The strange dichotomy between desire for innovation and contentment with the status quo plays out across all spheres of human endeavor from public governance to private technology companies. That shuffle is intersected by innovation constants like Moore’s Law and persistent human aspiration for things like autonomy. How then do mature (and thus more rigid) corporate entities survive the onslaught of light-footed disrupters that seek to topple their established organizations? Globant and BBVA have been trying to figure that out together.
Human nature often tends towards complacency – a feeling of control over the environment that what “is” will continue to “be.” (Think Kodak.) Paradoxically, evidence of a rapidly evolving world disrupted by new competitors, technology, social trends, and geopolitical shifts demonstrates that such complacency is treacherous. The agreed upon medicine is innovation, but how is it prescribed?
Pablo Brenner, VP at Globant, went with the 10,000-foot view of innovation (during a recent Globant-sponsored webinar). He spoke of employing the basic “what if” analysis that is the cornerstone of any kind of predictive forecasting. Forecasting is innovation’s less coveted counterpart and perhaps the key brainstorming instrument that leads to innovation itself. The “what if” that sparks more systematic forecasting is often better done with an interdisciplinary team that is not intrinsically tied to the business at least in part. Those heavily invested professionally, emotionally, and financially in the continuation of the status quo are often the last to conceptualize its disruption.
“We put together people from different industries and technologies and try to foresee what may be done using different technologies or business models,” said Brenner. He mentioned that this first phase, as it is directed towards innovation, is sort of a “divergence” where as many ideas as possible are created. The next phase where there is a “convergence” of ideas seeks to ask the question, “Why not?” in regards to implementation. Often, an idea will be possible immediately or within the next few years given certain cost and technology conditions that can be predicted because of the constant of Moore’s Law; x2 faster every 18 months, x2 cheaper every 18 months, and x2 smaller every 18 months.
In concurrence with Moore’s Law, Brenner painted a picture of technology advancement and cost reduction in the context of the iPhone. “In 10 years’ time we will have things 100 times faster and cheaper. We will have iPhones for five dollars, or everything will have iPhone capabilities included,” asserted Brenner. The advancement of technology means marginal costs of tech infrastructure and distribution will reach zero; data storage, processing power, bandwidth, and digital distribution costs are all set to become insignificant.
Becoming a Disruptor
Marco Bressan, former Director of Xerox’s Innovation Group and current Director of BBVA Labs that deals with Big Data and Open Platform efforts, set the stage by showing an admittedly boring slide of a bank’s essential functions. He recounted how colleagues questioned why a PhD and innovation professional like himself would want to go to work for a industry like banking, not know for radical innovations. He then illustrated his challenge by overlaying the same slide with names of the plethora of companies that have sprung up to attack traditional banking; the Bill Gate’s quote, “Banking is necessary, but banks are not,” hung at the bottom of the slide. Bressan mentioned that unlike other industries that have been completely displaced by innovations (i.e. bookstores by Amazon, video stores by Netflix, media companies, etc.); banking still has the financial means to fight for survival.
Referencing Robert Wolcott’s Innovation Radar that segments innovation into 12 categories under the umbrella for four tendencies regarding the area of innovation, What or New Offerings, Who or New Customers, Where or Presence, How or Process, Bressan declared it necessary to go in the direction of What – New Offerings and Who – New Customers. “If you really want to put up a fight, you need to go in the direction of your core, your product, your platform, your solutions, your customers…you need to understand what you are really good at. When you have had a business that has been highly profitable over the years, you’re really not too good at telling what you’re good at – this is why the concept of Open Platform is so critical to our strategy,” said Bressan.
Open Platform as explained by Bressan is opening up core competencies as services so that others can take advantage of those skills and build new solutions on top of them. A common example could be smaller merchants piggybacking on the logistics skills of Amazon. In BBVA’s case, payments, risk assessment, and secure transaction processing, etc. are opened up as services through their open platform. Bressan gave the example of an online retailer that wants to let customers buy on credit; obviously they wouldn’t want to build their own scoring engine and would do better to utilize the scoring engine of a bank. He talked of the shift of clients from end-users to developers using toolsets provided by a company like BBVA. Companies, especially in the digital space, are already well versed in such practices; Facebook has 162k registered developers, Expedia’s affiliate network accounts for 90 percent of its 28 million in revenue, and BBYOPEN hosts seven APIs for third parties to develop retail apps for Best Buy.
Guibert Englebienne, CTO at Globant, stated that although innovation is a top three priority of CEOs two major obstacles are risk aversion and the inability to test and implement ideas quickly. Englebienne addressed escape velocity, which in the context of a larger corporation means getting employees to think and design in ways that break free from the status quo.
“You need talent…and you need to open up for that with things like Hackathons…you need to speed up feedback (and give it context with gamification, which helps build organizational social tissues)…collaborate with other corporations…embrace agility…master rapid prototyping… and prepare architecture to react,” he explained.
The opportunity for many business leaders is to exploit the transition of technology from a productivity tool to a way to connect directly with consumers. Despite that paradigm shift, Englebienne asserted that companies in large part are still using old command-and-control management techniques, thus squandering the knowledge quotient when compared with what a flatter organization could bring to bear. He spoke of autonomy and choice being a conduit to motivate employees to innovate, and mastery and intellectual challenge being important to keep employees motivated to push the boundaries. Sharing that mastery with a community and getting feedback, intrinsic human yearnings according to Englebienne, are also imperatives.