All the corporate angst about disruptive business models and stealth competitors begs a simple question: how can established businesses take the initiative and innovate enough to remain on the offensive? Sparking the innovative process within organizations was the subject of a strategic briefing during the opening day of the Fusion CEO-CIO Symposium produced by WTN Media.
Perhaps the most important maneuver in dealing with disruptive online business models is getting out of the defensive crouch and initiating disruptive change. That means fostering a culture of relentless innovation, a task that CIOs are in a unique position to enable.
Several Fusion keynoters offered their insights on “The Art of Lighting the Match,” including Bentley Curran, CIO for Brady Corp., a Milwaukee-based manufacturer of identification products; Steve Cretney, CIO of the Monroe-based Colony Brands; and Peter Coffee, vice president and head of platform research for salesforce.com.
The key is keeping the innovation fires burning, especially as it relates to the customer you haven’t been able to get. Coffee believes that most companies are too focused on the dissatisfactions of their present customers as their guide for product improvement, rather than constantly asking themselves what they’re failing to do for everyone else. “When companies ask the user of version N what they’d like in version N+1, they can’t be surprised if they’re told to do things better, faster, cheaper,” he noted. “It’s today’s non-customer who’s most likely to say, `You need to give me something different.’
“Existing customers will ask for more than they have, for less than they now pay, even though each successive improvement in any given technology almost always entails a bigger price for a smaller gain.”
According to Coffee, some research has put forth algorithms that purport to give an early warning of disruption. In one case study, researchers claimed that their method would have warned Sony not to make another round of investment in its Trinitron picture-tube technology, which put Sony behind the curve of flat-panel adoption in the marketplace and forced it into an uneasy relationship with Samsung.
In every business, Coffee says it takes real effort to ask if something is being done better than necessary, at increasingly unreasonable cost, while things that are not being done at all are perhaps the more important opportunity for new accomplishment. He believes the essential questions, which can be answered through an organization’s innovative focus, are as follows:
- Who is not my customer today, and why not?
- What are my customers doing today with someone other than me, and should I be doing that?
- What can I do for my customer that has low cost for me, and high value for my customer?
“These are three questions that I believe will lessen the likelihood of being on the wrong end of disruption,” Coffee states.
Coffee offered this insight, using Google as an example of a proactive disruptor. He acknowledged that it took him awhile to figure out why Google wanted to develop autonomous, self-driving cars (powered by the software Google Chauffeur). In time, he said became clear to Google management that their organization is more than a search engine, it’s an advertising company, and the last frontier of advertising is people driving in their cars.
“People consume location-aware content in environments where they have nothing else to do,” Coffee said. “Of course Google wants to have autonomous cars. It’s the western frontier of advertising.”
To be the disruptor and not the “disruptee,” Cretney and Curran described how they light the match in their organizations, and how they remain capable of adaptation and change. It starts with shedding the tunnel vision that leads to petrified attitudes reflected in statements like “Our customers don’t ask for that” and “That’s not our business model.”
Curran used the term “disciplined adoption” to describe the process of innovation at Brady Corp. It’s an iterative process that involves establishing a hypothesis, testing (including agile testing), learning, and perhaps most importantly, being unafraid to fail.
“The hardest thing is to admit failure,” he noted. “That iteration is difficult for people.”
Cretney was in complete agreement, stating the process at Colony Brands is about “testing, testing, retesting, and validating.” Sometimes, he added, “you will find your belief system is wrong. We don’t just shoot cannon balls.”
Coffee said overcoming the fear of failure would remove a frequent barrier to innovation. In his view, the phrase “this didn’t work” has to be regarded as making a contribution. “The purpose is learning, not punishment,” he counseled. “You’re doing this to learn, not to find the guilty parties.”
The key to selecting the right projects is to focus on delivering better business results, Curran stated, not on tasks like generating more sales leads. His advise is to base the project on the question: “What result are we trying to improve? To maintain focus, consider naming projects after the desired business outcomes.
Instead of an annual process, Brady Corp. broke up its process into quarterly reviews with parallel teams. Anything can come up during each quarter, particularly things that were not envisioned beforehand, with the goal of fostering ongoing discussions and getting away from old, stalled pipeline models.
“You have to have discipline, rigor, and an openness to experiment a little bit on the `what-could-be’ models,’” Curran stated.
In an attempt to take more control over the innovation pipeline, Cretney’s staff established a roadmap exercise, and went to business leaders to find out what they wanted to accomplish in terms of big strategies. At first, they produced a list of projects that wasn’t exactly what IT asked for, but eventually they came up with projects that were a manifestation of strategic initiatives that management really wanted to accomplish. How to better reach the customer; how to penetrate channels that have yet to open.
Part of the idea is to prove to management that technology managers can initiate this kind of conversation, not merely have their departments viewed as a cost center that should report to the CFO.