Strengthening the Organization and Accelerating Value – a fresh look at Capability Building

Embedding an effective innovation program in your company requires a fresh look at capabilities. We find that very few – if any – large companies are truly set up to enable innovation to do battle with how the business landscape is evolving.

We strongly believe every established company must focus on new capabilities because of two key trends:

Company structures, and therefore customers and areas of competition, are evolving
Digital transformation – ‘everything’ is changing and will become automated to the greatest extent, driving new customer expectations and experiences

Changes in companies

HBR published a recent article questioning the classification of companies because the current reality of ‘platform’ companies is not reflected in the traditional classifications.

Consider the five most valuable companies in the world, according to S&P: Apple, Alphabet (Google), Amazon, Microsoft, and Facebook, which we call the Fab Five. Despite the fact that these companies make money in different ways — Apple makes most of its money on hardware, Microsoft on software, and Facebook and Google from advertising — they do share a lot of similarities. But Information Technology doesn’t seem like the right category to group them into.

If the five most valuable companies in the world aren’t playing by the “business as usual rules”, it’s critical your company doesn’t either. However, to make this kind of switch in strategy and tactics, every company will need new capabilities.

The Impact of Digital Transformation on People

With companies changing, what will be the impact to each of us as individuals? Consider this compelling article that goes into great depth on how digital transformation might impact our daily work.

Gerd described the growing need to focus on the right side of our brain. He believes that algorithms can only go so far. Our right brain characteristics cannot be replicated by an algorithm, making a human-algorithm combination — or humarithm as Gerd calls it — a better path.

The great news is that as we invest in new ways to consider our ecosystem, we can simultaneously grow and organize the capabilities within our companies to respond faster and with greater impact. Here are a few considerations to get started:

Who are the customers we can engage?

• As you look at your market, how would you map out where your customers are today and where they are headed in the next 5 -10 years?
• What trends, (think virtual reality, IoT or mobile apps) are impacting your customers? How will that bring new players into the market? Where are these issues being considered within the current innovation process?
• How is customer insight and feedback coming into your organization, then being leveraged in the innovation process? Is innovation at your company considering both incremental pain points as well as long-term growth?

What we’re learning is many large organizations don’t have a strong process for bringing the customer perspective into the organization to drive innovation. When that is lacking, it’s difficult to define and answer the question: “who are the customers we can engage”? If you’re struggling with “who”, you will certainly struggle with “how”.

What are the people and processes to strengthen?

As you consider the innovation process, think about these key areas – how does information come into the company and the process, what happens with the information, and how do subsequent concepts make it into the market?

How information and feedback comes into the process. Customer insight, trends, new competitors, new products, etc. can all be rich sources of information. Who currently owns this process? What is the structured approach to “make sense” out of the noise?
Once you have the insight, what do you do with it? Are you getting these pieces of information to a diverse-thinking team? Are you considering the impact on today and tomorrow? Are you using this information to drive innovative ideas? What programmatic approach drives transformational innovation within your company?
How are concepts moved into the market? How long does it take a concept to move through the current process? How does customer feedback come into play with rapid prototypes? Who in the organization owns moving new concepts into the market? How well is this team supported?

We’ve seen teams struggle to bring these pieces together. These capabilities are usually owned by different teams, staffed by employees for whom this is only a small subset of their role, or in some cases, these capabilities are completely ignored. The good news is these capabilities can be developed using known tools and techniques.

What value can we accelerate?

Let’s assume you’ve gained the insights, and you have a structure to activate the insights. Let’s consider too how to accelerate value. This can be particularly tough because there are so many friction points:

• In your organization, how are risk and reward balanced throughout the process?
• When does the team consider ROI, or other traditional financial measures? (Hint: Not during the business case)
• What is the current timing for getting the legal team involved in new concepts?
• What structures are in place to support moving from concept into fully operational product or service? Are different types of projects treated differently?
• Does everyone involved in the process have an alignment around driving value quickly and what it means for your company?

While this one can be a particularly tough nut to crack, consider the value to your company. This is where we are seeing the greatest struggle across all companies, likely your competitors as well. So, the value of accelerating these capabilities is not just for the current set of initiatives, but for an undetermined amount of time where the first to build an effective capability wins.

This isn’t an exhaustive list of capabilities to build, but just these capabilities have potential for great impact. As the landscape continues to evolve, it’s important to start building or enhancing these capabilities.

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