Many large, successful companies are creating offices in California's Silicon Valley to spot big, new trends and learn how they can transform their organizations in ways they couldn't otherwise imagine. It's no longer good enough to wait for change to come to your industry; you need to be out there where it's happening. And a lot is happening in Silicon Valley, which has shifted from 'high-tech' capital of the world to 'industry disruption capital of the world'. Join global strategy expert Mark Zawacki as he discusses some of the latest learnings from Silicon Valley.

1. C O N F I D E N T I A L© Copyright 2012 – 2014 650Labs. All Rights Reserved.
Silicon Valley Wants It All
Why Non-Tech Companies Globally
Need to Think Harder Than Ever
About Silicon Valley
September, 2014

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Silicon Valley has made a big shift …
From “High
Tech Capital of
the World”
To “Industry-
Disruption Capital
of the World”
 Makes technology-
based products
 Sells IT to
businesses
globally
 Arms merchant
 Builds disruptive
businesses
 Competes with
businesses
globally
 Mercenary

3. Page | 2© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
… and has already disrupted several industries in very
significant ways
Industry Disruptors
Revenue
Disrupted Disrupted
1. Mobile
Handsets
$ 75B Motorola, Nokia, RIM, mobile
operators
2. Advertising $ 45B Broadcast & print media,
big brands
3. Music $20B Music retailers, distributors,
labels
4. Movies $ 6B Movie retailers, content
creators
5. Hospitality $ 6B All major hotel chains
globally
Five Examples:

4. Page | 3© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
The incumbent CEO’s dilemma: Software Is Eating
The World
What’s the most
unsettling scenario if
you’re the CEO of large
incumbent in a slow-
growth mature industry
somewhere in the world?
How about a well
planned, focused attack
by a fully-funded, below-
the-radar disruptor that
simultaneously …
 Your move
… Takes on the risks of re-envisioning how your industry
can operate and grow
… Builds a product or offers a service that is deemed
‘much better’ by your customers than your current offer
… Focuses on efficiently tearing away your most
profitable customers with a better value proposition
and/or business model
… Undercuts your cost structure with advanced
technology and/or business model innovation
… Hits you with sustained force sufficient to inflict major
damage
… Outflanks your every response with a superior battle
plan and strategy
… Not constrained as you might be by a bureaucratic
culture, lack of an innovative culture, high cost
structure and being slow to competitive responses

5. Page | 4© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
Software
Is Eating the
World…
Source: Why Software Is Eating The World by Marc Andreessen, Wall Street Journal, August 11th, 2011

6. Page | 5© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
Construction of Valley Vertical Ecosystem
Big / ‘Traditional’ Silicon
Valley Companies
High Growth Startups
Global Multinationals

7. Page | 6© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
In Silicon Valley, a ‘5-layer’ mobile cluster of 1,000+
companies focused on innovation/disruption has taken root
500+ mobile centric startups in
Silicon Valley combined with:
50+ non-Valley mobile
companies who have set up a
strategic presence in the Valley
combined with:
Every major traditional Silicon
Valley company with a
compelling/viable mobile-centric
strategies combined with:
25+ leading mobile operators
globally all with a strategic
presence in Silicon Valley
combined with:
Two Silicon Valley juggernauts
who have fundamentally
transformed the face of mobile
globally:

8. Page | 7© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
Equally, there is a formidable retail & CPG cluster in Silicon
Valley
Hundreds of retail startups have
been funded in Silicon Valley:
Large CPG companies from
throughout the world have
opened a strategic presence in
Silicon Valley:
Large retailers from throughout
the world have opened a
strategic presence in Silicon
Valley:
Dominant Silicon Valley
juggernauts themselves are very
active in retail activities:

9. Page | 8© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
Example: In Silicon Valley, a 1,000+ company financial
services cluster focused on disruptive innovation has taken
root
10+ financial services centric
companies who historically
happened to be headquartered
in Silicon Valley, combined
with:
25+ traditional ‘tech
companies’ with a strategic
Silicon Valley presence who
recognize the utter importance
of the financial layer, combined
with:
700+ Silicon Valley startups
broadly in the financial services
space, combined with:
20+ financial services
multinationals who have
opened a strategic presence in
Silicon Valley

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Massive Sharing, Ideas Competing, Massive Learning,
Fast Cycles – ‘Ideas Cross Pollinating’

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Scouting &
Business
Development
This is the most prevalent type of non-tech activity in SiliconValley.The company
is scouting for innovation trends and their impact on their business, conducting
business development, meeting with and evaluating interesting startups, driving
alliances, gaining insights what the disruptors are up to, etc.
Build Stuff This activity tends to be focused on application or product development,
prototyping, etc. For instance, DeutscheTelekom has 20+ software developers in
an office across the street from Google.Their focus is related to Android and it’s
success inside DT.
Research Stuff Several companies have pure research teams in SiliconValley working on advanced
technologies that have very long lead times to get to market.These pure research
offices generally work closely with Stanford, MIT, etc.They attend academic
conferences, etc.
Venture
Investing and
M&A
Some companies elect to participate via venture investment funds, both on and off
balance sheet approaches. Some companies are making direct investments in
startups; typically more for strategic insights and staying close to innovation vs. a
purely financial returns. e.g. AmEx, Citi and BBVA doing venture investing.
Culture
Vultures
Looking at SiliconValley best practices for hiring & retention, leadership
development, organizational design, innovation, etc. and trying to replicate those
best practices back at HQ.
Five ways non-tech companies tap into
Silicon Valley by opening a strategic outpost

12. C O N F I D E N T I A L© Copyright 2012 – 2014 650 Labs. All Rights Reserved.
Further Reading: http://www.650labs.com/disruptor-proof-points/
maz@650labs.com
@markzawacki
#650strategy
Thank You!’

13. Page | 12© Copyright 2012 – 2014 650Labs. All Rights Reserved. C O N F I D E N T I A L
“Here's to the crazy ones, the misfits, the
rebels, the troublemakers, the round pegs
in the square holes ... the ones who see
things differently – they're not fond of
rules ...You can quote them, disagree with
them, glorify or vilify them, but the only
thing you can't do is ignore them because
they change things ... they push the human
race forward, and while some may see them as the crazy ones,
we see genius, because the ones who are crazy enough to think
that they can change the world, are the ones who do.”
– Steve Jobs