Q&A: Why innovation is so difficult, and what can be done about it

1. What are some ways in which enterprises find, test, and integrate innovative software solutions today?  

There are several methods that enterprises use to find new innovations. Some bigger corporations choose to open or partner with an innovation lab, incubator or accelerator. Those with in-house innovation labs have a designated team to develop ideas and test them within the confines of the corporation and partnering with an incubator or accelerator provides access to a large body of cutting-edge solutions to hand-pick from. While these options often yield valuable results, they require much care, time, and many resources to operate. 

For the majority of enterprises, finding solutions in the open market and then testing them is the main way innovation is accomplished. Companies scour the open market looking for startups and independent software providers with solutions that meet their needs, or are approached directly by solution-providers that think they can be of service. 

Once an enterprise finally finds a solution it thinks will fulfill its needs, it runs a proof- of -concept (PoC), a process that entails creating a dedicated testing environment to examine the solution, running tests, and analyzing the results, before choosing if and how to continue to integration.     

2. Why is this a concern? What are the current pains that are associated with innovation?    

Tapping into incubators, accelerators, and innovation labs is beyond the means of most companies, and therefore not a viable option for innovation. The entire PoC process, on the other hand, is fraught with complexity, a mismatching of needs, lack of information, and false advertising of solutions’ capabilities that can stall the process (deliberate or not). Because of this, many enterprises resist undertaking the process unless absolutely necessary, causing them to miss out on opportunities for advancement.

Even when they do finally decide to search for solutions in the market, the procurement and integration process is tedious and costly.  The first step, finding solutions to test, is like trying to find a needle in a haystack, especially considering that even if they find a potential software that could be a fit, it may not actually be ready for implementation yet.

Setting up a sufficient testing environment is costly in terms of money, time and manpower, and even once a successful PoC is completed and the enterprise chooses to use the solution, the actual integration itself is a nerve-wracking experience, as it is near impossible to know if the solution will mesh easily with the system and scale effectively, or if it will crash the system. There is nothing more discouraging for an enterprise than allocation the resources and putting in the effort, all to get nothing out of the process, or worse – get a half-cooked, unstable solution implemented.   

3. Why do more conservative, established industries face more innovation roadblocks? Can you provide some examples?    

For well-established industries dealing with sensitive information, such as finance or healthcare a more pressing concern is the slew of restrictions they face. An abundance of red tape, often in the form of legal and security restrictions, shapes internal policy, and executives fear overstepping the law by being too adventurous in their quest to stay ahead.  In terms of what this means for the software-testing process, these companies fear granting access to their assets to external parties, and therefore will want to create a separate testing environment to avoid having to do so, consuming even more time and resources. Many times, however, they just avoid issues altogether by choosing not to pursue innovations.   

Due to this, many of these industries were slow to undergo the digital transformation taking place nowadays. Until very recently, if someone needed financial services of any kind they had to physically go to a bank. It was only when the financial sector realized the inevitability of rise of online banking and financial that they felt compelled to innovate as quickly as possible, despite the hurdles.   

4. How are conventional enterprises, such as banking, insurance, and healthcare, reacting to the entrance of startups and other digital threats into their industries?    

The biggest industries were once characterized by a handful of central players, but now any small vendor can offer a specialized service. For example, the insurance industry has long been dominated by a relatively small list of providers, but now, smaller providers can offer highly tailored, user friendly services, at a fraction of the price. The competition is no longer merely amongst a select group of “peers,” and so now behemoths are taking steps to ensure that they can offer similar services to what the newer, smaller startups, who they would never have noticed before, offer. With the new nature of the competition, they are not merely at risk to lose customers, but to become obsolete.   

Even the traditionally slow moving sector of manufacturing has had to adapt. Once, all a manufacturer had to do was ensure that their machinery and methods were sufficiently productive to meet the demands they were facing. However, with the rise and accessibility to advanced business intelligence platforms, competitors who are no match when it comes to scale, are competing for the same contracts, utilizing data and technology to compensate for mass. 

5. During the process of innovation—when enterprises find, test, and integrate solutions—do startups run into the same obstacles as enterprises?    

When enterprises innovate, startups find themselves on the other side of the equation—they must find ways to show their solutions and then prove their worth. This process comes with its own, unique, set of complications. First and foremost, startups spend their very limited resources attempting to attract the attention of enterprises and develop partnerships instead of allocating that time and money to perfecting their products. Once they do attract the attention of an enterprise, and decide to begin the PoC process, the lack of clear channels of communication means that opportunities stall or fall through the cracks.     

