Please stop innovating - digital heresy from Accenture

Stuart Lauchlan Profile picture for user slauchlan November 30, 2014
Telling a room full of CDOs to stop innovating was part of a long list of actions to take to move to digital, according to Accenture

Narry Singh accenture
Narry Singh

An eternal frustration to me as I’ve attended the various industry conferences over the years is how all too often the sponsor companies waste their ’15 minutes’ when they deliver their keynote address.

Rather than seizing the opportunity of a captive audience to position themselves as thought leaders and original thinkers, they proceed to do a sales pitch by running through everything that’s in this year’s product catalog, topped and tailed with a couple of expedient numbers from Gartner. Just because you’ve paid for the coffee shouldn’t mean you don’t have to try!

As a result, I now tend to approach the sponsor’s address with a large degree of trepidation, which can, I’m pleased to see, be proved wrong on occasion as it was at the recent Chief Digital Officer Summit in London.

The address in question came from Narry Singh, Digital Strategy lead for Accenture EALA., which was one of the main backers of the day. But rather than a sales pitch, Singh delivered a down-to-earth analysis of where organizations need to focus on their digital transformation journeys and in the process came out with some ‘sit up and pay attention' moments.

Take this for example:

Please stop innovating!

That one took the audience by surprise. You could almost feel a ripple of disquiet round the room as an audience of CDOs used to having the orthodoxy of innovation preached at them from every vendor pulpit struggled to take this heresy in.

Singh, who’s recently returned to the UK after many years in Silicon Valley, cited his Californian experiences to justify his plea:

The thing I’ve found over the past 7 or 8 months now that I’m in Europe is how often I’ve heard the word innovate. I don’t think I remember hearing that word back in Silicon Valley. I don’t think it was what entrepreneurs do. It might have been a by-product, but I don’t think most of us were trying to innovate.

Talking about innovation sounds to me like a a defensive stance. You’ve already lost and you’re now responding to something else. Whereas if you actually identify four or five customer problems that haven’t been solved, it just switches a slightly different gear. If you’re a telco, stop trying to do all these wonderful things and just fix the voicemail. That’s a problem I can get behind. I don’t think you innovate to fix anything.

Under pressure

Singh told his CDO audience that he had some sympathy for their position at present, suggesting that they face huge external and internal pressures. Externally he pointed to the likes of Amazon and Google who he said move into new markets because they have:

a very healthy and annoying disrespect for industry boundaries. They didn’t get the memo that they should stick at what they do. They have a lot of buzzwords such as wearables, Big Data, drones and things like that that can be repurposed.

Then there’s the Ubers and AirBnBs and Nests, companies that move into an established industry sector as new competition that came from nowhere:

Most of them are coming from industries that aren’t your traditional competitors but are coming at it completely differently. I don’t think AirBnB is a hotel or a hospitality company, just as Uber is not a taxi company. Nest was certainly not started from a spin-off from a utility company. As we start thinking about digital strategy, the idea of competitiveness in whatever industry you’re in becomes an interesting question.

Internally the shift to digital is all too often held back by too many doubts and questions, such as unclear monetization models for digital initiatives. Will digital offerings cannibalize existing revenue or create new ones? Can an organization’s existing IT support a digital transformation? Are you organizationally structured to support such a move?

The end result is indecision:

We often hear from chief executives ‘We don’t really see any billion pound opportunities. We see some things that move the needle here and there, but we don’t see anything that really moves the needle. We don’t agree on the size or urgency of digital.’

That’s more important. You better agree how quick digital matters because that’s usually what’s going to galvanize organizations into doing something. Some of this is down to not having the stomach for digital investments. We kind of know what needs to happen, we might even understand the investments required, but we don’t have the stomach for it, it’s not where we are.

Incumbent power

That’s the bad news. The good news, according to Singh, is that contrary to popular wisdom, digital success doesn’t need to belong to the disruptive enfants terrible. Established companies have several first mover advantages that they can exploit:

There has never been a better time to be a disrupting incumbent, although it won’t be easy. What appeals to me about the incumbents right now is number one, the understanding of local markets and the ability to scale geographically worldwide. That’s a massive asset.

Understanding local regulations and how you scale is not something that most tech companies do well in new markets. Ask Google in China or Uber just about anywhere outside the US. The idea that you have a trusted brand and can leverage that in a different capacity is a massive asset. Your installed base is a massive asset. Cash on the balance sheet is still a massive asset.

I would say there’s a higher probability of succeeding with established assets than a start up thinking it can compete on the global scale.

But there are certain capabilities that established organizations are going to need, not the least of which is a sense of timing:

The biggest challenge in sensing disruption is timing. Have you got the timing right? You need to have a pretty good sense of timing to know how much time you have to respond. In client organizations we see a pretty good sense of what might happen, but nobody answers the when question.

