I do have to admit I did head to the Web Summit a little biased. Everything “smacked” of commercialization on a big scale. I never really got past this judgment. I had been invited so should I be so cynical or ungrateful, perhaps not but it is hard not to get past this “sheer” commercialization and randomness. I’ll explain randomness later.

When you are told “Forbes has said we run “the best technology conference on the planet”;  or The Atlantic that Web Summit is “where the future goes to be born”;  The New York Times that we assemble “a grand conclave of the tech industry’s high priests.”

These overhyped claims roll on “Bloomberg calls it “Davos for geeks”, Politico “the Olympics of tech”, and the Guardian “Glastonbury for geeks”. My eyes are rolling on these. Overhype is an understatement.

The publicity blurb adds “At a time of great uncertainty for industry upon industry and the world itself, we gather the founders and CEOs of technology companies, fast-growing startups, policymakers and heads of state to ask a simple question: where to next?”

This year over 70,000 people were heading to Lisbon for this Web Summit.

The claim and I don’t doubt it, is that we’ll be joined by the CEOs and founders of the world’s biggest companies, the most promising new startups, influential investors and leading journalists. Can you find them might be another challenge as they are mostly tucked away in VIP or off-limits sections of the venue, pampered and feted? I doubt they lined up for their food from the food trucks provided. The lines were impressive and off-putting. I quickly gathered it was best to eat well before you came to this event and just keep “walking the halls”

It is claimed that the Web Summit is the world’s largest gathering of international journalists, attracting more than 2,500 global journalists from publications including Bloomberg, Financial Times, Forbes, CNN, CNBC, and the Wall Street Journal.

So let’s read all the reviews over on the Web Summit press site, where there are presently only THREE entries in SIX weeks as of today. Something is not connecting here. Where is the validation of worth provided by this largest gathering of journalists on the Web Summit site as the point of reference, of knowledge, insight or benefit? This focus on size and commercialized comes through again. Put some meat on your bone, Mr. Cosgrave.

The Commercial Icing on the Cake, the timing for me was suspect.

Then I receive this to add the extra “commercial” icing on the cake, announce just days before the event.

On the 3rd October 2018: Paddy Cosgrave, CEO of Web Summit, and António Costa, Prime Minister of Portugal revealed today that Lisbon will remain the host city of Web Summit for the next decade. This is under a new €110 million deal, including a large-scale venue expansion to facilitate the conference’s fast-growth.

After a robust and competitive tender process involving offers from over 20 cities across Europe, the company behind the world’s largest technology conference has come to a new agreement with the Portuguese government. As part of the deal, Web Summit will receive €11 million per year from the country.

Do your sums, this is a sizable revenue-generating event

Now assume 70,000 attendees at Euro 1,000 (average) and you have Euro 70m coming in for this one off event over as well as this Euro11m, not bad for any events, in today’s environment.

 The good news I have just found out is the Web Summit has launched a $50 million VC fund baptized Amaranthine, the Financial Times reported. According to the FT‘s sources, the new fund will use the data from the conference to support its investment decisions, such as which startups have attracted more attention at Web Summit and what trends are worth attention. The fund will supposedly take minority stakes in startups at all stages, however, judging by the fund’s size and the startups that usually exhibit at the conference, it’s more likely to be anywhere from pre-seed to early growth stage.

Amaranthine will reportedly be led by David Kelly, the co-founder of Web Summit, and Patrick Murphy, who used to work for Goldman Sach’s and Universal’s venture arm.

The other part of the pre-event announcement was that additionally, a part of the Web Summit deal to stay in Lisbon deal is to double the size of the Altice Arena and FIL (Feira Internacional de Lisboa) within the next three years, to fit Web Summit’s growth forecasts. Commencement of the first phase of the expansion project will start in the coming months and will be completed for Web Summit 2019. I think it is WAY TO BIG now

The catch for anyone interested in buying out Web Summit is that they have also agreed to a €3 billion buyout clause. The buyout clause is the minimum, the expected economic impact of Web Summit to Portugal over the duration of its contract, and provides security to Portugal that Web Summit will remain in its capital for the 10 year period. It was estimated by the Government of Portugal that Web Summit generated more than €300 million in economic impact for the country.

It is also claimed Web Summit has also helped elevate Portugal and Portuguese companies on the global stage. Portugal was described recently by The Wall Street Journal as “one of Europe’s hottest stars, with tech startups mushrooming and investment pouring in”.

Web Summit CEO Paddy Cosgrave said: “We’re incredibly excited to be staying in Portugal. Without a larger venue, this would not be possible. Even until a few months ago, we never believed it would be possible. The plans are incredible and we’re very thankful to all those who have worked on them.

 This deal gives certainty to our many attendees from over 170 countries around the world, and our thousands of partners and exhibitors. It also gives certainty to our host country, and to our team of more than 200. Together we’re looking forward to doing incredible things.

 Finally, I should add that we are grateful for the support and encouragement we received from other cities who also placed bids to host the event. We very much recognize their efforts and definitely appreciate all they have done.”

The Mayor of Lisbon, Fernando Medina said: “This 10-year agreement with Web Summit will decisively make Lisboa a key capital for innovation, entrepreneurship, and talent. I am confident the next few years will bring a sharp rise in IT investment and employment in Lisboa. We are thrilled to continue to write this story together with Web Summit”

So did it live up to this hype? Simply NO! Well not for me. Let me explain

The Guardian’s quote of “it defines the Ecosystem”. All I felt was,  if this is defining an Ecosystem, then watch out, it is a lop-sided, highly unbalanced event. As my title of this post suggests “I was overwhelmed in its sheer size and underwhelmed in what it actually delivered to me”.

To start with just take a look at the jaw-dropping schedule.

Check out the schedule here. You can search by title, description or speaker or use the topic filter. The Web Summit App feeds you like the hungry beast sifting through so much. For me, personally it was not that easy to visualize, schedule and that was my loss in not investing pre-event time on this. This needs serious organization and focus and I am not famous for that!

The event crowds 1,200 speakers into limited time slots over three days. So in 20 to 30 minutes, all these speakers deliver a message. Inspiring, shallow, motivating, boils down to “depends” Some were listening to speakers for much of the time. Not sure why unless you wanted to top up your “I listened to..” claims to fame.

There are over 2,000 startups set up in ALPHA, BETA & START tracks pitching away to 1,400 Tech Investors. Where do you go, what do you visit really needs organizing your day and that is very hard unless you have a very definite focus.

I was talking to a fellow Web Summiteer on the way home on a plane. He valued the experience, he found some value but spent significant time having to “weed out” all the messages, promotions, announcements he was getting on his “Web App” as he found the “keyword” suggestions too broad, so he lost time picking up on those points of value in any (decent) organized way.

I believe Digital has not really arrived at the show to help the attendee pack in the real return on investment. It is great at knowing where the night time events were happening or the next “star turn” on the main Stages if you can get to them on time. Somehow the Web Summit people need to think about investing in a greater digital event set of tools. I was not impressed.

Without a doubt, the Web Summit is a very different beast than I had experienced before.

I felt I was sometimes on a different plant. The halls were seething, thousands were constantly on the move, walking these halls, chatting, meeting and drawn together. Some of the vendors like Amazon were pitching to packed audiences. So it attracts without a doubt.  It has the chance to mingle, seek out tech founders, investors, prime ministers, magazine editors, heads of global banks and multiple startups all under one roof. This is certainly unique and draws in such a diversity. Yet it is a little scary. I am not a techie, geek or seeking to compete in the technology Olympics. I wanted to learn a little more from some of the bigger sponsors on where the future was heading (AI, Big Data etc). To be honest I am learning more ‘rooted’ to my desk than I did for much of the time at this event.

