Enterprises are under tremendous pressure to transform, innovate and become highly competitive as they face growing competition from companies that don’t even come from the same domain.
For instance, a traditional car manufacturer is probably more wary of the competition from Uber (that doesn’t own even a single car) or Google (a non-manufacturing technology company that is betting big on self-driving and driverless cars) than another car manufacturer. Similarly, a bank’s next big competitor is possibly not another bank but rather a telecom company or a digital wallet company that doesn’t own even a single ATM or bank branch.
Just to give you a sense of the hyper competitive landscape that has emerged – some of the companies that have today become unicorns and transformed industries intrinsically didn’t even exist 10-15 years back. And, most of these are born digital companies without any assets and still they are valued significantly.
Hence, the next big worry for the so-called traditional companies is how to really gear up to face competition when they don’t even know where their next big competitor going to come from, possibly from a different industry altogether.
According to Shree Parthasarathy, Chief Innovation Officer & Cyber Risk Services Leader – Deloitte (India & South Asia), “Most companies as they grow tend to become complacent. The mindset is I’m delivering a great product/service and nobody can possibly shake me out of this. And then, in comes a new company silently disrupting the entire landscape. Having the agility to spot these particular opportunities and spin off new business models or at least test them out is what will help businesses get out of the rut of complacency.”
This is where the ability to constantly think out of the box and embedding a culture of innovation within the organization is going to be absolutely critical.
Parthasarathy, a highly regarded authority and leader on innovation, spoke to me at length about what keeps innovation ticking. He made some very critical and pertinent suggestions for organizations to boost innovation. Some pointers from a detailed chapter in the book ‘Accelerating Enterprise Innovations’ are listed below.
Right Organizational Structure
Businesses need to build a conducive organizational structure, where on one hand you have business as usual and on the other you have an organization that is constantly innovating and providing an impetus to business as usual to think different and out of the box. This way, while you’re planning your steady-state business, there’s another group working on the innovation piece with the right level of sponsorship and governance so that it can go all the way to the top. It is not that you’re doing innovation for the sake of it, but actually embracing and doing something that is different.
The business as usual group is pressurised significantly from the perspective of revenue, bottom line, etc. So, the question is that you have to be looking at is how innovation can influence these particular parameters and make a difference for business as usual while it is also trying to spawn off new things.
While it is recommended for the innovation and business as usual pieces within the company to remain two distinct groups, at the end of the day they really need to integrate. Innovation in the digital era has to be seamlessly integrated into everything that is happening in terms of your current business – any solution you want to create, any transformation you plan to do, any new technologies you want to bring in, and so on.
Identify the Layers of Innovation
To ensure effectiveness of the innovation efforts spawned off within your organization, whether internal facing or external facing, one needs to look at it in three layers.
Layer #1 is the core, wherein the innovation should target to make the core more efficient, effective and better. While you can innovate there, those are very incremental elements.
Layer #2 is touching the periphery of the core, wherein innovation should look at adjacent things, which you can possibly touch and feel. For instance, can you bundle services together to make a better value-added service or can you create a new service that you hadn’t thought of before.
Layer #3 is looking at innovation from the perspective of radical transformation in terms of new business models and new areas of thinking.
Overall, as you look at innovation you need to sit back and think as to what is it that you’re doing currently, what are you really known for, how do you then essentially look at change, making an impact/change in those particular services, and then how do you take it up the value chain. It’s not real innovation looking within your organization alone. You have to look around at your alliance partners, your ecosystem, startups, academic institutes, which is what will expand your horizon and bring in a lot of fresh ideas.
Use Digital to Give the Right Push
If fact, some of the ideas already exist. They just need to be thought out of the box. For instance, drones may not be completely viable in India currently because of aviation authority regulations. However, you can use these in a controlled environment, such as a factory. For instance, Deloitte is already using drones for survey for its audit business for greater efficiency.
So, it’s a question of how do you look at some of the new age digital technologies like AI/ML, IoT, analytics, mobility, cloud, AR/VR and apply them in a way where it brings in greater efficiencies into your existing operations or creates new opportunities to create new services. If one continues to stick to one area, it may be niche, but up to what point in time? Ultimately, somebody else is going to possibly come and take that opportunity.
While the innovation needs to be driven from the CEO office, for it to be truly transformative in the digital era, I would recommend a multi-faceted approach where innovation is spawned at all levels – top-down and bottom-up, inside-out and outside-in. In all this, CIO and the CDO really need to reinvent their roles to be able to keep up with the innovation, else run the risk of becoming redundant.
Data at the Core
Organizations need to invest in innovation around the next-gen, which is where a lot of them will possibly be left out and go down the slow moving path to extinction, if they don’t. Most significantly, they will need to invest in building capabilities around the massive data volumes finding way into businesses today as the core of all their innovation efforts.
The data explosion, which has already started will only get bigger and inability to grapple with it can prove to be disastrous. The thing with the power of data is that it has the capability to be the bane of your existence, because there may be some critical data that you may not have purged which can possibly hurt you as well as the force of transformational opportunity that you were missing. Which way you tread will be determined by your ability to manage the data effectively.
Amidst the ongoing digital disruptions, businesses across the entire ecosystem will need to re-look at their talent pool, service portfolio, revenue model, customer interactions and customer touch points to stay relevant. Most importantly, the people working in this value chain will be the ones most disrupted. Hence, organizations need to focus on up-skilling and cross-skilling their people and continue to build agility within the organization to move forward and move fast.
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