Applied Innovation as a Discipline

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An introduction to applied innovation, and how to incorporate it in your organization’s DNA.

What does ‘applied innovation’ really mean? What are the challenges businesses face, and how can they overcome these?

In the introductory episode of the Applied Innovation podcast, Frank Wammes, Chief Technology and Innovation Officer, Capgemini Europe discusses these and other questions with Lanny Cohen, Chief Innovation Officer, Capgemini.

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Transcript:

Frank Wammes: 

This is the Applied Innovation Podcast, presented to you by Capgemini’s Applied Innovation Exchange.

In this podcast we’re going to talk about what innovation really means, how companies can incorporate innovation in their DNA, the challenges business face, some solutions to overcome these challenges, and one of the most critical elements, what does success actually look like?

Innovation is, at its core, about solving problems, and there are as many ways to innovate as there are problems to solve. There’s no one true path. At the same time innovation doesn’t have to land in the headlines to have impacts. Everyday innovation can be critical to longterm business success, said, Scott D. Anthony managing partner of the growth strategy consulting firm Innosight.

Since the 1990s however, most large companies have been outsourcing their internal innovation efforts. According to an article in the Harvard Business Review by Beth Altringer from Harvard universities, John A. Paulson’s School of Engineering and Applied Sciences. Companies pay they upwards to 300k to 1 million to innovation consulting firms, to conduct market analysis, identify new opportunities, generate promising ideas, and often develop ideas into working prototypes.

Undoubtedly, not all inventions from these collaborations achieve equivalent fame. It can make clients, who are paying high fees to those consultancies, nervous. And it seems to be opening the door for new options, that emphasize a deeply pragmatic approach to innovation, including mixing entrepreneurship and corporations.

My name is frank Wammes, Chief Technology Officer for Capgemini Europe, and a member of Capgemini’s applied innovation exchange steering committee. For the introductionary episode of this podcast we have with us today, with great pleasure Lanny Cohen, Capgemini’s Chief Innovation Officer. Lanny, great to have you on this call.

Lanny Cohen:    

It’s great to be here, Frank. Thanks.

Frank Wammes:

Yeah, it’s one of our favorite topics to talk about, of course, lovers of innovation. But a question I have for you, is in today’s hyper connected, hyper digitized world, terms like innovation, disruption and digital transformation, et cetera, have become bywords for any industry. How should an organization define innovation as a discipline? What’s the difference between the buzz words, and really the discipline? Can you elaborate on that?

Lanny Cohen:

Yeah, that’s a great question, frank. And I think one that we’re only starting to, I think pay more attention to. I think the real genesis of it, and why it’s different is I think up until now when we talk about, or we hear in the market references, to disruption or innovation or digital transformation, they tend to be regarded as more discrete events, that have a beginning, a middle, and an end to them. Are often treated as projects, that type of thing.

And I think, while maybe to get started, there’s some benefit in looking at it that way. I think at the end of the day it’s very shortsighted, and I think … I think it undervalues what really has to be addressed, and that’s where the discipline comes in. Because I think what we’ve found is that unlike the past where, innovations were happening once every five or seven years, that tended to be the cycle. The sources were pretty much well-defined. They came from very few sources, most of the most important innovations, and the impacts on most enterprises tend to be very narrow in terms of their scope.

Innovations, for that reason were somewhat scarce, but now innovations are plentiful, they’re pervasive, they come from sources all around the world. The impacts can be entirely broad, almost disrupting entire industries, let alone an entire business process. And as a result I think what we’ve found is the ability to apply or adopt or consume innovation is really what a discipline’s all about. And companies can no longer look at these things as just individual projects, but they really need to develop core competencies and proficiencies in adopting and applying innovation today.

And that’s a real struggle for many companies, which we can elaborate on a little later. But I think the real core answer to question is I think because it is this constant flow, and this acceleration of new innovations that’s occurring, companies are now challenged with this need to address it on an ongoing basis, to be proficient at it, to have true enterprise competency at it. And that’s why I think we now see this distinction between innovation, disruption, digital transformation, versus becoming being a true discipline, and an ongoing kind of process.

Frank Wammes:

And to that extent that goes further than just appointing a digital place, or a digital department for companies to look at what could digital or technology be? It really is about getting it really through to DNA of an organization. Is that the difference between what most companies do, and the one that really mastered the discipline of innovation?

Lanny Cohen:

Yeah, I think that’s a huge factor that you’re referring to, that I think because it’s not discrete anymore, and it doesn’t necessarily have this very well defined beginning, middle and end. The innovation department, the chief innovation officer role, the R&D function are just suboptimal today. These things are so impactful across the enterprise, and as you say, it gets to the true DNA of the enterprise, that there’s a lot of things that have to start aligning to make these things really sustainable over time. So you have to deal with leadership, you have to deal with culture.

