Let’s address the elephant in the room: innovation is a journey. The reality is that you will have your share of failures mixed in with some successes.
Now, imagine these efforts as a cluster of small experiments, and learning opportunities that build a mindshare of improvement be it incremental or disruptive. These are not enterprise-wide large-scale implementations that pose financial risk due to costly investments.
Instead, these are minimally viable concepts that cost pennies on the dollar and pump valuable insights into the organization or can even set the foundation for full-scale production. When viewing each failure or success as a bridge across the gap you’re trying to solve, rich with opportunity to learn, grow, and try again in the next iteration, a culture of innovation starts to take shape.
Let’s expand this thought for a moment and let me take the liberty of defining innovation in a manner not often considered, as a bridge. All organizations formulate strategies to define and describe a desired state. Innovation is simply a means to bridge strategy to a desired state.
Disrupt or diminish
Now let’s start the conversation by offering a perspective on why an IT organization might consider venturing into this type of innovation. To answer this, we should first widen the aperture and consider the basic value proposition IT has brought to companies over the course of the past couple of decades. Let’s do so through the lens of an organization’s profit and loss (P&L).
Companies have directed billions of dollars of investment in technology with the primary purpose of automation and insight into the effective use of enterprise resources. These investments in technology have largely focused on a firm’s Selling, General and Administrative (SG&A) section of a P&L, helping to manage ‘below the line’ cost by unlocking unprecedented growth in productivity gains.
After decades of investments, most organizations have either realized the value of technology’s promise in productivity gains or are positioned to do so more readily than ever before. Capabilities that once required large-scale technology implementation are now approaching the simplicity of services that are externally contracted.
Without question, IT has enabled corporations to deliver on the promise of optimizing the SG&A expenses line of P&Ls. However, there is a new challenge on the horizon. The pace of change across industries is increasing at a dramatic rate. It is fueled by the application of disruptive technological inventions. They are often referred to as disruptive because the result of their application disrupts the industries in which they are applied.
Technological advances and inventions in machine learning, blockchain and virtual reality are but a few examples with the potential to disrupt how economic value is generated across many of the sectors we support as technologists.
We are witnessing a historical juxtaposition, where successful corporations with massive market share are positioned with vast resources at the ready to leverage emerging tech and re-create their organizations. Yet they are continually upended by those that seize on the opportunities created by emerging technologies to disrupt long-established business models. The results are new entrants and the exit of old and familiar brands.
To lend additional perspective, Credit Suisse highlights that the average lifespan of companies listed on the Standard & Poor’s 500 has decreased from 60 years in the 1950s to just under 20 years in the current decade. They note “The disruptive force of technology is killing off older companies earlier and at a much faster rate than decades ago.” Provocative, perhaps, but the disruption of business models is evidenced by the likes of every local taxi cab business on the planet replaced by companies who offer mobile applications that allow the rider to customize their own comfort and experience. The cycle is only increasing at an exponentially faster rate.
Bringing it together
IT organizations have an opportunity to lead in unlocking the power of disruptive technologies, not by its application to internal productivity gains, but by exploring its ability to generate value in the markets their organizations serve. Through the power of experimentation IT organizations can begin to climb out of the realm of commoditization, while positioning their organizations towards successes in value creation.
Harnessing vast resources, such as talent and tools, while leveraging emerging technology, to develop new products and services will create new lines of business and open new markets. Disruptive innovation provides the path to this desired state.
A solution to the innovation dilemma faced by corporations is at hand provided they reconsider the implications of how it is sourced. If innovation is approached as a service and not a process, an organization might look to source new ideas via their own IT organization.
If Amazon Web Services can generate hundreds of IT-based services a year, an IT team can leverage the same go-to-market principles and develop an innovation-as-a-service practice. More specifically, they could execute an organization’s strategy by narrowing the aperture on disruptive technology to ignite market disruptions that sustain their viability into a new tomorrow and subsequently allow IT to transform beyond the commoditization of the back-office.