Many organizations are not designed to innovate effectively or fast. They lack the necessary processes, talent, risk tolerance and leadership alignment, as well as a culture that encourages, rewards and promotes innovation. In order to innovate effectively, the traditional organizations need to embrace the “Unorganization” structure to meet today’s market demands.
Capgemini’s new and tested global Applied Innovation Exchange network, breaks the traditional model; instead taking a multi-party collaborative approach and balancing external and internal thinking to assist organizations in cultivating and applying innovation within their enterprises, and specifically to their most strategic business processes.
Presented by Lanny Cohen, Group Chief Technology Officer, Capgemini at Sogeti’s VINT Symposium
Learn more on Capgemini’s Applied Innovation Exchanges: https://www.capgemini.com/applied-innovation-exchange
4. Startup investment in 2015
$7.5
billion
21%
905 deals with startups
Total business deals 2015
SOURCE: Thomson Reuters data published by PwC
5. startups in the San Francisco
Bay area
17,000+
of startups fail in
the first year
new innovation centers
opened over the past
6 months in 20 countries
56 80%
SOURCE: Thomson Reuters data published by PwC
6. Annual spend
on R&D
$650
billion
of new consumer
product
launches fail
are too slow to
market
85% 90%
SOURCE: Thomson Reuters data published by PwC
7. This is a profoundly uncertain,
perpetually disruptive marketplace
8. • 52% from the year 2000 no longer exist
• The iPhone = extinction of 27 business models
• Uber is 7 years old, valued at over $66 billion
• Snapchat valued at $10 billion after 4 years
14. Business and IT
alignment
Business model
innovation and growth
Buyer sophistication
and state-of-readiness
Getting started
Innovation is still not the whole story
There are plenty of cool new technologies in the market today
These are seen in typical innovation centers which generate a lot of excitement and buzz
But none of this matters
In 2015, Corporate venture groups invested $7.5 billion in 905 deals to fund startups, accounting for 13% of all venture capital dollars and 21% percent of all deals
This level of investment has not been seen since the dot-com bubble.
The money is there, but all the investments in labs and venture funds have yet to prove they have any value today. Which brings the question, is it possible to do corporate venturing in a big organization – are they too risk averse and too slow in their decision processes?
Innovation centers are popping up everywhere -- just in the last six months 56 innovation centers opened in 20 countries.
There are over 17,000 startups in the San Francisco Bay area alone and that’s not considering other growing hot spots like Tel Aviv, Singapore, Dubai and more.
Everyone wants to get into the startup market, but how do you sort through this mound of startups to find exactly the right start up for your specific projects/needs?
Good luck trying to do this on your own with 80% of startups failing in the first year.
a) Leading companies spend over $650 billion on R&D every year.
b) Despite this investment, over 85% of new consumer product launches fail.
c) In addition, 90% of companies consider they are too slow to market.
52% of Fortune 500 companies from the year 2000 no longer exist
We are in a marketplace where Billion dollar companies can suddenly disappear,
The introduction of the IPhone in 2007, resulted in the mass extinction of 27 business models
On the flip side, new innovative companies can appear just as quickly
Facebook is a 12-year old enterprise, while Uber is only 7 years old.
Snapchat is now valued at upwards of $10 billion only four years after its birth
a) Faster Pace:
Today innovation cycles are measured in days and weeks, not years.
b) Source:
Longstanding business models are shifting
c) Impact:
Better payoffs for customers – products, and services are better targeted to the customer’s needs
d) At the same time, companies don’t have the processes or the culture to cope with it.
Most companies are ill-equipped to act, achieve, and sustain innovation– primarily because they lack the following:
Talent: In the traditional organization, hierarchical decision-making prevents agility, speed, and creativity; pro-active, bottom-up innovation is lacking.
Culture: Few CEOs pursue innovation as consistently as operational efficiency
Risk Tolerance: Traditional organizations are adverse to risk – failure is not allowed. Traditional organizations are built to be stable rather than disruptive in nature.
Process: R&D is the main innovation engine – it rarely come up with pioneering innovation despite the abundance of resources it has at its disposal and when innovation comes along they often don’t know how to employ it and scale it.