And you look at our work in the area of digital mastery, and what you find is that even today that the digital masters are those that have really cracked the code on culture, and on the DNA, and on the leadership, and on the governance, to be able to do these things on an ongoing basis.

Frank Wammes:

But challenging you a little bit on that, or perhaps the entire industry on that, is that requires really a different mindset from the leaders of your organization that grew up in an area where disruption was something that accidentally happened, or where technology changes occurred every seven to 10 years. How is it then that the leaders of organization can play that role? If you look at some of the successful organizations that you have interacted, how did leadership took on that rule to really bring it from this cultural perspective towards the digital mastery?

Lanny Cohen:

Yeah, and I think that’s why digital masters are kind of few and far between, because it is about leadership, and it really requires the top and the enterprise. As you allude to, most enterprises today were built to be efficient, to manage cost very well, to have optimal process efficiency, and those types of things. They were not built to be innovators, or apply innovation.

Now that is the way of life. And a lot of the leaders in these companies grew up in another place in time. So it does require everything from mindset to a unique set of capabilities. And I do think, those that are digital masters, I think if you look at them, it really does start from the top. While you can source many great ideas from the bottom, I think to really drive the kind of disruptive innovation, and be able to sustain it, and apply it at speed and scale really requires leaders to engage, leaders to have a lot of vision, leaders that can mobilize an entire enterprise, that can break down silos, that can kind of set the politics of the enterprises aside. I think that is unique. I think what we’re finding more and more is those companies that do have those kinds of leaders, or can develop those kinds of leaders do have an advantage today.

Frank Wammes:

Okay. That’s really interesting. And also if you look at recruitment companies, perhaps should bring in different kinds of people, diversity, probably will also play into that. One of the things that you also said, collaboration is something that needs to be done there, I think. If we look at innovation, it’s all those where the silos are being broken, innovation comes to life.

I always like a book, which I read, it’s called the Medici effect, which was written by a guy from Harvard, who basically said that the renaissance came, and the Medici family brought all the different disciplines together, like sculpturers, and painters, and poets, and scientists, and that gave birth to the renaissance. And I think indeed, the crossroads where different disciplines meet is crucial. But it’s already difficult, as you mentioned, to break that internally, within the company. But does innovation not only require breaking down the silos within the organization, but also perhaps between organizations? How do you look at collaboration in an open innovation way, and what kind of parties should people work with?

Lanny Cohen:

It’s, again, an excellent topic that you raise here, frank. And again, I think if you look at the traditional enterprise, they tend to be relatively closed. It used to operate within its four walls, and that’s kind of what it knew. It had x number of trading partners, it knew it’s customer relationships, and frankly took a lot of things for granted with those relationships over time.

And then within the enterprise, they were built to be very functionally oriented. That’s when silos started to evolve, and there’s obviously been a lot of research and a lot written on it. But as you said in some of your opening comments, the world we’re in today is about problem solving, it’s about opportunities, it’s about new challenges, new threats, it’s about disruptions. And the way you solve those is by bringing together whatever capabilities, competencies, experiences are necessary to address the problem.

A few comments on that, one, within the enterprise, it does require cutting across those silos or bringing multi-discipline teams together. We know that from so many different experiences, everything is confined, there’s Dev ops and IT, bringing business and it together. But now it’s even broader. If you’re going to deal with customer experience, you need sales, you need marketing, you need operations, you need all these things to be brought to bear to really fulfill the new brand commitments, and brand promises that are being made to the customer.

So how the enterprise works internally is being flipped on its side, or needs to be flipped on its side. Who you deal with externally becomes very, very important. We know very well, just in terms of sources of innovation come from hundreds of thousands of startups around the world. And being open to that is very important, to be able to reach down into your organization and source ideas from where you have interaction with customers and suppliers in the field every day, where some of the best ideas come from. Engaging much more directly with your customer, and understanding their needs and wants better.

So these are just many of the different forms of collaboration in the enterprise. And again, as we talked … Back to talking about discipline, those that can execute that kind of interdisciplinary, highly collaborative, open innovation kinds of models, again, have the real advantages in today’s market.

Frank Wammes:

What I was surprised about was we had a meeting in New York, AIE actually, with a large delegation of CIOs of Dutch ministries. And we had an interaction with people who were involved in the startup scene in New York. So we had four different kind of startup organizations that all interacted with the government.

