Full Transcript: How Can IT Enable Innovation Across the Corporate Enterprise?
10/25/2007
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Gian Trotta: Welcome to the inaugural
podcast in a
very special series on the role of innovation and agility in
today’s enterprises. I’m ebizQ’s Gian
Trotta. Our guest today is Richard Platt, the former corporate
innovation manager and senior instructor for innovation methods at
Intel Corp. Richard’s primary focus has been on the broad
scope of innovation as it relates to methods, research and development
and business units, strategy, management, infrastructure, economics and
the psychology and philosophy of competition in all of its forms.
That’s a very broad scope but Richard’s
podcast series on the eBizQ.net website will contain links to numerous
slides and presentations that illustrate the many references
he’ll make to sources, statistics and case studies. We hope
you enjoy this look at the drivers of innovation, all the way from
China’s First Dynasty to current business giants like
Samsung, Proctor and Gamble and Apple Computer.
Question 1: Richard, how does IT become an enabler of
innovation across the enterprise?
Richard Platt: Excellent question, Gian,
but I think
what we need to is just back up and understand something in a broader
context before we dig into how IT can actually do that. First off, we
need to discuss the difference between surviving and thriving. More
importantly, in a broad context, and I think it is arguably could be
said that, you know, business is evolutionary and Darwinian.
It’s survival of the fittest, the fastest, the most cunning,
who’s got the sharpest tooth, etc. And if you look at the
evolutionary drivers are within the Darwinian context, it’s
change and the rate of change, your ability to adapt. If we look at,
you know, what’s the difference between the who’s
the thriver and who’s the survivor and a non-survivor, for
that matter, survivors know how to consistently find growth
opportunities and deliver value to their customers and stakeholders in
a business context. Non-survivors compete on previous business models
that miss adding value in increasing degrees. Thrivers on the other
hand, beyond the previously mentioned survivor traits, they adapt using
tools and speed, more specifically to achieve gains.
The other thing is, and I think this is worth mentioning, is
that comments from CEOs and I pulled this from the InformationWeek.com,
their CIOs uncensored blog so this is coming from the IT world itself,
basically, the statement is is technology innovations must be a
partnership between IT, Marketing, Sales, Product Development and other
business stakeholders. And the problem with that is is that they
mention is that to think that meaningful technology innovation is going
to thrive within pockets of IT organization is naïve. And this
is stated by three different CIOs at which point, I go, OK, some people
are seeing this.
And if we want to go, again, step back a little bit to again
give us a really good idea about this is what I’ll use an
analogy that goes sort of the Darwinian model that we talked about
before a little bit which is to actually use a concept that’s
relatively new in the field of biology which is “cooperative
hunting” and it’s really an opportunity and let me
explain it in the context of a business example first and then
I’ll give you an example of how it actually works in the
animal kingdom, if you will.
The question that I’m really sort of getting at is
“can IT become a profit center?” and the answer to
that fundamentally is I’m pretty sure I know that it can be
and why do I say that. Well, I had the opportunity to go to BMW back in
2000 and I got a tour of their factory and their facility and long
story short, basically speaking, the senior management of BMW turned to
the factory manager and in Dingolfing, Germany which is in Bavaria and
told him that he was going to be responsible for the loss of jobs of
all his employees unless he turned manufacturing from cost center into
a P&L, to a profit and loss center. And that he was going to
make that happen. The reason and how I figured this out is that I
noticed that they were knocking out Porsche quarter panels on this big
huge ten story press and that’s how I began this discussion
with somebody who actually knew the inside scoop on this discussion
that had taken place at the executive board level within, I believe it
was within 18 months from that discussion I believe that that
discussion took place in 1997, if my memory doesn’t fail me
too much and by ’98 they had actually gone off and actually
began doing outsourcing work for a number of other companies, Porsche
included and so they began making revenue from an area that had never
been previously considered a revenue center or an opportunity to make
revenue.
Can the same thing be done for IT? I don’t see why
not. Here’s some key things though to understand about it. IT
metrics are subordinate to the business units’ goals for
innovation then these are the typically your partners for innovation
from an IT perspective and that whatever IT does needs to be in
complete support of that and the mapping of the IT investments is about
delivering what they need as your business unit partners to enabling,
you know, their capabilities whether it be tools or network or whatever
you need to put in place but whatever it is that you’re going
to put in place to enable your business unit partners your metrics in
IT need to be subordinate into supporting that.