The one thing that certainly struck me was how CISCO, Google and Microsoft were working very hard on AI face image recognition. The one that caught me was Pedro over on the Cisco booth and his coffee brew to show how tired you were. Take a look, the coffee grinder worked overtime. While over on Google it was comparing your face to famous people or past ones or Microsoft comparing you to a dog breed. So they decided I was comparable to a bluetick coonhound. I am smart, devoted and tenacious- I’ll take that! Fun maybe, helpful for them to build out their data bank of faces but where was the serious stuff I had come to hear from very significant tech companies. Missed it and they are missing what they can deliver if they bother to think beyond “missing out” by not being there. They need to rethink what they can offer web summit attendees.

Most of the big players in technology were sponsors but lacked any real substance. They had the bigger booths (bigger pockets) but gave little of their size, contribution or what they offered. Perhaps there were so many startup or tech investors they have not figured out the appropriate messages they want to deliver into such an audience like this. They had a brand presence but not a great amount more, they should. You do notice the Chinese, Japanese and most of the Asian tech world is dramatically underrepresented at the event- I wonder why? Bring them in, it might raise the bar for the established ones.

One example of a decent delivery of content was Amazon,.  I managed to listen to the Amazon AWS presentation on Knowledge Graphs and found out it was repeating what I knew or had invested in research, so not much new came out of this, apart from the fact it is a very hot topic figuring out AI and where Knowledge Graphs fit within this. The event was overflowing though and many more just gave up and simply moved on, back in the mass migration from one hall to another.

Actually, Amazon did seem to have the most active presence in what they are offering, so they get my vote for being the most tuned in for what was needed and provide as good awareness material. The other biggies were honestly a waste of time for what they should have given me or countless others as a “captive” market. So underwhelming.

Now the real appeal for many is the networking.

I think there was so many who were attending were having this as a reward for their contribution to the work they were doing. I think there was some serious partying going on at the Night Events and recovering during the day. So maybe CISCO had tapped into our need to check how tired we all were with their coffee idea.

At all the events, night and day, you can start up some great conversations but getting to know this one person is that someone you should talk too, is still left to chance. I cannot figure out why the bracelet we are all told to wear throughout the event can’t work with the web app to “signal” and connect us more.

Networking is such a generic term, how can the Web Summit turn this into a real powerhouse of connecting investors, those that are pitching and actually looking to change job. I loved the bland “we are hiring” signs for many, so lacking in anything imaginative besides this. Another lost opportunity

I found it amusing, up to a point, when I was pitched non-stop for three minutes, with his partner or wife I think, holding one or two sales pointers. To stop him and point out he was wasting his time on a randomness that was bordering on the ridiculous.

Randomness is where I want to finish.

This event is far too random, far too diverse, far to big in what it tries to provide; a melting pot “a place where many different people and ideas exist together, often mixing and producing something new”. It is certainly a “potpourri” offering an unusual or interesting mixture of things but does it work?

There was one talk “We cannot rely on algorithms to determine quality” by Ev Williams, CEO, and Co-Founder of Medium and former CEO of Twitter, but in the case of this Web Summit. If Paddy and his team invested in AI and some well-focused algorithms for their event, we might get a greater connection going, even more than presently claimed, with a real validation of its value, a real take-home value over simply tiredness.

As I said this event was both overwhelming in size, and due mostly to this, it failed for me and underwhelming in value I got out of it. I can’t imagine heading back to Lisbon for this event unless Paddy Cosgrove and his team stop thinking size and really investing in understanding what really matters, besides the buzz of this, and that means a very different set of digital solutions, not ones focused on selling hype and tickets.

It is certainly not the “the best technology conference on the planet”. For me, I feel it is an event that needs to be experienced once, a bit like The Great Wildebeest Migration – the annual migration of giant herds of grazers across Northern Tanzania and Kenya is a truly spectacular event. Replace herds with nerds of digital devotees moving around an event, restless for new feeding grounds. Yes, that was the Web Summit for me, the problem is I failed to get across the divide.

The post Overwhelmed, underwhelmed at the Web Summit, Lisbon first appeared on Building Your Innovation & Ecosystem Intelligence.

There is this consistent need or pressure to grow, yet that specific needle stays stubbornly stuck in low growth numbers, even with all this innovation talk and desire. Why is that? We know you simply grow a business by choosing a mix of investing in innovation, merger, and acquisitions or releasing your resources into more profitable activities. Innovation as a dedicated activity still sits uncomfortably within many organizations.

To try and catalyze growth, companies undergo perennial reorganizations, often to revitalize themselves. According to a Deloitte report, 50 percent of companies are undergoing an organizational transformation, yet only 11 percent think they will succeed. What’s worse, 70 percent of transformation programs do fail. In these failures, we only seem to continue to layer on complexity as a further stop-gap measure.

It is no wonder we’re growing increasingly pessimistic about making a positive change to a different transforming model within organizations. Without innovation taking a more leading transforming role, most of our established companies will continue to struggle to break out of their existing approach to business. Far too many are mired in a past business mindset.

One basic argument is that no matter what we do to undertake change, we seem stuck in the Industrial Age of the last century. We claim we are in the innovation age, one where a digital transformation will finally transform us, yet it remains elusive. I recently came across the below illustration of the struggles we seem to be having, in changing our companies from the industrial age to the innovation age. It depicts much of the constraints around how people are still working.

Source: www.swarmvision.com

What is holding this innovation age back?

To start, we face strong countervailing forces that restrict our abilities to break out of our past to move towards a new way of working. Pursuing old business paradigms of how a company should be run is not helping us.

Is it because of this traditional way of working, designed into the company, that we are all becoming disengaged and disenchanted with what we do? We’re often left feeling powerless to influence the type of change that we want to see, to release our creative juices and not simply to make those quarterly reporting numbers or get caught up in constant cutbacks when they don’t meet market expectations.

We are increasingly facing very different competitive pressures. This is a very “VUCA world” – the volatility, uncertainty, complexity, and ambiguity of general conditions and situations we operate within. Pressures are not just external. We often bring them upon ourselves, as we were not anticipating, investing, and looking to build a different type of business. We fail to invest in foresight and insight, continually not adapting and adjusting our organizational skill set around a more agile, adaptive, highly responsive innovating and creative organization.

Every time we begin to call on innovation, we face negative forces. These are the ways we still wish to judge business – on its short-term results and its ability to limit risks. To give returns to shareholders that safeguard their investments. To achieve this, we look for maximizing efficiency and focus on the continued extraction of value from our core. We talk about investing in the future, in making adjacency moves, and in encouraging risk – but is that really the case?

For many, risk management has never been seen beyond the protection of the status quo. This attitude toward a risk-containment approach restricts innovation. It is actually limiting or even sacrificing the future by not investing in all the aspects of growth, especially bold explorations of new growth avenues. They fail to invest in a clear, distinctive capability of innovation capacities, that is fully integrated within their organization. Innovation stays outside the current core.

I am not proposing we abandon the need to protect our investments and to provide a reasonable return for investors. Instead, I’m suggesting more of a conscious shift where we focus on building more effectiveness, extracting more synergies, and exploring greater growth options.

Can you imagine having the same number of people involved in innovation growth as we have that manage the finances of a business? In most companies, we have small, dedicated innovation teams of five to 10 people trying to take on this Herculean task of growing a business through innovation. They are reliant on engaging others, focusing on their specialized areas to hand over their time to innovation. This is often above and beyond their daily job responsibilities.

Approaching innovation in this highly constrained way is simply not a recipe for success even though in recent years we have been trying to make the subject of innovation more attractive by tempting people to join in and participate in multiple ways.