And what surprised me, Lanny, was that indeed they said they all referred very lovely to the Bloomberg administration, how that administration really was pivotal in creating a startup environment within New York. But, what struck me was that they had a great conversation with the CIOs of the governmental organization in the Netherlands, on how, indeed looking, using startups, using open innovation, but also using the diversity, which really was stimulated within the startups, like having immigrants, or having more female leadership. And if you had a startup with female leadership, you were allowed to have a larger first project without having too much procurement hassle around.

That really made the change, and the argument that they made was people have different insights that you will not have in your own organization. And those insight actually gives you a new value, new perspectives, and could lead to innovation. So what struck me, and I don’t know how you look at it, is their argument was almost like it’s the perspectives of people, almost are a bigger contribution than the new technology that you will have enhanced, let alone if you can combine those. Is that something that you recognize? I know you’re from the New York area. Is that something that you really feel as well is working? Or was it just like those four people had a great service talk?

Lanny Cohen:

No, no, I think you’re right. I mean I think, do we see it? We absolutely see it, do we see that it’s working? I think we see evidence of it working. Obviously it’s not at scale yet, in the market. But, I do think though those things are very important. I think the way a company, a governmental organization needs to look at itself is not define it based on its own traditional perimeters and boundaries. I think it needs to redefine the enterprise as all those potential touch points it can have in the market.

As you know, Frank, we use this term ecosystem, almost as part of our day-to-day vernacular today, and for a reason. Because I think ecosystem really becomes truly important. And the comment you make about diversity I think is totally spot on. I think more and more, if an enterprise doesn’t mirror the profile and the demographics of its stakeholders, whatever those stake holders might be, I think it finds itself as a disadvantage. Whether the stakeholders are its customers, whether it’s employee base, whether it’s a supplier network, whether it’s its investors.

Because I think more and more we see that those stakeholder groups emanate a set of expectations, expertise, requirements, those types of things. And unless we’re sensitive to those, and can understand, and embrace, and respond to those, we’re at a disadvantage. So showing up to a customer meeting that’s a highly diverse set of executives representing that customer, and showing up with a traditional group of white males, over the age of you know 45, or something like that, already just sends off bad signals.

To have an enterprise that is not responding to an employee base that is very diverse gender wise, ethnicity wise, culture wise, that type of thing, just makes for an organization that is just going to start to find itself very disconnected with its own employee base, over time. So I think all those things, I think we’re just at the beginning. So I think companies are … Even though we’ve been talking about it for a while, I think companies are just starting to make moves in those areas. We’ve got a long way to go, but I think directionally, we’re headed in the right areas.

Frank Wammes:

Yeah, I agree. I think you know, a diverse organization already is half of your customer journey, probably. But now we already are quite a … We’re not a long way with the applied innovation exchange, but we are on our way now, and I’m very curios, how did you see the applied innovation exchange evolve since its inception? Was it the journey that you thought it would be? Is it the outcome where you want to be already? Just give us a little bit of insight in the journey that you had, and where I probably could be part of, in the last two years.

Lanny Cohen:

Yeah. You know, it’s interesting Frank, it’s kind of a good news, bad news story. I think the good news was, is I think we’ve been more right than wrong. I think when we kind of came up with the vision, and the idea, and the strategy, and what this should be, I think for the most part we’ve seen over the past couple of years, more or less validation of a lot of that thinking. Of course there’s new things that have come about, but generally speaking, I think our center of gravity has been more validated than it’s been wrong, and we had to do course corrections.

I think … So that’s kind of the good news. The bad news is, to me the acceleration in the pace of evolution of what we thought might be coming, has just been just super, super fast. Things that I didn’t think we would get to for a couple of years down the road, we’re getting to in six months down the road.

A couple of examples, we knew early on that the discovery phase of the AIE would be very important in terms of the what. What was the hypotheses, or the right array of potential answers, or solutions to the problems? But I think, what has happened is now the need to get physical has happened so quickly that it’s not just enough to come up with a possible answer, and to draw it out or talk about it, but the need to see it, and be able to touch it and feel it, and create proofs of value around it, has just, to me, materialized super, super fast.

So the demand for prototyping and MVPs, and proof of concepts, and all those types of things has really just accelerated. We knew, adoption is another example, was going to be a real challenge. Again, but we thought there’d be time before we had to really understand more and more about those barriers. We knew kind of what they were, but I think they’ve come into focus now at such a pace, and companies have been right up front, and say, “Great idea, but we can’t do it. We’re not built for that.”

So, recently we’ve taken kind of the barriers of innovation, as you know, and we’ve kind of consolidated them into five other impact drivers, if you will. Things like cultural resilience, digitally native, landscape driven, customer obsessed, and those types of things. And that’s really, I think become so much of the nucleus now, of what customers want to get into, those kinds of dialogues. Because they know if they can break those things down, or at least become more and more proficient in those areas, their ability to absorb innovation, and have it really stick, and be sustained is going to be undermined as they move forward.

