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.