Now, I’ll give you the example and why, I mean,
basically speaking if animals can do this, why can’t humans
which is if we look at “cooperative hunting”
between groupers and moray eels where groupers will actually go up to
where a moray eel is actually sitting at and actually shake their head
in a specific rhythm. Moray eels will come out and they will hunt
together because the moray eel can get into the coral reefs and
actually chase out fish that the grouper wants to eat and they both get
to eat because the grouper will end up, you know, chasing the fish back
into the, you know, into the coral reefs.
That’s one example. Another example is where baleen
whales in New South Wales, Australia. There’s was a small
town there that was right on the coast that actually had orcas that
would actually chase baleen whales into the bay and there was the
trophy tongue that was the payment that was give to the orca whales and
so orcas would chase the baleen whales into the bay, the humans would
come out in their boats, spear the baleen whales and they would leave
the whale in the water for overnight. That was the requirement and the
next morning the only thing that would be missing off the baleen would
be the, if anything, the jaw and the tongue, the rest of the whale was
left which where all the blubber was and so this is how, this went on
for quite some time, apparently, quite a few years, there was a number
of things of why it ended but this is another example of
“cooperative hunting” so if humans can do it,
certainly, excuse me, if animals can do it, why can’t humans
in business do it, I mean, I’m using analogous examples here
but it’s definitely something that, you know, can be done.
GT: That’s a telling example,
Richard and it sounds like a win/win for everyone except perhaps the
baleen whale. I wanted to say if it can be done by animals, can it be
done by business people?
RP: Absolutely. Here’s some
classic other analogous examples or examples in the business domain.
There’s the Fraunhoffer Institute in Germany which is a
network of German Universities and engineering department heads mostly
within those universities all collaborating and actually using PhD
students to actually work on problems that are brought in to the
Institute for money. So they can actually fund actual research on the
part of their PhD students and on top of it actually solve technical
problems. In a sense, what Fraunhoffer has done is turn an academic
institution into a bunch of mercenaries for hire, you know, hired help
to solve technology problems especially if your own organization does
not have technological wherewithal to hire an army of PhDs to solve a
technical problem.
So there’s a classic example of rethinking the, you
know, the infrastructure and the resources you have at hand. The other
one IBM where they’ve went from a semiconductor company and a
mainframe manufacturer to a provider of IT and consulting services.
They’ve completely changed their business model and their far
more profitable with much less capital and infrastructure costs and so,
again, you know, they’ve reevaluated their resources and
began using them in new ways to create new business models and revenue.
And so, that’s probably the best way to do it in that sense.
Hopefully, I’ve answered your question.
GT: You certainly have and then some. OK,
next question, though, the examples you cite, do these require a level
of cooperation that’s still not pervasive in the business
world. How can that be achieved?
RP: OK. So, it goes back to,
let’s step back again and use one of our analogies from the
animal world, right. It’s Darwinian Evolution. I mean,
we’ve got biologists that have figured out that, you know,
this cooperative interspecies hunting that really enables this to take
place. Now, the question is, is, again, it’s a cooperative
approach so if we look at that in that context and go OK, how do I do
this in a cooperative sense within my business, if I’m an IT
person, my business and my stakeholders and I look at this, and
basically speaking you have to, number one you have to get connect with
all the other partners in your organization.
The first one I’m going to give you based on my own
experience is absolutely, positively involve yourself with finance,
critical that the finance organization be involved and then obviously,
you know, partner up with what we’ll call “early
adopters” that want to have themselves enabled at the same
time, you know, will share in the risk and the development of such an
infrastructure for your organization. I actually have a process that I
would actually suggest which goes to how do you actually do this. Would
you like me to go through that, Gian?
GT: Sure. Please do.
RP: OK. So, basically, I have a six-step
process and some people may see this as a bit challenging, but the
first step is or the thing to understand is basically put your people
on dangerous ground.
So, if you don't want to put you and the head of IT or as the CIO out of a job, and all of your people, essentially, you have to I
believe have somewhat of a moral responsibility to help maintain these people's positions and jobs, you've got to put them on dangerous
ground. Which basically says this: you're going to use fear.