Extracting innovation has become very complex

Let’s all agree that we live in a complicated world. We are continually witnessing growing threats all around us. Competitors are disrupting – even ones who were not around 12 to 24 months before. We see mergers, closures, or once great beacons of industry shrink before our eyes due to new alternatives. I have in mind here GE and the dramatic restructuring pain it is currently going through. We feel increasingly unsafe unless we happen to be one of those sitting in a technology-related business where growth has been extraordinary in recent years (e.g., Apple, Alibaba, Amazon).

But first, when you think of innovation, what comes to mind?

Source: European Commission

In “Opportunity Now: Europe’s Mission to Innovate,” a 2016 European Commission report (a mere 360 pages long), the author makes this point:

“Innovation is also more complex than ever. Complexity, chaos, and non-linearity have been seen since the 1970s as the defining features of our age. But still, our advanced societies find it hard to make robust policy for a complex innovation system.”

We should always start by recognizing innovation as a complex system. As the report defines, a complex system is a place where:

• no one can have a complete map of the actors and forces at play,
• the system’s behavior is not simply the sum of the behavior of those parts,
• feedback loops surprise us and change the behavior of the system,
• the system is “autopoietic”: behaving in a self-driven way and not just in ways we have yet to understand.

The report also questions, quite rightly, that having a pipeline theory as too simple. The author suggests innovation is not like a Roman aqueduct, designed to allow water to flow; instead, it’s a “muddy pond,” rich but obscure.

That is not a comfortable view for business leaders determined to limit risk, maximize resources and be consistent to extract efficiency and be fully effective. Innovation flies in the direct opposite to this need of corporate design. So, we have become highly creative for innovation to be allowed to operate under the same roof as these efficiency and extraction rules and regimes.

We have come up with multiple ways to exploit innovation. It can contribute to the business model, explore the margins, undertake core renovation work, experiment, and prototype, and be completely new to the world. But it always seems to be divided up in different parts of the business. I often feel innovation activities within companies are a continuing set of experiments, needed but not systemized, fragmented in its potential energy by this underlying need to keep it under control and to minimize risk and feel exposure.

Are we dissipating innovation resources or recognizing that one-size does not fit all?

We are fragmenting much within innovation. Is this good or bad for the longer-term? “The Ten Types of Corporate Innovation Programs,” an article was written by Jeremiah Owyang, founder of Catalyst Companies, provides a terrific list of possible types of innovative programs to consider. But by adopting too many, you fragment and possibly dissipate your innovation resources. Owyang offers a good description and examples that make this a highly useful reference point. Which do you undertake or are actively considering?

Many others are emerging beyond these ten types, where “open” sets the tone for building creative spaces, in lab designs or investment by different avenues of VC funding, internally and externally.

To begin with, these ten types of corporate innovation programs form a good starting point to consider what works for you. Which strategies can push innovation further down or out of the company and help move the growth needle for your innovation program? Check out Owyang’s description below.

The Ten Types of Strategy for Corporate Innovation Programs

 1. Dedicated Innovation Team

Corporations often start with staffing an innovation team within the company of full-time employees dedicated to developing the strategy, managing, and activating innovation programs. These leaders are experts at internal communications and are change agents.
Example: MasterCard, Hallmark, and BMW all have innovation teams dedicated to new business ideas, as does Nokia. Learn how Nokia’s innovation team works here.

2. Innovation Center of Excellence

Innovation can’t happen in a single group; without broader institutional digestion, new ideas will falter and fall. Some corporations are setting up cross-functional, multi-disciplinary groups to share knowledge throughout the company.
Example: Various retailers and consumer packaged goods companies enable this. Read: Creating the Physical Space for Innovation

3. Intrapreneur Program

Rather than rely solely on external programs, internal employees – dubbed “intrapreneurs” – are given a platform and resources to innovate. These programs invest in employees’ ideas and passions to unlock everything from customer experience improvements to product enhancements and full-blown internal startups that are then launched from within the company.
Example: Adobe’s Kickbox program is widely recognized as the leading program. Read: Exploring the Intrapreneurial Way in Large Organizations

4. Open Innovation: Hosted Accelerator or Corporate Incubator

Hosted inside a corporate office, large corporations invite startups to embed at their physical locations and provide them with funding, corporate support, and other perks. This brings innovative startups inside a large company for everything from overnight hackathons to long-term programs. Other variations include online open-innovation programs that request – and often reward –ideas from the crowd.
Example: Allianz Digital Labs in Munich hosts startups, and GE Garages enables startups to partner.

5. Innovation Tours

Frequently inspiration comes from outside, not within. Corporate leaders tour innovative organizations, companies, and regions to discover trends in various industries, learn from speakers, meet partners, and be inspired as they immerse themselves in innovation culture.
Example: European-based WDHB and Nexxworks tour executives in Silicon Valley and beyond. See an example of an innovation lab tour from the University of California San Diego here.

6. Innovation Outpost

A dedicated physical office, such as in Silicon Valley or wherever innovation happens in their market, staffed with corporate innovation professionals whose job is to sense what’s occurring in a market, connect with local startups, and integrate programs back into the corporate HQ. Some of them host partners, events, and startups, thereby spreading the function to Internal Accelerator programs. An Innovation Outpost is typically managed by employees – unlike an External Accelerator, which is run by a third party.
Example: Swisscom, Vodafone, and Nestle have opened Silicon Valley outposts. Read Evangelos Simoudis’ blog for insights.

7. External Accelerator

Corporations partner with third-party accelerators to provide sponsorship and/or funding in exchange for relationships with startups and integration opportunities. Corporate innovation professionals often embed themselves in Accelerator offices, fostering relationships with local startups. These External Accelerators are run by third parties – unlike Innovation Outposts, which are managed by employees.
Example: Plug and Play, Singularity University, Rocketspace, Runway, 500 Startups, Betaworks, and more.

8. Technology Education, University Partnership

Corporations can tap into new graduates, early-stage projects and companies, and the network of an established educational institution. In addition to traditional universities, there are new private versions opening up that are dedicated solely to technology training, like Galvanize and General Assembly.
Example: General Assembly, Galvanize, and most tech- or business-focused universities.

9. Investment

Many corporations place bets among the startup ecosystem, with both small amounts for early-stage startups and larger amounts of corporate funding that yields market data, creates opportunities for follow-on investments, and blocks competitors.
Example: Intel Capital is a leader in direct corporate investments.

10. Acquisition

Rather than build innovation from the inside, many corporations acquire successful startups and then integrate. While often expensive, the startup is often already successful, and the acquisition can help the startup scale further.
Example: As one example, Dollar Shave Club was purchased by Unilever for a reported $1B.

Source: Jeremiah Owyang. Some additional links also applied where relevant.

Are we fragmenting our innovation activities or applying a solution to a specific problem?

We do have to guard against “simply” adopting one type of innovation over another. It needs a deeper understanding of what we want to achieve, and then we seek out the tools, methodologies, and solutions. Diving in and experimenting has some value, but some clarity in what you want to build in innovation capacity makes sense first.

If we apply one approach, we are in danger of “shoehorning” innovation to fit a program. Maybe we are then not allowing the idea or innovation we had in mind to evolve in its own way – in its natural path. Perhaps we are only responding to a top-down pressure of fitting initiatives into that same pattern of seeking efficiencies that fit within an organizational design that will eventually choke innovation.

We need a new call for change based on a focused innovation mindset

For the majority today, we are at this countervailing point where innovation is in need of breaking the impasse. We need a different, more holistic set of solutions to manage innovation.

What I want to look at in a series of articles in the coming months is how we can manage risk from innovation differently. How can we build and accelerate different corporate innovation programs? How can we begin to re-equip our talent to build their capabilities and capacities and to recognize that we can design innovation differently to engage in innovation in more transparent, more structured, and more open ways? How can we design our programs more purposefully?

