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April 2017

Applied Innovation

Innovation is business strategy de jour. But large sums of money are wasted because of poor planning, buy-in, and alignment. We examine how innovation, properly managed and applied can yield superior outcomes, and reduce waste and frustration.



Innovation in APAC

The Asia Pacific (APAC) market, specifically Singapore, offers an array of opportunities for accelerated growth, boosted by the latest technology, motivated entrepreneurs, and innovation. Insights from the top industry influencers in the region.

As one of the fastest growing innovation centers in the world, companies and entrepreneurs around the globe are seeking to invest in the innovative APAC region. With the region’s market growth sitting around four percent and an ever-increasing culture of improvement in software and services, companies are increasing their innovation spend to keep up with competitors. Because of this growing spirit of innovation, Singapore, India and China are set to experience significant boosts in growth, with Japan and Australia set to grow half as fast. Increasing thought leadership, continuing investment in R&D and a large talent base makes APAC a prime area for innovative technology. As far as opportunities go, Singapore is a vibrant, innovative center of growth with strong financial services, stability, market access and a straightforward government for business. It is known for its diverse workforce and multi-lingual business support. 
 
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Innovation Keeps The Big Issue Thriving

John Montague, MD, The Big Issue

Innovation can and should be used to address society’s systemic social challenges. In the UK, a 25-year old social organization applies innovation to reduce poverty and fundamentally improve lives.

John Montague spent twenty years in the world of construction before realizing he viewed people as nothing more than numbers. So he went off and launched a new social business for his industry. This moment of inspiration was the spark he needed to kick-start a whole new life mission, one where he could help people through the application of social enterprise. 

Now the Managing Director of The Big Issue, a UK social business that helps people who are facing poverty take control of their lives and earn a legitimate income, John has overseen the latest transformation of an organization that bucked publishing industry trends last year by reporting a 5% rise in the circulation of The Big Issue Magazine. It was the second consecutive year of such growth.

In the following interview, John looks at how a business-wide application of innovative thinking has driven the social enterprise from its humble beginnings on the streets of London to last year celebrating the milestone achievement of  200 million copies of the magazine sold since its inception 25 years ago. The key to success, John argues, lies in adjusting the approach just enough to make that positive change. 

Innovation to me means not doing the same thing and expecting a different result. So many people do the same thing, redo it, and expect a different result. Innovation, to me, is standing back and saying, "We want a change. We want to move forward. How do we do it differently? What can we use to innovate, to do something that hasn’t been done before?"

The Big Issue was, 25 years ago, an innovation. Who comes up with the idea of creating a street paper sold by a chaotic workforce with all sorts of issues and actually (successfully) create a business out of it? Despite this, our mission statement is clear: we want to dismantle poverty by helping people who need a hand up, not a handout. We're about business solutions to social issues.

The day people stop talking about CSR (corporate social responsibility) and actually talk about CSV—Corporate Social Value or what value have we created—that's when we really get somewhere. Businesses have a choice. They can come in with a traditional CSR agenda, paint three village walls, and plant reed beds for the pond. They might have a nice day, but there's no sustainable value that they will leave behind.

I think we’re trying to figure out how to engage partners and ask them, ”How do we create sustainable value through people working together?" This question is the driving innovation at The Big Issue: we should not be focusing on responsibility, but value. 

There are a couple of moments where The Big Issue changed direction based upon innovation. One standout instance occurred with the realization that we need to do more than the magazine. People regarded the Big Issue as "that magazine that homeless people sell on the street." We needed to be more than that. One of the things changing this is the power of data, data that can actually drive our business forward. 

Innovation, to The Big Issue, means taking an existing system and "turning the dial a bit" to make a positive change.

 

For example, we want to tackle the question, "Why do the poorest pay most?" The answer? Because they've got a very thin credit file, they have to pay for everything up front as they go. There's a barrier in place because data is making a decision for them and it's not due to bad data, but rather the lack of data. For the last four years, we've been working on the basis of getting rent data to be accepted in credit scoring ratings in the same way that mortgage data currently is.