4 design principles are needed to make innovation stick
Speed
Scale
Safety
Certainty
Innovation is not a random act
Need to be more prescriptive
Planned
Measured
Predicted
What we see:
Imbalances exist between business and IT motivations
Business Model innovation is moving to the foreground
Interest is strong, but buyer sophistication and state-of-readiness to act are low
Action and impact are in high demand, but organizations struggle with how/where to begin
A vigorous framework is needed to foster the exchange and application of innovation.
allowing exploration and experimentation in a safe, secure and immersive environment
leveraging the latest tool suites and methods, accelerators and design thinking
all underpinned by a robust governance model
Discover
Devise
Deploy
Sustain
A multi-disciplinary ecosystem is needed to drive Applied Innovation. There must be a collaborative, co-creative approach to build prototypes, proof-of-concepts and demonstrate business value.
Ecosystems thrive on the energy that comes from sharing ideas. To create this energy you need to combine different types of people, partners, and even ecosystems together.
Innovation experts
Partners
Academia
Start-ups
3rd party R&D
Venture funds
Private equity firms
You also need an experience-based innovation facility where you can make it all happen. One that features:
A highly collaborative environment
Performance-focused innovators
An open design
Multiple party participation during the innovation process
A geographical location in close proximity to other ecosystem players.
Emotional Engagement
Inform
Inspire
Incite
Ignite
51% of new innovation centers list “partnering with an ecosystem” as their top priority. They are starting to realize the value in partnering with relevant startups and ecosystem players, rather than simply gaining access to technology.
Also worth noting is a focus on enhancing the customer experience
The “Unorganization” is structured to meet today’s market demands
Talent: Innovation becomes an organic part of the organization
Culture: Business Model innovation moves to the foreground, rebalancing the decision-making proces
Risk Tolerance: Experimentation is built into the culture – not afraid to fail
Process: Ecosystems constructed to foster innovation collaboration
New Unorganization model leaders:
Uber
Uber digitally link drivers with people needing rides. Uber's commission revenue is over two billion dollars on ten billion in gross spending by passengers.
Airbnb
Airbnb matches property owners who wish to rent out to travelers. Airbnb collects a commission that averages 11% on room rents. With nearly a billion in annual revenue, AirBNB is being valued at around 25 Billion
Amazon
Amazon’s biggest impact has been in the hosted storage and processing business known as Amazon Web Services. Amazon has also dominated the cloud computing sector. Revenue from Cloud Computing exceeds IBM, Google, and Microsoft combined
Google / Facebook / Linkedin / Zillow
Internet companies that offer information and services for free, and make their money by selling targeting advertising, or better positioning within search results.
More established companies are forging new disruptive business models as well. For example:
GE Digital
Transforming a 130-year-old traditional company into a digital company
Changing fundamental DNA in people, processes, systems, and tools
Innovating with customers quickly and frequently
Implementing rapid iteration –pushing the envelope every 30 to 60 days
Siemens
Today Siemens is utilizing knowledge exchange platforms, idea competitions and research partnerships as a unique approach of open innovation.
Employees can openly discuss developments together, identify the best ideas, and transform their concepts into market-ready products.
Siemens’ Innovative Ventures departments not only partners with Startups but creates its own.
The Bridge by Coca-Cola
A unique Commercialization Program for startups
Startups range from early stage to growth startups
Software solutions are ready to commercialize
Six-month program provides tangible commercial guidance, plus opportunity to pilot within Coca- Cola and chance to license product to Coca-Cola and/or its Partner
Singapore Government
Singapore has earned a reputation as an innovation hub at the cutting-edge of modern business.
A vast new entrepreneurial ecosystem is being created in Singapore, which aspires to be the Silicon Valley of Southeast Asia.
With unemployment at 1.9%, Singapore is striving to be the first Smart Nation powered by big data and analytics technologies, and next-generation connected and sensor networks. For example:
A network of sensors, cameras and GPS devices embedded in taxi cabs track traffic, predicting future congestion and alerting drivers to alternate routes.
New technologies detect and treat early gastric cancer; tele-health rehabilitation systems transmit data wirelessly through sensors attached to patients’ limbs as they carry out therapy in their homes.
With unemployment at 1.9% and the world’s highest per capita income rates has turned into the Smartest nation and true hub of innovation.
a) A robust process is needed to manage Applied Innovation, allowing its employees to explore and experiment in a safe, secure and immersive environment that is designed to foster the exchange and application of innovation.