Once the testing begins, startups run into a slew of headaches. As we discussed before, enterprises create testing environments in order to protect their data and isolate testing from production. But creating testing environments and filling them with generated data is difficult and costly—startups commonly find themselves testing their products in environments that are either missing information or don’t accurately represent the enterprise’s system. They may find themselves set up for failure if not provided with the right information and materials to prove their solutions. Finally, if the enterprise lacks a system to fairly evaluate or compare the results of PoCs from different potential solutions, or lack a streamlined process for innovation altogether, they may inadvertently choose an inferior startup’s solution or decide to cancel a project altogether for reasons outside of the startup’s control.   

6. You’re in an interesting position to comment on innovation – as you facilitate it and can view it from a bird’s eye point of view. In your experience, in which areas is innovation most critical?    

I’ve spoken about traditional industries that are looking for innovation—such as banking, healthcare, and manufacturing—and their large bureaucratic corporations in dire need of adopting new technologies. These enterprises constantly find themselves limited by their size, traditional processes, and internal and external regulations. The changing customer base, an ever-growing population of users more familiar and comfortable with using technology in every aspect of their lives, as well as the entrance of startups in these fields, are forcing large enterprises to innovate in order to stay relevant.   

Most emerging technologies have the potential to revolutionize business—industries should be integrating Artificial Intelligence, Machine Learning, and other solutions into the way they offer services and create products. A critical innovation that should be a high priority for all corporations, however, is technology to leverage the power of data. Our world today amasses data constantly, and I have seen enterprises realize only recently that they are not organizing and analyzing all of their data in the most effective way possible. Data allows corporations to precisely identify weak points in the business, find growing trends, and optimize their infrastructure—passing up on these insights due to the lack of technology is simply unwise. With the growth of data analysis came better Business Intelligence technology. There is no reason any method or process should remain untested within an enterprise: Business Intelligence solutions should be integrated in order to evaluate all aspects of business operations constantly—legacy systems and the ill-placed loyalty to them weaken companies.   

7. What steps should companies be taking to streamline the enterprise innovation process? 

Streamlining enterprise innovation doesn’t happen from one day to the next—companies are slowly shifting their mindsets regarding innovation adoption towards embracing external solutions. Here are a few things to keep in mind:  

It’s a full-time project. Find a person who can keep their finger constantly on the pulse of innovation. The best way to make sure your enterprise’s technology is always up to date, is always knowing which solutions exist and what the technology landscape looks like outside of your industry.   

Think outside the box. Find creative ways to locate and test solutions. Not all solutions will come knocking on your doorstep, and having a multi-pronged approach to finding innovation, testing the solutions, and integrating the ones you choose, is worthwhile. Remember that innovation does not have to come from within, innovation labs and hunting for external solutions are not mutually exclusive, and not every external software vendor that you work with must be acquired.    

Adopt a “coopetition” strategy. Look for ways to work with the startups that are posing a threat, as they are clearly doing something right. Chances are they could benefit from working with a major enterprise, and a strategic partnership could be advantageous to both sides. 

Data, data, data. Taking control of your enterprise’s data by collecting and analyzing it will help your enterprise function more efficiently and effectively. Getting down to the details of the testing process, the better you know your data, the more realistically you can provide data for testing environment creation, yielding a more helpful PoC run and ultimately, a successful integration.  

8. What are the main benefits of using cloud-based testing platforms instead of testing environments in the enterprise’s IT infrastructure? 

Testing environments that form part of an enterprise’s IT infrastructure automatically opens the door to the IT system and offers access to external companies—placing data, systems, and other proprietary information at risk. Companies with especially sensitive data, such as health or financial records, must be extremely cautious to eliminate all vulnerabilities and possible exposure.    

Instead of forcing an enterprise to design extremely complex, isolated, testing environments, the cloud provides an invaluable wall of privacy and security. The cloud’s inherent, non-limited structure also allows enterprises to test multiple solutions at the same time, which creates better comparisons and metrics that allow the innovation scout to make the most educated decision when choosing a solution. Finally, cloud-based platforms are easily upgradeable, with predictive analytics and AI technologies that can be plugged in if an enterprise chooses to do so while running PoCs. Cloud-based testing environments simplify the process for enterprises and startups—allowing startups to access the testing environment without it becoming a headache for the enterprise, and providing the enterprise with precious peace of mind.      

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