There is a call for finding more methods and approaches that are open and scale well. We need to reset the baseline of innovation through knowledge, collaborations, and building capabilities. We need to build networks and systems designed for this explicit innovation purpose. Let us finally separate “extraction” from “exploration” in the design of companies. We need to strip away complexity within the way we practice innovation today and connect “it” all up in a new innovative design.

***This post was originally provided for Hype and has been republished here

The post Why Are We Making Innovation So Complex? first appeared on Building Your Innovation & Ecosystem Intelligence.

Today, I think we certainly have a beginning point but all of us lack a clarity of the end point of where digital transformation will take us. Why, well I think this nicely puts it, we have to move or be moved. Nicely put Mirko

Yes, we can measure success in our progress but these are in both multiple and equally personal ways.

Each organization is unique. Never has this become crystal clear that when you face your own transformation journey. You can learn from others, you can adapt but you need to clearly understand where you are in your own evolution and capacity to undertake change as it is simply your journey. This has not been as well recognized as it is today when we attempt to make any transition, from the old ways of doing business to the new one; that is highly connected, collaborative and based on our growing reliance on technology and ‘everything’ digital. It can become life-changing.

Each business makes a judgment, on speed, scale, and scope of transformation.

How they evolve, in new growth, in their changing business model, in their innovation, in their capabilities to manage the “spread” of activities required to transform. How do they upgrade or re-orientate their people, their customer-facing activity for example?

The world is moving at different speeds, technology is being implemented in unique ways. We are all making and leaving our digital footprint, each very differently depending on our own situations. Judgment becomes personal, relative to your own situation. We need to measure in those “measured steps” what you need to determine as a transformation journey. Of course, once we have our ideas, we can begin to find ways to measure. It is not a bad thing that we must calibrate this against others, in seeing the outcomes feeding back from our customers and markets but it is a journey that you can undertake as you and only you, have the best grasp of what is needed or required. It is your journey.

Can we look out and give it a ‘hard’ quantification in five or say ten years? Does digital transformation have any easy answers? We can take some broader measures as business is still driven by growth, growth in revenue, in product mix, in-country development, in market share. Or equally how the perception of the company is beginning to change and how the market ‘sees you’ as different and adapting to volatile conditions. You hear the word “exponential” often and that seems a high validation point today.

Seeing the digital transformation story in different ways

I am involved in a community that supports Siemens and attempts to contribute as well as extract better understanding of their transformation journey.

This involvement is being part of their external influencer community. We influence in different ways but more increasingly shape perceptions and undertake exchanges. For me, and I think certainly Siemens Influencers, this is taking on a radically different meaning from that social media aspect alone. It is where there are engagements in deeper meaning and relationship growing, that can only emerge from sharing other’s perspectives.

We have two perspectives for this community to thrive in, the insiders working within a business like Siemens, and those outside, looking in, mutually engaging. This can sometimes be a very uncomfortable, often challenging ‘relationship’ when someone outside challenges the management of an organization. You can face “push back” or simply a rejection, or moments where you can openly exchange and gain from conversations.  Or, you simply add a new dimension to a particular challenge or problem, that is if the other party is prepared to listen or learn.

Many companies talk of diversity, in who they attract within their company but this diversity of opinion, of different perceptions, is as increasingly important. I think Siemens is recognizing this and exploring what this means in value and contribution. It is a privilege to be part of this.

The initiative for this building of a Siemens Influencer Community is driven within Siemens Communications Group, where Clarissa Haller (@clarissahaller), the head of Corporate Communication within Siemens, outlined her vision of this in an article, providing some of the opening values in forming an influencer engagement group in B2B.  She talks the three “R’s” of “relevance, reach and resonance” and that forms a good “mantra” for influencers, in general, to work towards and specifically for influencers working with Siemens, in my opinion. How this group is forming and storming in new ways lies with Patrick Naumann, (@naumannpatrick) the Siemens Influence Engagement Manager. He has the hard task of “herding cats”- An idiom denoting a futile attempt to control or organize a class of entities which are inherently uncontrollable – as in the difficulty of attempting to command a large number of cats into a group (herd). This he does in a number of amazing ways. It certainly is not “futile,” it is very progressive and highly imaginative but it can be a little disorderly and challenging to steer, transitioning change that is radically different from past practices within an organization like Siemens. The diversity within the group influencing needs exploiting in many ways to extract the greater value.

Patrick recently commented in “The 2018 State of Influence 2.0” written by Brian Sollis that shows the progress of influencers and he commented on the impact within Siemens. Being on the inside of the Siemens program this report is lagging behind the evolution. Siemens has been turning aspirations of getting this community to form and influence in unique ways. What Patrick states here, these are getting greater each time we meet. As part of this exposure to Siemens, we are having some significant engagements with their senior people.

Three months ago, while in Munich for one of these community sessions, we met up with Dr. Roland Busch, (@BuschRo), currently the CTO of Siemens and soon to assume the role of COO, in a new structure emerging early next year.

At the time I had mixed feelings on the session but in the past few months, I have been reflecting a little more on this.  Recently revisiting the recordings of the event (part of my misgivings of the session being recorded) I extracted a lot from the dialogues. So the recordings gave me a longer-term value of putting much in a different context.

It reminded me that the perspective of giving events considered time for reflection may deliver many “sound bites” from parts of a session but there is this need for us to piece together a ‘greater’ whole. At the time we react and magnify one aspect and not frame it in something that is greater, more cohesive and lasting. Giving time and reflection can do that. This Q&A gave me the opportunity to consider how a digital transformation journey is made up of so many aspects to consider. There are no easy answers.

The session, a Q&A, spoke around many of the aspects of managing a digital transformation. This was within Siemens and in general.

Dr. Busch presented a very sharp operating canvas that Siemens is working through, their emerging narrative to handle digital transformation and equip themselves to be at the forefront of leading this.

You might have value in watching some of the sessions, short vignettes that tackle specific aspects of any digital transformation journey. These offer the Siemens perspective and are worth listening too.

So each of these questioners is part of this influencer community. I have picked out five that reflect part of the connection issues that make up our digital transformation journey

The first was a question from Lucian Fogoros, (@fogoros), co-founder of IIoT-World, was asking about the present stage we are in, relating to the digital transformation journey, relating Industry 4.0 and asking specifically about adoption rates. Dr. Busch’s reply broke this question down into the ability to deploy, how digital transformation needs to be gradual or can be undertaken in more “bigger step changes” depending on the type of industry each organization operates within. He saw digital adoption coming from “how they show up in each environment” to give us a level success rate. I liked that perspective as it signified it is relative to your own position, industry, and ability to drive change. Huge infrastructure facilities are totally different from re-equipping a whole plant for a new car. Each takes the digital journey in unique ways.

A question from Antonio Grasso (@antgrosso) a well respected and leading digital transformation advisor, zoomed in on Cybersecurity and the worries of trust, of possible roadblocks on the road to digital transformation. Dr. Busch touched on Siemens own focus through their “Charter of Trust” as they can see sustained attacks that might run down (degrade) critical infrastructure as critical to be prepared for. He touches on a concept of simulation of these possible attacks through having a digital twin and working through their Mindsphere platform where you can prepare for these attacks or get levels of adaptive security. to be increasingly secure, wherever possible. Yet it is still a cat and mouse game that needs constant vigilance to stay ahead.