There are four and a half million social housing tenants and five million private renters. I pay a mortgage; I get all the benefit. Someone else pays rent, they get no benefit. With this data-driven change and working in partnership with Experian, 30% of all social housing rent data will become shareable by September.  

That's innovation – taking an existing system and applying small but meaningful changes to influence a better outcome. I think that what we're good at actually doing is asking, "How do we just turn the dial a bit?” We're never going to change the credit reference agency world. But how can we move the needle to render the system fairer and more inclusive? 

We tried to implement Salesforce a couple years ago without buy-in from staff and it didn't go anywhere because we did it top-down, not bottom-up. The breakthrough came in convincing that they are supported, they have influence, that the software would change their lives. By doing this, we will save two hours a day for each member of the team. That’s ten hours a week for over 50 people. Suddenly, it’s creating time to do other things. 

It sounds stupid. But our innovation lies in how our organization delivers. It's innovation how other external organizations are supporting us to grow from the bottom up. And that's why it will be successful. It won't be successful because the business leaders said, "Let's do something." It will be successful because the team itself wants to deliver something of which they are proud.

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The Evolution of Innovation – ‘Ecovation’ could be the New Normal

Gaurav Modi, VP, Capgemini APAC

One can argue that the next evolutionary phase of innovation will be the building of ecosystems, not depending on existing platforms. Companies and even countries are betting on them. “Ecovation” could be the new normal.

The etymology of “innovation” is intriguing. “Novation” in the 13th century was a term for renewing contracts. During the Industrial Revolution, it came to be associated with science and focused on technical inventions. The progression from invention to innovation came when intellectual creativity was measured alongside commercial viability in the second half of 19th century. Today, many organizations claim continuous innovation: they are not afraid to say that they innovate every day or that a lack of innovation is the cause of all ills, from slowing macro growth to falling stock prices.
 
One way to look at the effectiveness of innovation is to measure it by the following three parameters:
  1. 1. Customer experience
  2. 2. Process effectiveness
  3. 3. Alternative business model creation
 
Uber remains the most cited example of a new business model that successfully combines customer experience (simplified mobility) with GIS. Where advancement in battery technology would have been considered “innovation,” Tesla provided a case of precipitous evolution—not only by generating creativity through their vehicles in a rapidly growing niche of the auto industry, but also by projecting electrical storage applications, such as their Powerwall 2 home appliance, across multiple sectors to compete with traditional and existing utilities.
 
Alibaba, Apple, Amazon, Baidu, Google, Facebook, and Tencent are good examples of platforms that have influenced many innovations, affected traditional sectors, and made a huge impact on human lives. Gartner predicts that by 2020, about 20% of all activities in which an individual engages will involve at least one of the big seven. The rise of tech start-ups and their ability to disrupt a value chain or a business model has been possible partly because of the reach of these platforms. In fact, one could argue that the majority of product design and development has been dominated by this concept of platform-led innovation: it provided a basis for the model whereby a large, sustainable, and profitable platform could be used by others as a medium for value distribution.
 
I believe we are looking at the next step of evolution, where companies will be building ecosystems rather than depending on existing platforms.
 
  1. 1. Platforms have resources to exploit: extensive access to the customer, a highly developed understanding of consumption patterns, financial muscle, and agility in execution of new business ideas. Amazon Prime Video uses these resources exceedingly well. The platforms are exceptionally strong and employ a highly favorable negotiation position.
     
  2. 2. We are already starting to see use cases where an idea cannot be supported by any existing platforms, or where platforms place limitations on the developers to address real needs.
     
  3. 3. We are likely reaching a consequential tipping point: if the dependency on one of the major platforms is not removed or modified, the rate or pace of innovation will slow down.

 

Often times, it is only at the point of complete dominance by entrenched players that disruptors emerge. The notion of a well functioning ecosystem implies co-existence and inter-connection. Each part of the ecosystem is vital for the overall growth of the ecosystem. Moreover, the sustainability of the ecosystem will increase as the number of organisms sustaining it it multiplies. The important part here is that the organisms are not attached to the same platform; instead, the underlying fabric of the ecosystem that binds it together acts as a “value creation opportunity.”
 
