Original weblink: PWC on Innovation
A friend of mine reposted this article on his LinkedIn profile, which is on Innovation, and is something I found quite interesting. I'm posting it here, because it holds very true for the ICT industry in New Zealand, especially now that the UFB project is about to get going (more on my views in a coming post).
The main points:
"Demystifying Innovation: take down the barriers to new growth," the drive for innovation must arise from the CEO and other executive leadership by creating a culture that is open to new ideas and systematic in its approach to their development. The innovation process generally has four phases:
- Discovery: Identifying and sourcing ideas and problems that are the basis for future innovation. Sources may include employees as well as customers, suppliers, partners and other external organisations.
- Incubation: Refining, developing and testing good ideas to see if they are technically feasible and make business sense.
- Acceleration: Establishing pilot programs to test commercial feasibility.
- Scale: Integrating the innovation into the company; commercialisation and mass marketing.
The study also identifies seven misconceptions about the innovation process:
- Innovation can be delegated. Not so. The drive to innovate begins at the top. If the CEO doesn't protect and reward the process, it will fail.
- Middle Management is the ally of innovation. Managers are not natural champions of innovation. They to reject new ideas in favor of efficiency.
- Innovative people work for the money. Establishing a culture that embeds innovation in the organisation will attract and retain creative talent.
- Innovation is a lucky accident. Successful innovation most often results from a disciplined process that sorts through many ideas.
- The more open the innovation process, the less disciplined. Advances in collaborative tools, like social networking, are accelerating open innovation.
- Businesses know how much innovation they need. Leaders must calculate their potential for inorganic growth to determine their need to innovate.
- Innovation can't be measured. Leadership needs to identify its ROII--Return on Innovation Investment.
ICT is a capital intensive business; that means LOTS of cash spent by companies is classified a certain way and can be depreciated over future years, much like any other asset can be. If I spend $1m developing a new product, it means I can take a charge to the business accounts over the life of the product, rather than realise all costs up front. This might sound boring and a little dry, but it's a fundamental tenet of how investment works and the behaviour it drives in a company. Put another way, if you spend $1m buying a business, you expect returns over the life of the investment, like any other investment. The more the better.
The interesting conundrum though is the last point; Innovation can't be measured. At least, not with significant accuracy in advance of the investment. Any investment carries risk, which can only be reduced by understanding more about the nature of the investment as well as the people making the promise.
The significance of the last point is that Innovation involves Research & Development - words that drive cold sweat into investment folk. Simple statements like 'Online Ordering', 'It all just works', 'It shouldn't be this hard' - well, Simple is difficult to engineer and takes a lot of effort. Folks have marvelled at how easy the Apple iPhone is to use - but prior to this, the industry threw GOBS of Innovation money at the concept. Apple did it better - and I bet they went down a lot of dead ends and wasted efforts in the process.
That's a hard business case to write - 'The estimate is $4m, but about 15-30% of the project involves stuff we've never done before'.
UFB has been pitched as $1.35bn public money investment, matched by at least equal private sector investment. The industry has thrown out estimates of $3-6bn of their investment over that time. Personally I believe it will be even more than this - but that is not a bad thing.
Innovation doesn't occur just in technology - it can and should happen with distribution, delivery, user experience, billing and so on.
But each change requires commitment and reason, and an element of risk. Some changes don't deliver new revenue - but they improve how a service is used and what customers experience.
One of the best I have seen is with 2degress, on their Pay Monthly plans:
I can set a billing threshold for my account, so I don't get billshock. For example, $250. At 80%, or $200, I get a warning text. At $250 my account gets suspended until I unlock it. It's a simple set and forget procedure, avoids opportunity to blow my bill (a BIG problem with Pay Later services), and gives me huge confidence to use it.
Where the innovation is required: unlocking it. I have to go online, or make a call to the call centre.
Why can't I just send a text back to a service number to say 'thanks for saving me, please unlock my account now'?
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Comment by Dratsab, on 6-Jun-2011 10:11
On your last point - maybe it's because if your phone has been stolen, it'd be too easy for the thief to unlock your account and rack up a heap more credit?
I don't use any 2degrees services, so don't know how any of their systems work, but this would seem like a logical reason to me. Innovation is one thing, but you still need to have a measure of care.
On the whole, it's going to be interesting to see what happens in respect to software innovation in this country because of this: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10724282