Then a further question from Wilko Wolters (@WSWMUC) a digital specialist in the Automotive world and Lecturer. He raised a question about much of the current roadblock to digital transformation lies in the attitude of the people, in their awareness, current skill set and the ability to adjust and change. He emphasized the need for a “working culture” that reflects a digital transformation. Dr. Busch spoke at some length on finding a new way to unlock the potential in the people, the blending of different engineers into a team environment where software redesign gets increasingly factored in. Then the inevitable “agile development needs” and co-locating closer to market and customer needs and finally, that need for as rich a “diversity” in backgrounds, skill sets, and experiences. It is as much an adaptive challenge in changing the culture as it is ‘simply’ applying digital solutions

One from Antonio Santos (@akwyz), Atos Social Media Business Evangelist and Community Manager, asked one of those great open questions around a digital narrative of “are we talking all about the same thing?” “Are we blurring differences?” Now that has different perspectives (again) be those regional in maturity, in market and company outlooks. According to Dr.Busch we are in very different stages of evolution, there are emerging common understandings of recognizing where platforms, the cloud, data, and analytics are growing in importance to making these digital transformation changes, yet they are very different across industry type, regions of the world and even individual markets on their abilities to actually bring about change within “certain” architecture constraints. Yet Dr. Busch felt there is a growing convergence as: “we continue to mature solutions we bring this convergence”

Lastly, the one question I got the greatest value out of, was one posed by Dean Gratton (@grattonboy), a technology futurist and global influencer. Dean was asking did Dr. Busch see an end result. how would Dr. Busch and Siemens look back in “X” years time and judge success in any digital transformation? Now, this is a tricky question to answer. The reply from Dr. Busch I liked “there is no end point”, he spoke about us all being in the middle of a (digital) chess game, you can see opportunities opening up but the permutations, in this case, are constantly increasing, not closing down. “We are seemingly sitting in the middle of the chessboard”. An interesting perspective.

I got the understanding from this that we are in that wonderful world of perpetual beta. I like the work of Harold Jarche he calls this “the future of work is a perpetual beta”  You pick up the message within the Dr.Busch Q&A here that “we are connecting devices quicker than people” and how do you measure this? The need is to shape it, to leverage on the strengths we know and can see as valuable.

When asked a little further of Dr. Busch on a “harder” measurement, when looking back, it comes back to where Siemens digital business is today and where it can possibly go. Today of the digital business of Euro 5.2 billion, only Euro 1.2 billion is digital services and Euro 4 billion in digital software. It is the ability to grow this in a company that has Euro 80 billion, digital shows its (external) revenue as only 6.5% of total company revenue. This is where ‘exponential’ needs to happen.

The absolute need for Siemens is to grow this part of the business as an increasing share of total business and that requires finding better answers to deploying digital solutions to customers, designing solutions that can be replicated and not reinvented each time and continuing the search for breakthroughs in products, that provide improvements in productivity, efficiencies, in improved and efficient ways. This is, in my opinion, the way to validate and make the digital transformation through the increased ability to build new business model designs, ones that capitalize on this connecting up and the acceleration for innovation in future design, to ‘account’ for the promise of digital.

What is better in understanding digital transformation than having open dialogues?

I think having dialogues, debates, and conversations between those on the inside of our organizations engaging in open conversation with a savvy, smart and digitally aware group of outsiders have real value. Many of the questions and answers are on many a senior executives mind when it comes to digitalization.

This community forming around Siemens is a brave step initiated with Siemens Communications Group to give this richer diversity of opinion, advice, engagement. It takes “influencing” way, way beyond just today’s influencer meaning, of social media influencing. It can become an interesting model in design for companies wanting “dialogues of trust” in community exchanges.

Digital transformation is central to Siemens in its future. It offers a good “window” to observe, learn and gain from.

The post How do we measure success in our digital transformation? A journey of discovery first appeared on Building Your Innovation & Ecosystem Intelligence.

It is then by utilizing robust research and development projects, combined with an acquisition strategy that augments growth, management creates sustainable and evolving business model.

These are the hallmarks of effective leadership. through managing your future development, mostly through research and development, that when combined with a sound acquisition strategy, that you believe will augment your present internal growth, so as to look to sustain the business, longer-term, becomes your contribution as a leader.  These are the bedrock of good corporate management. It seems within GE, all of these have been forgotten or collapsed. Why, I mean how can that have happened?

For a company reputed to have a good management discipline and focus, yet this year, 2017, for GE, it seems all of these are lying in tatters, or some parts will lose out as a consequence, into the future. What has gone wrong at GE?

The last few months have been some of the most shocking ones in GE’s history. GE has been around since 1892 and was one of the corporate titans of the 20^th Century. Since the crisis of 2008, GE has been struggling to fully regain its position but all its actions were regarded very highly as “making good progress” as it maintained a relentless momentum of shedding and acquiring operations, as well as pursuing a buying back of its shares, and paying out the beloved GE dividend. This certainly provided a highly dynamic environment for managing the business. There has been a consistent muttering that this was not fast enough or clear enough. Well, GE faces a very different set of realities today.

Today, GE is in a very dark place at this moment. It is managing a full-blown set of crisis, that has investors highly spooked and demanding answers. Its share price is hovering around $17 per share, whereas, in February of this year, it was ranging in the $31- 32 price. Its market valuation, once over $400bn, is now closer to $150bn.

This is a long read, as the story itself is only just emerging and is a complex one. I simply have to step outside my own innovation comfort box to try to get to grips with the breaking GE story. It has shaken me.  I assume you already have some awareness of what is happening in a company that has been held up over so many years, as a model of good management.

So let’s jump in and try to find some answers to the GE story unfolding in front of our eyes, it is one that has more to come and a finish that is less than clear. Is it too big to fail? A Kodak moment? Will GE eventually break up? Or is this a set of crisis overhyped and those attempting to manage the complexity of this turnaround will simply put it back in good order in the next eighteen months. I just wonder if it does hold more ‘spin’ yet to be discovered?

Whatever, it is a big story happening in front of our eyes and it is generating more coverage by investors than you can possibly read. So here’s my take on it, so far:

Past transformation activities were not enough within GE, the cash has been running out!

Jeff Immelt who ran GE for the past 16 years, attempted to radically transform the business, he really did. GE was beyond the classic conglomerate, it had such a massive financial arm, GE Capital that at one point in that financial crisis of ’08 it had been determined as “systematically to be deemed as an important financial institution to be allowed not to fail”. In preceding years, Immelt stripped away as much of the tangled web of GE Capital to refocus the business on its core industrial business. GE Capital is certainly a tangled web and still might become central to any further crisis.

Yet GE stayed locked into the classic conglomerate structure, where Immelt chose the shaping of this by taking the high road of acquisition and spending, to be his attempt to reshape the business. In Immelt’s view, he was achieving a strategic transformation, yet it seemed he also relied far too much, in recent years, on the significant ramping up of the digital arm, now Digital GE, that equally required lots of cash. GE made a $4 billion bet on connecting industrial equipment via the Internet of Things (IoT) and analytical software with a suite of products called the “Predix Cloud”. This has a significant place in the future but it was not able to alter the conditions that radically changed in the marketplace GE are facing today.

The complexity of the GE transformation is unique and unfinished

This complexity of transformation, when you operate within any heavy industrial asset world, is a significant challenge, especially today when technology is fast displacing dated business models, technologies and ways of work at an ever-increasing pace. A world where others, far more nimble and agile, are able to respond as they are more laser-focused.

Yesterday’s models of the world, especially the conglomerate, has to be equal to the same task of responding to the short-term nature of our stock exchanges and increased returns. Our stock exchanges are still not recognizing the value or rewarding innovation in a time when companies need to be innovative more than ever. There is such misalignment in time for innovation to emerge. This impatience goes far beyond companies and investors, it is hurting the economy and society as a whole as well.  Each company, big or small needs to be nimble, agile and highly focused, on what will return a market premium, or the investor drives your business down even more. GE has been caught in this for some time. Time is not on your side in this world of immediate return. I wonder if GE will follow its rival, Siemens in moving towards more of a holding structure of separate entities?