There are organizations and even countries that are betting on these ecosystems for their growth strategies like building new initiatives via accelerators programs. The Disney Accelerator is a compelling case of how they can build an ecosystem around the entertainment industry. Disney has the experience and resources to help start-ups create a robust business model, thereby enhancing the overall ecosystem
 
The evolution towards ecosystem-led innovation is an exciting journey and it will be very interesting to see how the big seven react and adapt to it. It is difficult to predict it, but as the poet William Blake said, “What is now proved was once only imagined.”
 
 

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BW Bank digital.lab Creates Innovation

The banking industry has a classic heritage and with it, ingrained processes. Learn how a German bank used FinTechs, local startups and a “digital lab” to transform their development methods into an agile framework.

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Applied Innovation Exchange Singapore: At the heart of a thriving Ecosystem

Sudhir Pai, CTO, Capgemini Financial Services

For innovation, the dynamic markets of APAC now rival Silicon Valley. Singapore is in a unique position to leverage its relationship with local startups, providing access to affluent consumers and multinational companies.

Does innovation happen in a flash of light? Quite the contrary. We believe that innovation is a long journey, with many milestones. One of them being to gain a competitive advantage in the industry.  However, there is no rulebook or step-by-step guide on how to fast track your journey. Innovation cannot be done in silos, and to succeed, must be applied across all aspects of business and technology. Should you listen closely to your customers or go with your gut feel? Buy the most expensive technology or upgrade an existing one?
 
At the Applied Innovation Exchange (AIE), we help companies answer such questions. With the help of functional prototypes and a team of qualified experts, we blend technology and business to help companies with tailor-made solutions to their problems.
 
Our AIE centers helped Boulanger (a French electronic retailer) chalk out a digital strategy when it decided to move to an urban center. We also helped an Eneco (Dutch energy major) get a better picture of the electricity usage pattern of its customers. We believe that being closer to the customers helps us pinpoint and understand the specific challenges they face. 
 
With the opening of the AIE in Singapore just round the corner (Feb 28, 2017), we are very excited at the prospect of working with companies in Singapore, and the APAC region. The country is a favorite investment destination and enjoys the advantage of being on a busy trade route. The Singapore Economic  Development Board (EDB) is also working hard to position the country as an innovation hotbed by creating an ecosystem of start-ups and research centers. A major focus area for the board is the Fintech sector to bolster a strong banking system in the country.
 
The Monetary Authority of Singapore (MAS) has apportioned a $225 million budget for the development of a Fintech ecosystem. A recently concluded Fintech conference stressed the importance of ingrained digital technologies for banks. Keynote speakers discussed the need for imbibing digital technologies rather than just wearing a ‘Digital Lipstick’. This fact is even more glaring when we see companies in a mad rush to adopt digital technologies without aligning it with their business strategy.
 
The AIE Singapore will mark our efforts to ensure that companies are on the right track to develop sustainable, scalable innovation, and not get caught up in an ‘innovation trap’ by trying to be innovative for the sake of it. We have the infrastructure and experience to help them navigate the path intelligently.
 
In days to come, the AIE Singapore will partner with our network of 10 existing centers to bring expertise in areas like Robotics and IoT. We will also encourage innovative start-ups with a seed funding of $50,000 and support them with extensive networking opportunities.
 
With such a thriving start-up culture in the country, one of the key responsibilities of the AIE will be too groom local talent by providing graduates an opportunity to interact with industry experts.
 
As we look at the growing APAC market, and the challenges being faced by companies in the region, our priority will be to collaborate with them in terms of new ideas, people, and technologies that will also benefit the society.
 
Collaborative business experience is our DNA. Our ability to leverage cross-industry solutions and scale up ideas to enterprise grade products & services will be a huge differentiator. At the AIE, we will look at not only immediate problem areas, but also new business models that we can co-develop with ecosystem partners in the APAC region. It will also play a vital role in driving economic growth in Singapore by embracing initiatives around Cybersecurity, IoT, Smart Cities, Digital identity, etc.
 

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How Should Governments Innovate

David Blackwood, CTO, Capgemini Cloud and Infrastructure Services

Local governments (not huge national institutions) are a logical place to introduce innovation. Learning from real-life communities and “road testing” new apps and technologies prior to a wide rollout improves the success rate and saves money.

