Every year in Columbus, Ohio, TechTomorrow focuses on the trends and technology that are reshaping the IT and business landscape. The theme of this year's show, at Ohio State University, was sustained innovation, and specifically how organisations can embrace and profit from the four most important technology trends of the last 25 years: Social, mobile, analytics and cloud, collectively known as SMAC.
Many executives equate innovation to "crazy ideas that they will never do," Chris Potts, the noted author of The FruITion Trilogy and a business strategy consultant, told the 300-strong crowd.
Potts argues, however, that innovation isn't a single "thing" or project that you do and then get back to business as usual. Innovation is a mind-set, a continuous process of rebalancing a company so that it is alternatively more stable or more open to new ideas and experiences. And cloud computing and consumerisation are changing this balance for everyone, all the time. They are perfect storm of converging technologies – consumerisation is actually absorbing cloud computing as the main driver that companies need to be thinking about.
"The Internet did not kill the video store," said Potts of the recent announcement by Blockbuster that it will close all its remaining bricks and mortar stores; rather, "innovation killed the video store."
Blockbuster was bested at its own game by upstart Netflix as well as other Internet entertainment options such as YouTube, Roku, Apple TV and others. Once a very innovative company, Blockbuster got out of step with its market by becoming too stable. Stability is great for delivering existing products to existing customers, but innovation is about delivering the next generation of products to the next generation of customers while still executing on operations and processes that current customers value.
Potts points to the UK clothing retailer Burberry as a great example. In business since the late 1800s, the company still makes and sells many of the same styles it sold over 100 years ago. About a year ago, Burberry put out a profit warning and saw its stock price plunge very quickly as a result.
In response, the company set out to understand what it was missing. After a reorganisation aimed at putting more creative thinkers at the top, Burberry re-architected its customer touch points to be as seamless as possible. "Their philosophy is all about coherence of experience," said Potts.
In the States, this is called omni-channel, experiential or boundary-less retail. Today, Burberry's stock price is higher than ever.
Companies that "get innovation" strive to meet new markets head-on by embracing probability over predictability, and it all starts in the board room. Because failure is such an intrinsic part of the process (up to 70 per cent of new ideas end up being abandoned – even after significant investment of time and resources), for most companies, innovation has to come from the top down.
"This makes a lot of people in boardrooms uncomfortable," according to Potts.
Innovation can't just be the preserve or responsibility of one area of the company or one position in the C-suite. If the CIO is innovating, that affects the other roles. If the CMO is innovating that affects the CFO and CEO and so on down the line. The same is true if you bring in or change roles to reflect different responsibilities. The rise of the chief digital officer is a good example. What is this role? What will this person do? Whatever it is, it won't happen in isolation.
Because technological change and innovation is happening much, much faster outside the enterprise, the consumer is now in the driver seat. Companies will probably never again gain the high ground in this fight, so they must embrace the concept of innovating from the "outside-in" by looking to the market for inspiration, not just expecting the market to embrace whatever new or improved product they choose to foist upon it.
So innovating means figuring out what the market needs (and hopefully wants) and then designing to that experience. It's all about the experience today, not mere products or services. To capitalise on this shift away from traditional business models, successful companies will become "design experience-orientated businesses."
"What it takes now, without exception, is to design our enterprises from the outside-in," said Potts.
Speaking at the opening dinner the evening before the show, Battelle's Lisa McCauley, vice president and general manager, Cyber Innovations centre, echoed these same sentiments, citing "inclusive innovation" as one of the next waves that will reshape how companies engage with the world's 2.2 billion poor and underserved to better their lives and raise standards of living everywhere.
Packing giant Greif Bros. is a good example, she said. After a trip to Asia on which employees witnessed women carrying water in heavy old chemical containers, the company came up with a five-gallon backpack that also helps to sanitise the water during transport. The Greif PackH2O Water Backpack received Popular Science Magazine's 2012 Best of What's New Award. To date Grief Bros. has given away over 100,000 of its innovative backpacks.
Undoubtedly, this product could have been developed for a paying market first, such as backpackers or doomsday preppers (and could easily be converted for this market) but it was the experience of seeing people in need that drove the product's development, not profits.
So, if everything going forward is experience-first, how do you know if your organisation is innovating fast enough or in the right ways? Financial results are certainly a good measure. Are costs going down while profits go up? If so, this is a good indicator of being on the right path – at least for now.
"What's common to all of this is something the Romans gave us," said Potts, showing a slide of the oldest and longest Roman era aqueduct still in use today. "What the Romans gave to us is investing in durability, usefulness and beauty. When it comes to the enterprise, the beauty is in the [customer] experience. This focus on beauty is absolutely something people need to invest in."
Developing an innovative culture
From a cultural point of view, companies have to give innovators two things: The freedom to ask "stupid" questions and to fail without fear.
"Failure is a fact in innovation," said Potts in an afternoon breakout session titled the Culture of Innovation. In fact, Potts recommends his clients actually do exercises based around failure and how they will deal with it. Success is great, but failure is more common so embracing it is a natural part of the process that will yield great benefits.
Panellist Michael Luh, vice president of the Centres of Excellence and Innovation at steel cylinder maker Worthington Industries, always looks for outsiders for his innovation teams. He particularly likes people who are not subject matter experts (SMEs) in the areas he is looking to change.
"SMEs are great," agreed panellist and closing keynoter Srini Koushik, president and CEO, NTTi3, which focuses on open innovation to improve organisational performance, "but they don't ask dumb questions." And, often, some of the best insights come from asking very basic "dumb" questions. Koushik also employs Amazon founder Jeff Bezos' "two-pizza rule." If the team cannot be fed by two pizzas then it is too big.
For companies that have become overly stable and therefore, by Potts' definition, not very innovative, Luh recommends a tried-and-true formula to get back on the innovation track: Small wins. He also focuses on training mid-level managers, the sergeants of any organisation, in how to embrace an innovator's mind-set. This is critical since this is the group that will be tasked with embracing whatever changes are dreamt up at the top.
Ultimately, innovation comes down to people, said Koushik. You need to find people that celebrate learning over success, for example, as well as to free people from the fear of being judged, from the fear of the unknown, and also give them the tools they need to get going.
Koushik focuses on seven building blocks to do this:
1. Embracing creativity and playfulness.
2. Accepting failure.
3. Finding leaders who inspire and enable.
4. Accepting diversity of thought and experience.
5. Giving people the time to think.
6. Giving people the ability to experiment.
7. Embracing the willingness to change.
"If innovation is what you are trying to drive, you really want to look for people that act in a certain way," he concludes. "It's not about managers. It's about leaders."