities that deep technologies open up, they must consider the scope of the changes they will bring. It depends on the complexity of the technology and the ability to scale solutions based on the business. As Arnulf Gruler, head of the Austria-based International Institute for Functional Systems Analysis, and his colleagues argued six years ago, new technologies can bring about four stages of change. You can:
1. Improve the existing product. For example, sustainable biodegradable plastic can replace conventional plastic packaging.
2. Improve the existing system. Nanomaterial composite paints and AI-enabled smart home systems, for example, can dramatically transform homes.
3. Changing the system. From hydrogen production to gas stations for hydrogen-powered cars, developing the ecosystem could transform urban mobility.
4. Changing the gender system. Creating purification technologies that change the current water supply and management system will also change industries that use water, such as agriculture, alcohol, beverages, paper and sugar.
Knowing which of the four stages of change is most likely to occur helps companies better assess market size and growth directions. BCG’s recent assessment of the market size of deep-tech solutions in nine sustainability-related sectors, for example, found that technological improvements in existing value chains generate more than $123 billion in additional revenue per year, while system change generates 20 times more. Or up to $2.7 trillion a year.
Developing ecosystems
Few companies have all the technology and skills in-house they need to deploy Deep Tech. To develop those competencies, technology-related ecosystems, from academic and university departments to investors and governments, must be supported. The types of relationships that are created depend on the business opportunity and the maturity of the ecosystem.
Many types of collaboration can be created. It’s clear that some incumbents are teaming up with startups, as Bayer did in 2017 with a joint venture with Ginkgo Bioworks to synthesize microorganisms that allow plants to produce their own fertilizer. They coordinate other system changes, which Hyundai Motor Group is trying to do in the field of activity in cooperation with several Deep Tech startups. Others may focus on nurturing deeper technologies to mature themselves in their efforts to expand sustainable steelmaking, including fossil-free electricity and green hydrogen replacing coal with Sweden’s SSAB (formerly Swedish Steel), Vattenfall and Finland’s Elkeb. .
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Deep technology was impossible yesterday, it’s simply not possible today, and soon it will be so pervasive and influential that it’s hard to remember life without it, says Michigan State University’s Joshua Siegel. The future may lie not only in pursuing Deep Tech, but in companies driving its adoption by investing in its development and interacting with the ecosystem, forcing competitors to play a losing strategy.
Read another Chance Columns by François Candelon.
It’s Francois Candelon. BCG Executive Director and Senior Partner and Global Director of the BCG Henderson Institute.
Maxime Courtaux is a project leader at BCG and an ambassador for the BCG Henderson Institute.
Antoine Gorevich is a Managing Director and Senior Partner at BCG.
John Pashkewitz is a partner and associate director of BCG..
Vinit Patel is a Project Leader at BCG and an Ambassador for the BCG Henderson Institute.
Some of the companies featured in this column are past or present clients of BCG.
Opinions expressed in Fortune.com comment sections are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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