Breaking Down Business Innovation Today Vs. 1961

Innovation is more than a new gizmo or a slick website. It's an entirely new way of thinking—something AT&T understood all the way back in 1961.

In business, innovation often results when ideas are applied by an organization in order to further satisfy the needs and expectations of a target market. The topic of ‘business innovation’ is vast and can differ significantly from person to person. Let’s define some context for our discussion purposes first. According to a IESE Business School paper:

“Business model innovation, which involves designing a modified or new activities system, relies on recombining the existing resources of a firm and its partners, and does not require significant investments in new technology R&D.”

Recently, I stumbled upon the AT&T video archive—‘Seeing the Digital Future (1961)’. Remarkable how far the world has come—yet, the more things change, the more they stay the same. I think this old video below captures the sentiments of business innovation quite well.


In this context, business innovation:

  • Focuses on the how of doing business, as opposed to what, when, and where
  • Emphasizes value creation, as opposed to value capture
  • Recognizes that partners can enable essential activities, as opposed to helping with non-essential tasks

Leading business innovation requires: creating the right environment, applying ‘accessible’ technology, and a methodical management approach.

Creating The Right Environment

The first step in creating an environment for business innovation is having an organizational culture that:

Unites the strategically oriented top of the organization with the tactically oriented bottom

Fosters horizontal collaboration within the organization and across its boundaries with outside partners to identify and assess new opportunities

Ties investments to business strategy and measures value created by business innovation

Applying Technology

Business innovation doesn’t have to be technical—but increasingly almost all business innovation is wrapped up in technology. Mobility, cloud computing, social media, and analytics have forever transformed global business ecosystems. Technology today:

Automates transactions and work processes, generating higher productivity and efficiency. Employees, customers or business partners can access services with speed, convenience, and personalization. Think of customer self-service (i.e. self-checkouts at retail stores, Internet check-in for airlines), employee self-service (i.e. self-management of benefits), and online sales.

Empowers fast, effective decision-making across the enterprise and its partnership network. Think of analytics (i.e. data mining, big data), intranets for dissemination of best practices, and extranets for rapid sharing of information with business partners. Empowerment enables the goal of being easy to do business with by providing front-end workers with intelligence and decision support in their interactions with customers, business partners, or other external stakeholders.

Facilitates real-time monitoring of operations and business partners through such practices as daily close, operational alerts, and dashboards with drill-down capabilities. Think of monitoring tools and enterprise risk-management processes. Business technology enhances transparency of business operations, rapid detection and resolution of management control issues, and accurate reporting of the key metrics of business performance.

Innovation can occur in any of these activities, but on a higher level technology can enable entirely new business models (for example, direct to the customer, multiple-channel integration), new products and services (for example, digital products and services, digitized customer service), and new modes of organizing work (for example, globally distributed work practices).

The focus here is not so much on specific technologies as much as on the development of digital options, the digitization of products and services, and on experimentation with new technology-enabled business ideas.

A Management Approach

The debate about who should drive business innovation is never ending. Is it the CEO, the CMO, the CIO, or is it the emergence of Chief Innovation Officers?

In reality, leading business innovation requires cross-functional, cross-collaborative teams to:

Assess: Closely examine the business and operations model from the perspective of the organization’s current position. Next, articulate drivers for change and analyze the impact on partners, suppliers, and customers. Finally, evaluate the organization’s own ability to execute, focusing on enterprise assets and structure, management capability and operational practices.

Create Advancement Roadmap: A roadmap must accomplish two key objectives: 1) define the execution path to implement the business capabilities defined in the previous step; 2) define the steps necessary to ensure that the organization is able to drive value from the execution. Both types of roadmaps are required, for it is the combination of analytics and the ability to leverage them that creates a business result.

Create Multiple Scenarios: Roadmaps define a path to the future; scenarios are detailed blueprints of alternative future states. Each scenario is developed to a level of detail so that the dependencies among the strategy, business model, operating model and supporting technology can be understood before making the often costly investments necessary to build a capability.

Manage the Execution Process: Execution has two critical components: program tracking and value realization, just as a roadmap has two aspects: readiness and implementation. Program tracking is the familiar exercise of project management, ensuring that a result is on time and on budget. Value realization involves comparing the business results achieved to those envisioned in the scenario.

Creating value from business innovation requires a long-term perspective. Successful organizations continue to demonstrate the benefits of a comprehensive, and sustainable approach to innovation and growth.

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[Image: Flickr user Nicholas Erwin]

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