A couple of months ago, I wrote an article about India’s Smart City program. Unhindered by the legacy infrastructure of a Western city, the Indian government has the agility to invest in technology that addresses the current and future needs of its people. While they still face the challenge of redeveloping established cities like Delhi and Mumbai, being able to build brand new Smart Cities provides the opportunity to innovate from the ground up.

Another example of a government that’s been able to take a ‘start-up’ approach to digital transformation can be found in Estonia. The 79th smallest country in the world and home to just 1.3 million people, Estonia is blazing a trail of innovation through Europe. How so? Well, for starters it teaches every school kid between the ages of 7 and 19 how to code, and has some of the fastest broadband speeds in the world. Estonians access nearly all government services online, while non-citizens can even become an ‘e-resident.’ All of this may explain why the country has a huge number of start-ups per person―one of which gave birth to Skype.

With success stories like that, it’s easy to look at bigger, first world economies and question why so many government-run organizations and processes still seem so archaic by comparison. If Estonia can do it, why can’t we?

I think the real question is how? How do governments successfully deploy and sustainably maintain innovation at scale when the stakes are so high?

A tale of two systems

India and Estonia share an entrepreneurial backbone and a start-up mentality borne of necessity. They prove that in some ways it’s simpler to build something from scratch than it is to try to modernize systems that have been in place for our entire living memory.

An infamous example of this is the failed NHS IT overhaul that saw the biggest contractor working on the project pull out after two-and-a-half years. To date, the National Programme for IT is estimated to have cost taxpayers almost £10 billion.

The immense complexity and scope of upgrading (or rolling out) a digital public healthcare system has plagued more than just the UK government. Over in the United States, the Affordable Care Act has been cited as being flawed from its October 1, 2013 launch date, due to technical glitches and web outages affecting the federal HealthCare.gov site. These technical teething problems have been, in part, attributed to the fact that the administration didn’t know until six months before enrollment which states would be building their own sites and which would be using the federal site.

In both of these examples, the governments involved demonstrated a big appetite for innovation, but appear to have bitten off slightly more than they could chew.

Bottom-up or top-down?

According to the eGovernment benchmark, the UK government is actually doing quite well for Europe―even when compared to Estonia. The benchmark is an important measurement on whether governments are aligned with what their citizens want.

There are a number of pioneering projects, both at a local and a central government level, that are changing the way citizens interact with government services. A bottom-up adoption approach can be seen in the pilot rollouts currently underway in 19 councils for Verify, the UK Government Digital Service’s identity assurance scheme.

Local governments are a logical place to introduce innovation. Like a modern start-up, launching on a smaller scale allows governments to leverage real-life communities the way digital start-ups leverage and learn from their online communities. They can ‘road test’ and improve technology prior to a wider rollout.

But there are examples of top-down innovation being just as effective. Peru’s Development and Social Inclusion department has established a social innovation laboratory aimed at boosting cost-effective innovations for social policy. The difference between this and less successful, more autocratic examples is that the feedback and input from citizens plays a major part in informing the lab’s efforts.

Delivering to scale with the speed of a start-up

A case can be made for both top-down and bottom-up tech adoption policies, and there is plenty of evidence of both. The challenge is ultimately in deploying these large innovation programs effectively at speed. Part of this is from managing the human aspect of digital transformation, but another part of it is inherent procedural bureaucracy and the vast networking of challenges that governments need to tackle simultaneously.

That’s why programs like the UK government’s Innovate UK, Dubai’s Mohammed Bin Rashid Centre for Government Innovation and Capgemini’s global Applied Innovation Exchange are so important. These programs offer the opportunity for governments to connect and collaborate with start-ups. They provide an opportunity to establish value-driven partnerships and reduce the risk on both sides of the equation. Governments can benefit from start-ups’ agile approach to innovation and razor-sharp focus, while government departments and councils can help provide start-ups with the support they need during the early stages.