With all Immelt’s selling off of those slower-growth, lower-tech, and non-industrial businesses, over the years, he just simply stayed with too much of the core business model as central, being managed centrally. He was ignoring the shifts taking place within the marketplace,  or perhaps he had the feeling he could shape them accordingly, simply by GE’s actions and rhetoric. More of his businesses were far more vulnerable than he realized to the changes taking place in these markets.

Even though he doubled the GE investment in R&D progressively, the innovations emerging from the businesses were not transformational enough to counterbalance all the negative positions developing in market shifts, although it produced some significant breakthroughs and advances on what went before.

A slowing growth, a rapid shifting of market sentiment, from fossil fuel to renewables, also went faster than expected. Other more focused companies were re-working their core business models where digital played a part. In retrospect it seemed in GE, it increasingly became the only growth game, in his view, besides acquisitions to bolt on to existing industrial business areas. Digital became overwhelming in management attention, to find and sell digital solutions.

Then came 2017 and the roof caved in on GE

Immelt kept faith on the existing core industrial business, he even recently decided to double down on the fossil fuel industry and you can question seriously was he ignoring the realities of where the sentiment in the market was going. He had a greater belief this was a time to consolidate within core businesses reliant on fossil fuel.

Until this year, a constant stream of GE buying back its own shares, paying out a good, solid and reliable dividends and profit returns has kept the investment market from deeper questioning. Coupled with a consistent upbeat stream of management views has projected GE as a well-run and highly effective, highly optimistic organization. There was a growing denial set in by all that steady reassuring news. Well not anymore, GE recently in its 3^rd quarter review revealed its chronic cash position. In reality, its free cash flow can’t pay its obligations. Its recent acquisitions were not achieving the synergies expected and especially GE power was in deep trouble. Could this have been foreseen?

In 2012 GE free cash flow (FCF) was $16.2bn, in 2015 this was down to $12.6bn, then in 2016, this started to drop significantly with it really “hitting the rocks” in 2017, with some suggesting a negative of  $3bn predicted for this year, although the urgent action currently was undertaken, might pull this back into positive territory, partly due to the dividend being cut in half, allows for this saving to flow through. Some in the markets still view the latest GE predictions with caution, as too optimistic.  In late January 2018, they will be announcing their 4th quarter and end year results, to confirm the full 2017 performance and that will determine, much of the future, and determine even more immediate action.  Presently the GE position is that they will claw back too  $6- 7bn (FCF) in 2018, although many in the market are predicting this might be tough as well. Suddenly they have had to be faced with a cash-starved reality.

So the cash to fund the bets, fund the dividend, keep paying into a pension scheme, keep pushing the digital solution began to unravel, as the main business units generating the cash, built on fossil sources, dropped through the floor. Oil, gas, and power that GE had put ongoing bets on, have become significant cash consumers at unhealthy rates. The other parts of GE, especially healthcare and aviation could not bail them out.

Obligations mounted. Dividend cuts (50% ) have caused significant anguish for the longer-term smaller investor who was partly reliant on that consistent dividend pay-out. The dividend policy is still up for potentially more cutting, the share buyback is highly questionable (if you have no spare cash) and any M&A program suddenly becomes shrunken dramatically, down to small tweaks. Ouch!

Immelt retired and his vice chairs headed also for the exit door

Immelt made a series of expensive big bets that especially investors did not share as winners. The synergies were hard to extract on his promises. So in mid-2017, the writing was on the wall, Immelt needed to go. He resigned or was retired in June 2017 as CEO and it seemed quickly departed as handover Chairman, once the 3rd quarter results come out.

GE was heading for a full-blown crisis and the new CEO, John Flannery, quickly became also the Chairman and undertake a massive review “across the board”. Three vice chairs in Beth Comstock, Jeffrey Bernstein, and John Rice also decided the time was right. In Flannery’s opening discussion with investors, he outlined a dismantling of the legacy of his predecessor as he began with his comment “we need to make some major changes with urgency and depth of purpose”

So what has caused this radical shift to turn GE into a full-blown crisis?

Running out of cash, bad investments in recent big acquisitions, paying out of a dividend that GE’e earning could not sustain and the collapse of its GE Power division and coupled with the continued lackluster of the oil and gas business, transportation, and its lightening business has become the crisis. The business model was broken and was in a real urgent need to be fixed, markets were not performing and GE was becoming even more complex with the layering on of digital to every business, to shift the focus from product and service into product + service + digital.

GE had gone for a doubling down on fossil fuels when the world wanted solar, wind and all other renewable sources of energy, as well as the global customers seemingly determined to keep extending the life of the existing asset and not invest in the new, however much, GE tried, in its selling.

GE was attempting to unwind a very complex beast. It goes back actually a long way. Even in Jack Welch’s time but in the tenure of Jeff Immelt the GE stock fell by about half. Its stock is trading well below where it was 20 years ago. In 2017, so far, GE is the worst performing stock on the Dow Jones Industrial average. The trouble was GE was unable to make a complete strategic transformation, it got caught up in supporting its old business model, just by adding new digital clothes.

Renewable energy versus fossil fuel- a reality check

As solar and wind power costs have plunged, this has been challenging the traditional model of the industry. Mr. Immelt decided to bet the other way by investing in  2015 on Buying the power business of Alstrom for $10bn, a company specifically strong in coal plant designs.

Then he went and paid $7.4bn to merge with Baker Hughes that has an oilfield and gas manufacturing and services business, that has been in seriously difficult market conditions for a long time. This created a merged company where GE retains 62.5% stake. I have heard that In the past the attitude between GE and Baker Hughes in the marketplace was antagonistic to each other. Not ideal for a friendly merger and already the profits of that business for the first nine months of 2017 were down 41%, excluding restructuring costs. The synergies were not materializing in downturn situations.

The Gas turbine market, a significant part of the GE power division, for example, has fallen through the floor, along with the usually highly lucrative improving gas-fired plants has dropped away as the shift to alternative sources of energy continued. GE is not alone on this rapid decline and bad forecasting, Siemens, the other titan founded also in the 19^th century, Siemens in 1847, GE in 1892, has been equally scrabbling to drive down costs dramatically in their power and gas divisions. It does seem Siemens has been well ahead in spotting this trend, warning of the risks within the hydrocarbons- based power, a lot earlier.

Both Siemens and GE are having to deal with some rapid adjustments and downsizing. Inventory needs to be run down so the demand/supply is rightsized and any healthy return to positive financial results for GE might not show through until 2019 at the earliest, most even are predicting 2020, draining GE of much of its management attention.

There is going to be a very painful adjustment in their GE Power, as well as their Baker Hughes division, and related GE Energy Connections business, in adjusting to the present and near-term realities of today’s markets, one of the reduced demands for power and oil solutions. Is this cyclical or permanent? In GE’s case, they will be hoping for some shift in really tough market conditions, presently facing them as they have been placing really big bets in recent investments that fossil fuel will still be needed to satisfy the world’s power needs.

GE divested their Water business a while back due to concerns that the deal would not be approved by the US government. Not only was the Water business highly profitable, but it was a segment that would almost certainly have led to large profits in the future. Selling the water business was, in retrospect perhaps a poor business decision for pivoting away from being reliant on fossil fuel.

The confluence of issues came into reality also in 2017 for GE- a lack of cash finally hit home!

With the power division in so much trouble, on its own, it might be contained but GE’s troubles don’t just end there. The opaqueness of how GE managed its conglomerate has been a source of worry for investors over the years. Until this year a constant stream of buying back its own shares, paying out a good, solid and reliable dividend has quietened the market, along with a consistent upbeat stream of management views. There was a growing denial set in. Not anymore, GE recently in its 3^rd quarter review revealed its chronic cash position. In reality, its free cash flow can’t pay its obligations. Suddenly as I stated earlier, they have had to face up to a cash-starved reality.