Now some people will argue against the use of fear to motivate people. Some people will go, "Oh, that's not a good thing to do."
OK, suppose that you have the vision down and every one of your employees understands that vision and you haven't raised the specter of fear
as part of it. Will that be enough to get them motivated to act?
For some of your employees with eh knowledge, tools and know-how on how to make that vision materialize, they will do their job, but
they will have those issues I'm talking about.
What about all those individuals that don't know how to make that vision materialize for your organization? We can go into all the
reason why people don't buy in or support the visions. These root causes have as many solutions as there are problems. The only way I've
consistently seen around this dilemma is to actually provide your people with the right set of innovation tools from the outset and set
expectations that they are to use them.
If you start with that, you can quite effectively circumnavigate the need to use fear.
If you don't have the innovation tools, to look, find, see and think differently then you have before, then you only have fear left as a
backup. Fear combined with a direction will actually focus the minds of these employees to find ways to meet the needs of the vision. They'll
actually go out and find the tools but now you can't fight them.
And what kind of tools are you going to go use? My personal preference is for the tools to be made available first and then set the
vision. That way you don't have to use fear at all. Give them the tool and make it happen. Doing things the same way as before and expecting
results to happen is unwise.
So if you don't have the tools, I recommend combining fear with vision. Much as BMW did. BMW management with the factory manager is
saying, "Listen, come up with a better solution, turn yourself into a profit loss center and a revenue center versus to a cost center. We
need to change mentality. Go make it happen."
The second thing that you need to do is take stock of all your
business unit operational partners including Sales and Marketing, then
you determine what your IT core competencies are, you’re not
going to have the same in your company as it’s going to be in
another company so that’s going to change the competitive
landscape but you need to understand them.
Fourth, go find the key innovation elements and understand
what level they’re at within the company. I have a slide that
actually speaks to that in the complementary slide set that we have
along with this podcast. You want to team up and pilot with one to two
business units to start with. Don’t go global yet. Just some,
you want to pilot this, you want to work out the bugs, you want to
address their needs, find the revenue opportunities and be looking
specifically for where IT can get dollars to be brought into the
enterprise. You’re gonna be, by working with these folks
you’re gonna learn to see how to think from a profit and loss
standpoint vs. from a cost center mentality.
And then lastly, refine and reiterate is step and repeat what
you’ve just done with these first two, worked out the bugs
and then show them that these other business units or organizations
within the enterprise how you can do this.
GT: Lather, rinse, repeat as
we’re fond of saying. You create a recurring revenue model.
At what point, how extensive or elitist should this movement be within
a corporation? If everyone is innovating, who’s producing?
RP: Oooo, how elitist? You know,
I’ve heard that before. I think it’s
context-dependent and dependent on the needs of the organization. The
first thing I’ll mention is this is look at what the
innovation elements that you need like innovation management,
innovation strategy, metrics, infrastructure, methods and tools and
incentives, management, rapid prototyping capabilities, innovation
training. These are all key elements to enable the enterprise as a
whole within the product development business unit environment but if
we look at whether or not this should be extensive, again, you start
off small and you grow it organically.
And I would actually argue for a requirements-driven approach
from an idea management, product development management standpoint,
environmental innovation management, enterprise-wide innovation
management and innovation life cycle management. We could go into
detail about what each one of those consists of but I’ve got
those in the slides and I think those actually will do a better job of
sort of explaining it on their own but if people have questions, they
can always get back to me about it.
But as far as it being elitist, I don’t think that
an enterprise can afford not to have everybody actually trained in a
number of these different aspects of innovation but it needs to be
driven from somewhere and IT can begin that discussion by asking these
questions that then force a larger conversation if these types of
elements are not being addressed so I would actually say,
don’t make it elitist but in once sense but you want to
create a network within the enterprise that actually enables innovation
to take place organically on its own.