So these are the kinds of things that, again, I think we knew were there, but boy, it’s just accelerated at a pace that I never anticipated. That’s for sure.

Frank Wammes:

Cool. And I like the new topics that you addressed, because basically all the things that we have been talking about were about culture. It was about, how digital intention, organization is, how customer obsessed you are. So we didn’t use that as our line through the podcast, but actually it really is the line through the podcast. It’s those things that now have become so obvious, yet I think so difficult for certain companies to really start mastering.

And I think that is indeed a role that the applied innovation exchange will definitely take forward. I have a lot of trust in that, Lanny. Lanny, any plans for this year? Because we have a lot of locations already. It’s more than only to location, it’s the framework so everybody can benefit from it. But I know that also the physical locations are of course of importance as well. Some plans for this year that you can already share with the audience?

Lanny Cohen:

Well, Frank, you know as well as I do our appetite is sometimes bigger than our ability to digest. So, we’ve got a lot of really good ideas, I think, out there, but I’ll maybe highlight three that I think are really noteworthy. Maybe four.

The first is around this concept of the global platform. I think really, now, the second half of 2018 and 2019 is when we really pull all these entities together, and really start to realize the power of this platform that we’ve created. And for customers, for partners, for startups, for our people, no longer should they be engaging with an individual AIE. That may be their portal into the platform, but it should really be this global capability that we’ve built, and the value that that is able to generate is what our stakeholders should be interacting with going forward.

So I think we’ll see a lot more focus on the power of the platform as opposed to the individual exchanges. The other thing we want to do is we want to continue to professionalize our exchanges. Just like everything else, the bar continues to go up. I think we’ve got to raise the caliber of our game, the professionalism of the people that are in the AIEs, the quality of the content and the output that we generate. And really makes sure that we continue to be able to stake a leading position in the market through our own evolution, and our own professionalism that we bring to bear.

The third thing is, which is kind of a new idea, but I think what we’re seeing in the market is customers really needing more handholding, more learning, more enablement of them going through this applied innovation journey. So we’ve been starting to toy with the idea, the concept of an AIE institute, if you will. Where we can harness some of the capabilities around the group, like the university, like some of our just incredible depth that we have in India. And how do we start to create a bit of an overlay, where we can offer our customers, and our own people, ways to accelerate their digital literacy and fluency when it comes to applied innovation. I think there’s some really exciting opportunities there.

And then last but not least, I think we’ve got to continue to look at the core geographies that we continue to take up residency in. So, as you know, we’re looking at three sites, four sites actually, for the remainder of this year. Madrid, Milan, San Paulo and Hyderabad, which is exciting. Again, not just because you think they’re good ideas, but the startup ecosystem there’s powerful. The industry dynamic is very, very interesting in those areas, and there’s a lot of talent in the future skill sets that we need there.

So I think those are very important. And then as we kind of look beyond that, I think we’ve got to come to grips with the innovation dynamics that are happening in China and Israel. Because you’ve heard me say frank, and I know you have the same position, that if we’re going to be in this game and be truly a leader, and credible in the market, those two geographies are just part of the future state that we can’t ignore. So just a little bit of a glimpse of, I think some of the ideas coming down the pike right now.

Frank Wammes:

I totally agree, and I the value … I recently had a discussion with the head of innovation for a large manufacturing company, and I actually was like, “Okay, what can we bring to the table?” But actually when we talked about all the stuff that we did, he actually said, “You’re spot on.”

And, and the cool thing for companies like Capgemini is that you cover more industries and different topics, where we can learn from, so that we’re not always looking at our own industry, and have the risk that we don’t see what’s really coming out there. And particularly with the convergence of so many industries now, where people are just looking and taking concepts from other industries. I think having the different locations, and having particularly the idea of the AI institute, Applied Innovation Institute, is something that I think will be very useful for the outside world.

Lanny, it has been a fascinating conversation, as always, and I hope it was also very insightful for you, our listeners. I hope you stay tuned for our next episode on collaborations with the startup ecosystem. We would love to hear from you. So if you have ideas, or if you have topics that you want to be addressed in one of the podcasts, then please let us know. You can find us on Twitter, at Lanny S Cohen, or at F Wammes, and of course on our LinkedIn accounts.

Don’t hesitate, as Lanny already has said, it’s open innovation, it’s about sharing ideas. And I think that’s where the crossroads come together, and where we all can benefit from the power of innovation to make the world a little bit more better, and a little bit more innovative. This is the Applied Innovation Podcast brought to you by Capgemini’s Applied Innovation Exchange.

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