Also, the pension fund has been grossly underfunded for some time, where some regard a fair value of the GE Pension fund to be $63b, benefit obligations of $94b and GE’s pension shortfall of $31b, the largest underfunded pension plan in the US. GE has been forced to borrow in new debt $6b to pre-fund some of its immediate obligations in 2018 to 2020. This becomes a real red flag as these obligations only continue to build and will constantly drag down share price for the dividend or shareholder return with this level of obligation. According to one analyst, this obligation of $31b equates to $3.50 each share.  So GE is shifting more to debt but needs to address this pension obligation, in the future.

Finding cash to fund obligations makes for a very uncomfortable position. To have its major business, Power, caught in a severe, possibly consistent declining market, reliant on fossil fuels, makes for a double whammy.

The pressure to save money; to delay payments, to renegotiate supply conditions, to reduce expenditure, all need a high sense of operating awareness, sensitivity and observation of possible consequences, as each changing action has its negative impacts when you are managing to extract cash or delay your spend or payment.

Yet the worries continued unabated.

Until the management of GE resolves the opaqueness that many still feel is surrounding GE. There will always be a feeling by many investors, that “they are spinning a good story,” something laid at the previous managements door of over hype and promise, under delivery. Here Mr.Flannery has been far more open, signaling the problems he is finding

The real opaqueness lies in GE Capital, it needs to become transparent.

There is a growing view that GE has billions of dollars of obligations from reinsurance agreements with other insurers. Each time GE was caught in a bid for contracts on any significant scale, GE Capital took on a portion of the carriers responsibilities of paying and helped in having access to more favourable rates of borrowing, due to its near- bank status (recall the designation some years back of “systematically important financial institution to big to allow to fail”.

Thankfully there is a set of actuaries examining GE’s long-term care reserves, many in the market believe these might be deficient. If there are any skeletons found here then GE would be very much down on its knees. No spare cash, struggling major portions of its business and a lack of growth in many markets is a very uncomfortable position to be in.

So why do I say that the enemy is already within?

Firstly we have the very real shift in the investors in GE. The secured dividend kept its stock as a large retail one, made up of pensioners, portfolio funds and individuals looking to have this guaranteed dividend come to them. There is growing fear the dividend might have to be cut again, or deferred in the possible near future. That takes GE out of one set of shareholders that held their shares due to the dividend, these shareholders made up a healthy part of the long-term investor. GE still sees its dividend as part of a new “balanced capital allocation mix” of R&D, CAPEX, the dividend and the company’s underfunded pension fund.  I wonder. This is ever more reliant on free cash flow.

The other investor, the large institutions, more looking for short-term gain, are always looking for rising share prices, attractive assets, good management providing strong returns. They are critical, fickle and demanding. At this moment, we are on the downside of many of these “needs” they expect by holding GE shares.

The type of investor attracted to GE is changing even more. In 2015 Trian Partners, known as activist investors, brought $2.5bn of GE stock, which was about 1.5% of the company. They campaigned immediately on how GE was undervalued and believed Immelt and his management team would not do the necessary things to deliver both a higher stock price and dividend.

“Activist investors” are regarded as the modern day “corporate raiders” of the 20^th century. They are part of a group of investors searching to unlock hidden value and increase shareholder value and have collectively, at their disposal, enormous assets of $120b or more, looking to invest in where they see opportunity. Their goal is clearly to increase their assets full stop.

They set about getting the management of the company to change strategy, they seek seats on their board, organize proxies and draw on the broader sentiment of the investor market to their side of the argument to maximise their position.

Trian Partners has recently achieved a seat on the GE board. They will be a part of a revamped board, that will shrink from 18 to 12, and three of these will be new directors. Recently the board might have been sleeping at the wheel, not seeing the problems as starkly as they have been painted in recent months. One can ask the question: why did they fail in their oversight and fiduciary duties? No wonder many are bailing out.

When you have more “activist investors “they often seek removal of the present company management or demand changes that are a radical shake-up as part of their belief of unlocking value.

The value of such an activist is he does prod a management into a more radical transformation, something GE should have achieved within themselves. It forces a very hard internal look at itself, one that is now being undertaken. The board itself wakes up and becomes the activist. The top management is put on notice.

 It remains within, that the problems still lie and all is clearly still to do.

GE, through its new Chairman & CEO, John Flannery has been responding. He undertook a 100-day review of the business he has taken over and presented his opening view in late November. The reaction has been muted as the market and investing community was expecting far more but there is a growing opinion of greater transparency than in the past.

The present portfolio is in need of a reset with a new guiding set of GE principles. The lighting business they have badly failed to refresh, transportation is in need for some radical rework and change in its market conditions before it shows growth. Both are likely to be sold, without some major redesign. The mergers they have made, have badly failed in generating the synergies or returns expected.

The renewable energy division is in a less than dominating market positions, something GE always prided itself on achieving, in “we must be No. 1 or No. 2 in market share” and their Digital and Additive business divisions are disruptors of ‘future’ promise but not yet of the substance to offset and absorb some of the other internal problems coming from declining profits and market conditions.

The two stars in the GE stable, are Aviation and Healthcare but these are in danger of being “swept up” in the same house cleaning need of greater rigor and fiscal tightness, to extract the essential cash needed for the group to fully function.

GE is restating what makes a GE business.

Its financial, operational and strategic characteristics need to be robust. There are presently far too many businesses caught out that need to prove themselves.

Mr. Flannery has promised to exit $20b of assets over the next 1 to 2 years, these will include transportation, industrial solutions, current and lighting and a host of 10 plus other transactions. This $20b promise is around 5% of the $365b on the books last year, that does not seem much does it? Selling off assets can also add to your problems as competitors “sniff” bargains and push down prices and markets don’t reward those that “blink first”.

His top team going forward is made up of 40% in new positions. The concern is they are all internally appointments and you worry that the same myopic view of the business might still prevail. Flannery said he would change GE’s culture to hold managers more accountable, demand better performance from the businesses and reduce the complexity of GE’s portfolio.

Why have so many “bright” executives (150 top executives) on the inside, why did they not spot some of this “storm”? With much of the same management caught up in this over last few years, coming through to replace some of the past ones they had been working for, are we honestly going to get the necessary challenging and fresh perspectives that Flannery suggests? Questionable.

Flannery promises to radically change the compensation plan for his top 5,000 employees with a higher equity mix and move from 20% to 50% of their compensation. This movement away from cash, into equity, aligns the top managements fortune to the shareholder’s expectations of share price and performance. They are at least working the same oars if the boat is to make headway.

The culture is expected to change.

Will it go back to the days of Jack Welch of stack-ranking, firing the bottom 10%, that would be a disaster. GE has never shed this Machiavellian culture in all the years of Immelt, as much as he felt he had tried it never trickled down through the management levels in a way that GE so needed to transform their culture.

As GE go through significant cost-cutting, reducing investments, research and development will we see a choking off of innovation? I fear so. What happens if the research and development dollar is radically cut or the talent within this area, senses threat and pressure. What does this do to the creative working environment?

As Mr. Flannery attempts to instill his planned “Accountability, Transparency, Rigor and Consistency” and his call for “getting back to basics” we will see a very different GE emerge. They are targeting $2 to $3b in cost-cutting. That is nothing on what it will have to be before the rescue is achieved. Already moves are currently underway to eliminate 1,500 jobs from the Head Office, and a suggested 4,500 from the European organization in the GE Power business. So many, many more to come, cutting into both professional and production staff. Maybe 15 to 20,000 in the months ahead. Will we see operation plants equally shut down with GE Power soon?