If I look at things from a military perspective which is
arguably a good model for organizations as well as the competitive
environment since warfare is reasonably considered to be the ultimate
form of competition at least in some people’s terms, some
people would argue giving corporate innovation officer or corporate
innovation officers sort of, you know, a special group go off and to
this, I think that happens later on down the road once you’ve
got in place all of the right infrastructure elements because you can
look again in the complementary slide set that we have is,
there’s a number of other pieces you need to have in place
and the least of which is senior management involvement and support and
that’s, I mean, there’s money you’ve got
to get in order to fund all of this and so it becomes a matter of
showing your value first before you can step into, you know, the domain
of actually enabling innovation, I mean, the truth of the matter is
when we look at what innovation is about, it’s about
minimizing your risk, it’s about shortening the life cycle
faster than your competitors and how do you know how to go about doing
that, I mean, one of the key things I’ll mention here, very
specifically is that if you look at minimizing risk and shortening life
cycles which is really the challenge of your business unit partners,
I’m going to tell you that, you need to help them minimize
the risk of uncertainty, shorten their time to sale, time to market,
help them manage innovation life cycle, the new product development
life cycle and so the only thing that I know of that’s
actually within the domain of IT is they can actually directly help
this with actually has to do with the ability to rapidly prototype
innovative concepts. I’m going to give you some examples that
I personally have been involved with at least two of these three.
One was the fly through tool, also known, it was also an
extension off of CATIA at Boeing that they did on their 777 programs
the first aircraft designed virtually first before it every, you know,
metal to bolt was ever done, you know, anything they did the flight
tool allowed it to perform form, fit and function checks. This is an IT
tool that was used to help enable the product design teams, minimizes
risk, shortens the product life cycle, lower cost for development for
this particular program which is now considered to be at least one of
the most stellar achievements on the part of Boeing. As a matter of
fact, the guy that actually helped to drive it, Allen Mullaley ran the
777 program. Guess who he’s running now? He runs Ford.
The other tool is the Valor DFM tool that I personally
experienced, I mean, again, I’ve worked on the fly through
program or tool at Boeing that’s how come I know about it and
then there was the Bower DFM tool at Intel where I was faced with a
very complex number of boards and a very complex server design and the
when I say DFM tool I mean the Design for Manufacturability tool. What
it is is a CAD tool, computer-aided design tool, for manufacturing
designs that helps you assess compatibility between manufacturing
constraints and design for manufacturability rule adherence here on
the part of the factories. Well what this enables you to do is to act
as an advocate back to the design community to or for the design
community with manufacturing because you can actually say,
“Hey listen I gotta make some changes,” the design
rules, these design for manufacturability rules, they actually prevent
me from delivering a product that I need. That’s the first
thing that it does. Second thing is that you can actually turn around
and you’ll actually know for sure that you’re not
going to be able to fit that particular design into the manufacturing
envelope when you’re building a complex server and so those
in turn becomes a way to sanity check everybody, again, reducing risk
to uncertainty we’re actually able to spend more board
designs and get more iterations out of this.
Another example, spreadsheets used by Wall Street way back
when when Excel and all these other ones came out and essentially they
enabled the ability to ask questions by, you know, by these financial
institutions that they were unable to ask themselves before, I mean,
simple tool, but all of these three tools I’ve just mentioned
to you here, they’re all IT tools and so this gives an
example of the types of things that help to enable innovation just from
a simple application standpoint that I think is missed on the part of
many people, they don’t quite realize the capabilities
they’re having here and it’s important for IT to
capture this.
Something else I will very seriously recommend to your
listeners, Gian, is the importance of rapid prototyping and spending
the time actually getting into it because here’s the thing
and why it’s really important. Virtual prototype models cost
far less than their physical prototypes and can be created in a
fraction of the time. The more prototypes and prototyping cycles per
unit of time that you have, actually provides more polished, final
product that goes to the market. You can actually use quick and dirty
prototypes to actually turn clients into partners that help to again
bring out a better product to the marketplace and on top of that
prototypes save money over the length of the project and so
it’s a critical tool to be used across, entirely across your
enterprise in every way possible, I mean, IT people come at this from
this angle, serious, Gian, this is a huge benefit that the people are
not looking at it in those terms from profitability standpoint so my
recommendation is go, read Michael Schrage’s book
“Serious Play: How the World's Best Companies Simulate to
Innovate”. It’s an exceptional reference on the
value of rapid prototyping and what IT can do. So, there’s
that aspect.
