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From Pilot To Enterprise Solution: How Analytics And Innovation Design Pace Digital Transformation

A proactive approach to change management

12May

88% of the Fortune 500 companies of 1955 are now gone. Think your company is keeping pace with digital? Around every turn, companies are challenged to transform and adapt. As technology continues to transform the economy, aligning organizational structure to maximize the benefits of digital is going to require a robust innovation strategy.

The Fourth Industrial Revolution, Second Machine Age, or Age of Disruption, whichever your favorite buzzword, one thing is certain - today’s corporate watchword, 'transformation', has no historical precedent.

This year, the World Economic Forum’s annual gathering of world business and political leaders was dedicated to exploring the transformative powers of velocity, scope, and systems impact on business. Programming centered on how the velocity of disruption and innovation are evolving at an exponential rate. Disruption is being experienced in nearly every industry in every country, and the breadth and depth of change is affecting entire systems of production, management, and governance.

Across all industries, computers and digital technologies are doing for mental power what the steam engine did for muscle power. Surprisingly, though, many organizations haven’t fully taken advantage of the technological disruptions currently available. Moving from digitization (the Third Industrial Revolution) to the benefits of recombinant innovation (the Fourth Industrial Revolution) requires more than simply raising our digital IQs.

Business leaders and today’s decision-makers must appreciate our rapidly changing environment. Traditional, linear mental models do not appropriately address the forces of disruption and technological change shaping our future. Contemporary innovation strategies require us to constantly rethink our business models, customer expectations, talent, culture, and organizational forms.

Connecting innovation to strategy

Given our digital, analytics-driven world, our natural tendency is to build a strategic priority around big data and the IoT, but the solution isn’t to just build a digital strategy just because everyone else is. Transformation into a digitally-driven organization requires total organizational commitment. Moving past the hype takes a measure of resolve that few companies demonstrate. A 2015 survey by MIT Sloan Management Review and SAS Institute revealed the inconvenient truth about the unglamorous but necessary actions required to improve decision making with analytics.

Gary Pisano, of Harvard Business School, points out that when thinking about innovation opportunities, companies have a choice about how much of their efforts to focus on technological innovation and how much to invest in business model innovation. 'As with any good strategy, the process of developing an innovation strategy should start with specific objectives tied to helping the company achieve a sustainable competitive advantage,' he writes. 

This means moving beyond generalities, such as 'we must innovative to compete,' 'we need innovation to create value,' or my favorite, 'innovation is the future.' Providing no sense of which types of innovation matter, these are not strategies.

Big Data meets Big Design — Meeting customer expectation and product enhancement through creativity and analytics fused innovation

According to Michael Krigsman, founder of cxotalk.com, the executive suite has to have a clear plan for the future, and a way to put the company on the road toward delivering on that vision. They can’t hide the innovation team in the basement. They need to inject innovative thinking into every process in the organization and that requires reconsidering every process.

To meet customer expectations and product enhancement demands, traditional technology and management consultancies are partnering with design and innovation specialists. The combination proves how central innovation design is to business today. Innovation is simply too important to left to chance or good fortune. Once limited to pretty packaging, modern design is an incredibly broad discipline, encompassing everything from product & services, branding, and business models to corporate strategy and structure.

To ingrain innovation design as a core competency, the overlap between management consulting and design consulting includes several high profile transactions. McKinsey buying the design firm Lunar in 2015 in one example. This February, Deloitte Digital acquired Heat to become 'the world’s first creative digital consultancy.' Accenture acquired Fjord in 2013. And, last month, Fahrenheit 212 joined forces with Capgemini Consulting.

Combined technology/management and innovation consultancies can quickly turn big ideas from pilots to scalable, enterprise level solutions.

Creating a culture for collaborative innovation and organizational form

You’ve probably heard it already. Data is the new oil, bacon, currency, soil, next big thing, and the force behind a new management revolution. Wait. Data is the new bacon? Apparently there are even t-shirts available. Makes me miss Ed Hardy. Matthew Mayo at KDnuggets says it best - 'data is the new everything'.

Despite being awash in information, many organizations are still starved of analytical meaning. Michael Schrage, a research follow at MIT Sloan School’s Center for Digital Business shows the real challenge is recognizing that using big data and analytics to better solve problems and/or make decisions obscures the organizational reality that new analytics often requires new behaviors.

For many businesses today, decision making may be more data-driven, but the organizational culture feels the same. Mr. Schrage’s research proves the quality of big data and analytics, ironically, mattered less than the purpose to which they were used. The most interesting tensions and arguments consistently revolve around whether the organization would reap the greatest returns from using analytics to better optimize existing process behaviors or get people to behave differently. But the rough consensus is that the most productive conversations centered on how analytics changed behaviors, rather than how it solved problems.

Getting the right answer, or even asking the right question, turns out not to be the dominant concern of high ROA enterprises. But how those questions, answers and analytics align, or conflict, with individual and institutional behaviors matters more.

Accenture’s 2016 Technology Vision Report claims the success of any company going through fundamental digital transformation is understanding that it is, first and foremost, a people issue. Before a business can truly enjoy the benefits of data-driven decision making, an organization and its people must first be aligned to a common purpose. Common purpose starts and ends with culture.

In 2014, Microsoft CEO Satya Nadella offered an interesting blog post: A data culture for everyone. According to Nadella, with the right tools, insights can come from anyone, anywhere, at any time. When that happens, organizations develop what can be described as a 'data culture.'

'However, a data culture isn’t just about deploying technology alone, it’s about changing culture so that every organization, every team and every individual is empowered to do great things because of the data at their fingertips. This means bringing together people, IT and developers to create a cultural shift that is just as important as systems and infrastructure. In a data culture, everyone benefits when more people can ask questions and get answers. In a data culture, the entire effectiveness of an organization can elevate. This is especially true when every employee can harness the power of data once only reserved for data scientists and tap into the power of natural language, self-service business insights and visualization capabilities.'

Addressing digital disruption with innovation design isn’t easy. But with the right culture, enabled by data and analytics, it can be a reality.

Learn more about Gray Matter Analytics here.

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