The end goal must be an inclusive and sustainable, city-wide innovation strategy, irrespective of whether the innovation comes from the bottom-up or the top-down. Public–private partnerships working together toward that objective can create Smart Cities that governments can comfortably manage, and that citizens want to live in.

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Applied Innovation in APAC

Lanny Cohen, CTO, Capgemini

Innovation is a long journey with many milestones. But when there is no rulebook on how to take innovation to the next level in your company, how do you make the right choices?

A few months ago, I visited Hong Kong and Singapore where I met with a number of senior business and IT executives from various industries such as the Public Sector, Energy and Utilities, Financial Services, Automotive, etc. I also had the opportunity to present our Applied Innovation methodology and the Applied Innovation Exchange (AIE) to an audience of over 75 executives including 55 CIOs in Singapore during the official launch of the IT industry publication “SG50”. Businesses in Southeast Asia, from the perspectives of buyer sophistication and “digital activity” are for the most part, on par with most clients and markets in North America and Europe. Overall market knowledge, leadership fluency, experimentation, innovation, start-up activity, etc. are consistently strong. There is much to be observed and learned, and potentially leveraged, from this market. Governments in the region are profound advocates of digital and emerging technologies and a major catalyst in driving businesses, government agencies, and the population to new market domains (very notable in Singapore).

The above observations and challenges from the Asia trip served to strongly reinforce our interpretation of the global market and the need for continued alignment, focus, and acceleration in addressing it, lest we remain fighting for the crowded, commodity end of the service portfolio and being only tangentially considered as our clients’ strategic partner for the “new” and supporting their journey into new markets or expanding existing ones. What came to mind again during this trip was our opportunity to be the “global partner for where our clients are going, not for where they’ve been”.

This was one of the key factors that led to Singapore as the choice for our newest and 10th Applied Innovation Exchange. With the right introductions and upon hearing our points of view, our capabilities, and our experiences in the new, clients in this dynamic region can quickly change perceptions and grant us access to opportunities.

So what makes Singapore an interesting place to build an AIE?

Aside from the obvious interest to bring the Applied Innovation methodology to our clients in the Asia Pacific region, Singapore has a unique ecosystem of startups, and is ranked 10 in the list of the 20 hottest startup hubs in the world, according to the last Compass report. According to the report "Singapore’s geographic location and deep business relationships with booming Asian markets means local startups benefit from access to affluent consumers and multinational corporations to scale their business".

Capgemini Consulting in a recent report, “The Spread of Innovation around the World: How Asia Now Rivals Silicon Valley as New Home to Global Innovation Centers,” also demonstrated the growing importance of Asia, which has for the first time overtaken Europe in its number of innovation centers built and operated, and may soon overtake the US as the biggest hub of innovation centers if it continues to grow at the same rate. Singapore together with Bangalore, Shanghai, Tokyo, and Tel Aviv (which is treated as Asia for purposes of this study) is driving Asia’s rise; these five cities in the report’s global top 10 rankings together account for 36% of all Asian innovation centers.

How can the new Applied Innovation Exchange help attract and retain talents in this very competitive environment?

First, to stay relevant and remain part of our clients’ strategic agendas, we must move faster and more aggressively and credibly toward the new.

Attracting and retaining talent is an essential mission for our Applied Innovation Exchanges around the world and definitely something that we will be pushing in 2017. By building these centers, we want to demonstrate to potential and current employees, our responses to, and activities in new market domains and the opportunities Capgemini can provide them (versus only being able to pursue these in start-ups and other external alternatives). As presented in the Capgemini Consulting report I mentioned above, the availability of talent is a key driver for growth. For example, of the 14 new Fintech innovation centers established globally between March and October 2016, five of these were in Asia as organizations look to tap into the region’s talent pool to meet changing customer needs. Four out of the nine new artificial intelligence (AI) focused innovation centers in the March-October 2016 period were opened in Asia.

I am hopeful that this new addition to our innovation network will contribute to and strengthen our position in the Asia Pacific region to better serve our clients, collaborate with the local ecosystem, and attract and retain the best talents. Additional geographies will be covered this year so stay tuned for new announcements.

Explore the Applied Innovation Exchange to know more about our Applied Innovation methodology, and how it can benefit you. 

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