There’s number of other challenges in the IT
environment that I go in to that are in the complementary presentation
that we have here, Gian. Do you want me to go into those or go more in
depth or are we at the end of our time, here?
GT: We have a little more time if you can
give us a couple of indicative examples.
RP: OK. Let me see here. OK. OK. All right.
Well, let me do this. IT needs to enable its partners. Some of the key
things that one of my colleagues, a Russian colleague that has been
working in innovation and dealing with a lot of corporations for easily
the last 15 years actually identified a number of things that were
issues that I have also witnessed in my experience in the corporation
world in enabling innovation across enterprise. There’s
knowledge overflow problems, there’s knowledge search
problems, there’s lost knowledge problems, there’s
miscommunication problems, there’s invisibility problems
where what was done in the past or what you’re doing now and
what should actually be done with respect to a particular task, a
critical thing because it’s tribal knowledge and you want to
be able to grab ahold of those things that were done in the past so
that you’re not recreating the wheel or redoing work
that’s already been done. There’s the ability or
the lack of technology intelligence. There’s the lack of
metrics to measure success of innovations across the whole innovation
lifecycle. There’s a whole variety of aspects that
I’ve listed here that are really, really critical for
enabling innovation across the enterprise and again, opportunities that
exist for IT themselves within that and I’ve actually even
included a little mock up that came from my Russian friend, Valery
Souchkov that sort of captures, at least at a graphical level what are
the different elements. I won’t bother going into each one of
those but what I have done is try to actually create a what is a
sustainable innovation system look like and I think and if we use that
as a, you know, as a what we’ll call an ideal final result on
the part of, you know, the IT organization and turn to ourselves, how
do we, you know, enable all of these different elements because I talk
about the working environment, the vision and strategy for innovation,
now that has to be owned by the partner business units, the culture
supporting innovation, the processes, practices, tools methods and
systems, and how they enable all those different pieces. I think
that’s, and there’s a slide in there
that’s graphical, I think people will get it very quickly and
this is very generic, relatively high level with a little bit of detail
in so that you could actually use it as a selling approach if you
wanted to from an IT perspective and go and talk to you business unit
partners and that’s the reason why I created it for you.
I think if we go to the end of that presentation, I think
there’s two things for IT to do as a conclusion, right. One
– support and enable your business unit on the operations
partner, again combine knowledge and process management that you
already have, right, to solve those problems of knowledge overflow,
etc. as well as this external/internal communications aspect.
It’s more than email and I think the last thing
that’s or the second thing is to develop a profit-center
focus and mentality in IT. I think this is critical for IT’s
next level of evolvement as a part of the infrastructure and you want
to build that infrastructure architecture tool based off these
requirements, these feedback and inputs from your actual users within
your own organization. Once you get your inside done, you know, your
inside how, your inside part of your house is squared away, then you
can begin looking externally and you can start talking about the
feasibility and reasonability of external focus part of IT actually
working in an elite way that you had originally asked, Gian.
GT: OK, that’s great, Richard. I
think that I’ve been reading this, poring over your
presentation myself -- and that’s poring not pouring for
those that are still with us -- and I think they should stay with us
and go to this presentation. I think you start out with simple concepts
to detailed, the great examples and then when you get deep into things,
you have very complex, yet simple to understand diagrams about how this
collaboration can really work and going back to where we are which is
the need for infrastructure architecture to really reflect requirement,
the input and the feedbacks from actual users as we said. And, on that
note, Richard, I’d like to thank you very much for taking
time from your busy schedule.
RP: You’re welcome.
GT: Thank you Rich and this will lead to
our second podcast next week and we’ll examine why the
lessons in the 2500-year-old book, Sun Tzu’s Art of War are
still being earnestly studied by both Richard and by thousands of other
business managers. Listeners here can visit www.ebizq.net/firstlook
for
an executive summary and full transcript of this podcast if
we’ve piqued your interest and as an added bonus, Richard has
made available that full slide show presentation of the points detailed
in today’s podcast and as an added bonus, you can use the
comment link on the first look landing page to ask any questions of
Richard that he’ll address before, during and after his
future podcasts. Until then, I’m Gian Trotta of eBizQ.net
thanking you all again for your valuable time.
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