If you want to empty a room of digital consultants really quickly, don’t ask them what, ask them when. It’ll get quiet pretty soon.

Even the seemingly most innovative organizations can miss a trick, he added:

A few weeks ago there were some Google folks promoting a book they’d written. They were asked how it was that Google is so good at sensing and responding. To my surprise, the Google guys smiled and said ‘We kinda suck at it. If you look at last 15 years we missed and were caught napping by Facebook, LinkedIn, WhatsApp and Twitter. If you combine those four companies that’s a market cap of $284 billion and two billion active users.’. It’s not easy if you’re only looking into your own backyard. Competition is coming from outside your backyard.

Things to do

So how do you know which horse to back? Singh advised another perhaps counter-intuitive idea for the audience - don’t worry too much about chasing the ‘next big thing’:

It’s not that trend spotting doesn’t matter; it’s more about what trends don’t matter. There’s a lot of bright shiny objects out there. It’s knowing what doesn’t matter and what is going to be a distraction right now that is almost more important than saying what matters.

I think beacons could be interesting in retail. Will they be as interesting in five years time - perhaps. But if I had to compare investment dollars in beacons with a very simple inventory management supply chain system powered by sensors where I can see payback in a year, then I wouldn’t even use the word beacons in my boardroom.

Two years ago most of us would have said we’d pay $200 for a TomTom, but right now it seems like an absurd notion. Timing matters!

Organizations need to look at how to self-disrupt, said Singh:

Find a bunch of crazy entrepreneurs who don’t know much about your industry and give them a couple of hundred thousand dollars and 12 weeks to figure out a company that could seriously hurt your business. That really starts to reveal some implicit, orthodox dimensions that you didn’t know you had.

Beyond that, put your house in order by ensuring you have the right structures in place to enable digital strategies to take root. This may lead to some less-than-traditional approaches, added Singh:

The Garanti  Bank in Turkey has a wonderful concept. They basically decided they can’t fix things within the current structure so they created a competitive bank called iGaranti that has all of our assets and does what we would have done if we weren’t encumbered by legacy.

For most of these new structures, having some kind of a virtual start-up depending on where you are in your digital journey is good. Usually the movie goes: someone get’s inspired by digital, then there’s a hunt for Ocean’s 12. You’re looking for Danny Ocean, someone in the organization who just gets stuff done. Then Danny Ocean will pull together the Chinese Gymnast, the Casino Hacker and the Bomb Exploder.

But you need your Ocean’s 12. If you don’t have your Ocean’s 12, it’s not going to go anywhere. Then that Ocean’s 12 becomes a separate virtual start-up. They have freedom and access because they have respect in the organization and they usually get stuff done.

Singh cited a particular example that appeals to him:

One of the most phenomenal digital enterprises that I have seen oddly enough is this company with half a million employees called Walmart. It is breathtaking what they do when they decide to do it. It has 1000 people who are away from the mothership that spend time building new businesses in different areas.

It’s also essential to think about partnerships and building out ecosystems around you:

If you look at some of the digital leaders, they have an intrinsic and intuitive understanding that they are not doing it alone. One of the things that surprised me over the last year is how few organizations have a title of EVP of Corp and Biz Dev. To me, this is a capability that’s going to be critical. Are you creating an ecosystem of partnerships as vested in your success as you are?

Expedia gets 90% of its revenues from APIs and partners. Telefonica is doing a great job with APIs to some of the biggest global brands and selling them non-sensitive, anonymous customer information for geo-targeting and advertising. Partnerships matter. It’s a mind set thing. Some of them are counter-intuitive. In San Francisco, Amazon’s doing a deal with US Postal Service for grocery deliveries to your door. It’s a wonderful complementarity for what they both do well.

Finally, make sure you can measure the success (or otherwise) of what you’re doing by using appropriate metrics that will deliver motivation in digital :

I do love financial metrics, but they are dangerous if they are premature. In the media world, the traditional metrics apply. But if you’re building a mobile business, there are three metrics that are more important, such as sessions per daily active users. There is no better indicator of how sticky your users are and how active they are.

The second metric is retention. The third is the ratio between the number of active users as part of your downloads. I’m not saying downloads aren’t important but the problem is the number of people who download your app and then never come back.

Monitor traction metrics. They vary for oil and gas, they vary for retail, but every business that is digital has traction metrics that are more important in the first 18 months than financial metrics.

My take

An engaging and informative pitch from Singh that challenged a few belief systems around the conference room and left people with food for thought at the sponsored coffee break. Beats doing a sales pitch any day!


A grey colored placeholder image