Say you’re an innovator in the 15th century. If you know in your heart that the world is round, what do you do with that insight? Just suppose you are living along the Silk Route when this is still a radical idea, but that you believe the theory of the earth’s spherical shape. If you are right, it could be a boon for business. You might send a much larger caravan of traders and merchandise than would be prudent if the earth had edges, anticipating they would circumnavigate the world, selling your tea or turmeric and other exotic products and returning home with unimaginable riches.
A successful business trip like that would set you up for life. If you’re wrong, however, you’d be done – and your traders might even fall off the earth and be done, as well.
Centuries later, there is still a strong economic incentive in innovation, but a potential risk, too. And if you employ the most common approaches to discovery and simply jump in, the risk may be too great for the reward.
Businesses today rely even more heavily on innovation, but the innovation process is changing quickly. Where business innovation has traditionally involved large investments, lots of resources and board-level approvals, the need to keep pace with digital disruptions while still operating a business can require a new approach. Some organizations, including insurance companies, are turning to cost-effective, lower-risk, nimble innovation. And increasingly that innovation is coming from partnerships, a liquid workforce and other external channels.
Advancement is essential to drive growth and profit, and internal IT organizations absolutely have a role to play in innovation. That role is shifting in many businesses, however, and IT organizations must adapt and be part of the solution.
In my new whitepaper, “A new frontier for technology: using nimble innovation to drive profitable business growth,” I’ve written about this trend and the importance for IT organizations to understand what is driving business to look outside the IT organization for innovation.
Things are moving fast. Our global survey of IT and business executives showed that just two years ago, 71 percent of executives surveyed expected IT organizations would be the primary generator of innovation. Today, that view is held by only 34 percent. Instead, a shortage of resources and investment has driven these executives to look for initiatives that are incremental, tightly focused on business outcomes and carry a reasonable price tag. Some have found the answer in nimble innovation.
We are living in an unbundling, on-demand world where individuals and businesses want to purchase only what they want, only when they want it. Increasingly, for example, consumers are opting for low-cost Netflix and Hulu subscriptions or individual-pay programming or even satellite TV over cable where they pay monthly fees that include channels they don’t watch. Those still willing to pony up for 800 channels want that content to be available on demand.
In the world of cell phones, contracts with subsidized Smartphone purchases have virtually disappeared in favor of full-priced phones with lower monthly cell-service fees or pay-as-you-go SIM cards. Given this mindset, it’s only natural for businesses to turn to on-demand innovation to solve specific problems, and they are not shy about finding outside partners to solve specific innovation needs.
These can take the form of open-innovation accelerators, like the Open Ledger Project, the consortium developing “hyperledger” software using Blockchain technology that I mentioned in my Blockchain post last month. Or it can involve working with university technology labs to develop targeted, lower-cost solutions. Stevens Institute of Technology, for example, is working with several financial services companies on applied analytics.
If companies are willing to go outside the organization, they also are likely to be willing to break down internal silos and use “bridgemakers” – Accenture’s term for internal, open innovation functions within enterprises.
The cooperation between internal IT and business groups that nimble innovation requires has yet another advantage. Traditionally, there has been organizational tension whenever business groups would do an end run around the internal IT organization by going out on their own to purchase technology or IT services. Instead of fighting this “shadow IT, “ savvy IT organizations are now embracing it as a beneficial way to make use of the discretionary funds within the business groups. These IT organizations have assumed an advisory role with the business groups, by providing governance to help limit risk and assure compliance, and then leveraging the technology elsewhere.
Cooperation within the organization has become more important because of looming business disruption, and competition can come from any industry – not just traditional insurers. Tech giant Google, for example, had obtained licenses for its Google Compare Auto Insurance Services aggregator in California and 47 other states, and separately created partnerships with established online insurance aggregators and independent agencies before shutting down Google Compare in March. The next cross-industry competitor could be around the corner, so the need to innovate quickly and economically will only grow.
Among the steps to take in nimble innovation are:
- Adopt the bite-sized, outcome-driven approach of nimble innovation.
- Execute an innovation-friendly IT operating model.
- Pilot solutions in emerging markets to test them in a low-cost, low-risk environment.
Even when resources do not permit immediate, disruptive change, every organization needs a certain amount of innovation to remain competitive. The focused, nimble innovation approach can make this possible.