Technology & Innovation…… The past, the present and the future…..?

Andy Button

Divisional Technology Banking Manager

HSBC Bank plc

InfoLab21 : Technology Matters

6th September 2006

The Global Business Environment

• The Internet

• Location irrelevant

• Productivity

• Network-centric not location-centric

• Think globally, act locally

Globalisation• E-Commerce markets are not the same as old markets!!

• Networked markets can change suppliers overnight!!

• What happens to markets happens amongst employees!!

• Markets know more about products than companies do!!

• Markets are smarter, faster and more informed!!

• Exponential change is like a runaway train…….by the time you see the danger, it’s too late!!

(kind permission of Peter Cochrane)

The Knowledge Economy

• Science & Innovation Investment Framework - Chancellor July 2004

• £185m (124 awards) over next 2 academic years under HEIF 2

• R&D spend to increase to 2.5% of GDP by 2014• Wellcome Trust expects to commit £1.5bn in UK

over next 5 years• Technology & Innovation accounts for 8% of GDP

What is Innovation?“The commercial application of new ideas”

• USP provided by science/technology

• Invention + entrepreneurship– more growth in last 150 years than previous 1000

• Contrast China 7th - 12th centuries– invented paper, movable type, clocks, gunpowder– but government prevented wide exploitation

• Japan 1950-95: 55% of tech came from UK

The Knowledge Economy

• Science & Innovation Investment Framework - Chancellor July 2004

• £185m (124 awards) over next 2 academic years under HEIF 2

• R&D spend to increase to 2.5% of GDP by 2014• Wellcome Trust expects to commit £1.5bn in UK

over next 5 years• Technology & Innovation accounts for 8% of GDP

Microsoft Corporation 1978

“I went to my bank first and met a very nice chap,

very friendly. It turned out he was normally doing

things like lending money to people to set up

newspaper shops. He did not really feel qualified to

comment on my adaptive non-linear pattern

recognition technology. But he did give me a good

piece of advice, which I carry with me even now,

which is that people will always buy

confectionery.”

Mike Lynch CEO and founder of Autonomy.

5 Dec 99

The Empathy Gap

Business Characteristics

• High growth rate

• Fluctuating cash needs

• Business inexperience

• New market/technology

• Low fixed assets ratios

• High gearing ratios

• Steady growth forecasts

• Stable cash-flow forecasts

• Track records

• Documented market

• Good fixed asset ratios

• Low gearing ratios

Banks Prefer

Start-up Investment Profile

“Seed” 1st Round 2nd Round Mezzanine IPO

Venture Capital

Investment Banks

ValueRisk

Friends & Family

Angel Investors

Time

Equity Gap

The Business Plan

Choose a card …….

keep it in your mind for a

few seconds…………..

The Business Plan

Card has disappeared!!!!!!

The business plan should contain realism

- avoid “smoke & mirrors!”

Understanding the Technology

Does it work?

USP/ How innovative?

Market?

Timeliness?

Longevity?Family of products?

Management? IPR?

Priority

Risk

“The Present……. ”• Wireless technologies - Bluetooth, Wi-Fi & 3G• Broadband - networks & infrastructure/ ASPs• Network security - viruses• Smart card technologies/ biometrics• Radio Frequency products• Nanotechnology• Biotech (drug discovery, diagnostics & devices)• “Green” & Environmental - Renewables• Digital Media & Software

Famous past quotes……!!!!!!!!

• “I think there is a world market for maybe five computers” (1943)

• “Computers in the future may weigh no more than 1.5 tons” (1949)

• “But what………is it good for?” (1968)

• “There is no reason anyone would want a computer in their home” (1977)

• “640k ought to be enough for anybody” (1981)

The Future……?• VDU displays will come in rolls like wallpaper

• Quantum computing

• Utility computing

• Omnipresent Computing

• Telephone communications will be virtually free

• Desert Reclamation including new megatechnologies

• Ocean Farming

• Genetics will give new biomimetic materials and “designer” foods

• Expert systems will redefine artificial intelligence

• Micromachines

• Automated Transport Systems

• Virtual reality

And finally… • Reliability

• Resolution

• ‘Rchitecture

• Route

• Risk

• Reward

“If you do not change direction, youmay end up where you are going”

Lao Tzu

(604 -531 BC)

Why the business plan?

Technology & Innovation…… The past, the present and the future…..?

Andy Button

Divisional Technology Banking Manager

HSBC Bank plc

Thank you.