Job-cutting sends such a ‘chill’ message throughout the organization for a “flight or fight” reaction. The talent they have attracted might simply ‘melt’ away if they deem the culture goes back to the old GE type. This needs a light hand, not a heavy bringing down of the ax.

Are we about to enter “the death by a thousand cuts period” as internal managers view bold action differently, not experienced in a managing out of the normal,  and fail to really respond to the multiple crises on hand that point increasingly to radical surgery? I fear we might.

Remember that “the enemy lies within” when you have to make a dramatic turnaround involving 280,000+ employees, spread out in a global business, that have been fed a very different message on their ‘dominating’ position. I feel they are more than likely about to learn what “agile and lean” might mean in the new GE way, and let’s see how they ‘react’ and how it is managed, will determine real, lasting change, or simply, reluctant acquiescence, waiting for further management evolution.

It is all very much to do, and GE has little “wiggle” room it seems

 There is an enormous set of “What if’s” in GE, over the coming months. Nothing is certain, ever thing is uncertain, everything is to still do. The jury is out but many will want a guilty verdict if fresh evidence of change is not forthcoming. New evidence of problems will make it even harder. Everything has come into play.  What is being undertaken is one of the most complex, difficult turnarounds in modern business.

Lacking any proven turn around executives that will find this unrelenting in its pressures for the next 18 to 24 months. Execution has never been the strongest at GE, they have bounced from idea to idea, layering on their version of change before it has filtered down to the rank and file. This time it has to be very different.

A turnaround needs to be a strategic transformational one

A culture of turnaround need is as demanding as anything that comes towards you as a manager. It is life changing as it seems in GE’s case, it is life-threatening.  Jeff Immelt in his farewell view of “How I remade GE” commented: “I led through recessions, bubbles, and geopolitical risk. I saw at least three “black swan” events. New competitors emerged, business models changed, and we ushered in an entirely new way to invest. But we didn’t just persevere; we transformed the company. GE is well positioned to win in the future”

What he never stopped to question as deeply as he should have done, was the enemy within, those that resist change, those that chose to interpret it in their way. He should have appointed a Vice Chair of Change, who drove the change he wanted, in transforming GE, all the way through the GE organization. He had within himself this “Be All In” or “Game On” or “Let’s Go” with an enormous sense of competitiveness but he felt it was his to do, perhaps ego got in the way, so for others to follow it never was “full on” or that deep organizational commitment I felt.

In that remarkably ill-timed departure article over at HBR of “How I remade GE” his final words tell a story of promise yet to come:

“It will take years for GE to fully reap the benefits of the transformations. But as I contemplate my departure, I love where the company is positioned. I love what we’re targeting. The company in 2001 was certain that the future would look like the past. The company in 2017 is ready for any future. I’m confident that I’m handing over a company that will flourish in the 21st century. Some people at GE feel that the stock market doesn’t fully appreciate what we’ve accomplished. But I look at it this way: Our task now is just to perform, to execute, and let the market make its own judgment”.

Judgment time is here, the clock is ticking down. To flourish in the 21st century the new management tasked with this turnaround, really will need to challenge everything as the market and GE investors are certainly not in a friendly mood.

Self-belief or Delusional- we are still facing the volatile time

Immelt held a view that what people were calling GE, the 125-year-old start-up was his achievement, well that was a little delusional. They were and are slowly transforming into a digital industrial company that is defining the future of the internet of things but is it changing the very nature of the product businesses that GE are in? Nice vision, only part way there. and certainly, his claim “Change is in our DNA” was perhaps only skin deep. No one doubted his self-belief.  He made the opening comment in that (farewell) article for HBR: “remaking a historic and iconic company during an extremely volatile time” seems to be exactly where we are today. The difference is that this is of GE’s own making, this time they can’t blame others, it is theirs alone to turnaround.

Turning the page with difficulty, whats next?

As we turn the page with some difficulty, I’m optimistic at the strength that lies within the cores of GE; in its people, in its research, innovation, and real resolve to forge ahead. I’m certainly pessimistic at present, I worry that there is not going to be more “bad news” discovery when Flannery not just opens up the cupboards but starts working through the piles of issues he will find that need to be unraveled and reshaped.

Will it get even uglier, not just for investors but for the employees, for the customers to worry over? Well Yes, is my feeling, in all that I have read as it gets vicious as you spiral down, with less and fewer options. Everything seems to diminish. If GE starts pairing back R&D, they will begin to see their talent leave and their renown innovation spirit dry up.

It is far from that all doom and gloom, GE has incredible products and dedicated talented employees

I want to come back and focus on GE and its incredible potential in another post soon. At present, I’m still working on my shock. GE is clearly in the middle of a storm and like anyone caught up in this, it takes time to regain your footing and beliefs, mine as an admirer, included. No, GE in its real core, its product, is far, far, too good to fail.

As it slowly attempts to dig itself out of its own hole with a new strategy, let us see if it is enough to bring it back to health. Much is returning to the basics but recognizing that the recent business model needs a radical overhaul. The hard days to turn it around are still ahead.

Like many, I have a store of goodwill and sentiment for GE. I want to see them come out the other side, recognizable. I really wish I could help as I just feel they, the management, are ill-equipped for managing relentlessly a turnaround of this complexity and magnitude.

They do need all the help they can get and some good luck that sentiment; by investors, by the markets, by their customers. all the vested stakeholders, or their own employee’s, to not make the present position that GE finds itself in, even worse. Don’t hold your breath in the coming months, it will be a tough period.

It is theirs to do, they need to fight much within themselves, open themselves up to healthy questioning internally as well as externally seeking help. As I said, the floodgates are open, will GE survive but in what eventual shape?

***My research for this offering my personal assessment was drawing down from the GE material released in recent months, from management transcripts, numerous investor and analysts assessments and many views; especially countless articles on www.seekingalpha.com and in trade-related papers, or individual viewpoints that I found made a contribution to my own knowledge and understanding. Errors and omissions are clearly down to me.

*** some amendments or new editing was made on 7th December 2018

The post The enemy is already within. The flood gates are open. Can GE recover? first appeared on Building Your Innovation & Ecosystem Intelligence.

Recently I was asked to complete a review of digital transformation, to gauge where it presently is, to take a look at the leading emerging practices and ‘professional ‘wisdom’ and turn these insights into a report due out before the end of the year.

There are many innovation implications in this digital transformational journey that hold my increasing attention. For most of this last twelve months I have been increasingly tracking, researching and responding to supporting clients need  about digital transformation, so I was happy to take this on. Little did I realize how this digital transformation has become a flood, a torrent of wisdom, many offerings different, often varying views and advice.

The more I deepened and intensified my investigation there came this overwhelming feeling that it is getting a real overload on those wanting to understand this digital transformation that is occurring. It seems no industry or business person is going to be immune to this transforming impact yet we seem to be facing such a deluge of advice. Picking it apart requires the stamina and focus of a long distance swimmer, the same commitment I think will be needed for this digital transformation journey

So I need to pick it apart. Not easy but a challenge.

A digital transformation does mean going back to so many fundamentals. We need to create a digital transformation strategy, a clear roadmap and build the business case as it is going to be, well, umm……..transformational.

I do get a distinct impression there is no randomness in this, it does need to be well thought-through. It is not like downloading one app, or simply moving some items over to the cloud, assessing its value and purpose and how it currently fits, and then simply dispensing with it if it does not meet our need. This is about having a viable business in the future, based on digital as we have this overwhelming, nagging feeling all our current business models are under threat.

It is no more just the smart, nimbler upstarts threatening us, it is coming from all directions, at speeds that seem to increase the rate of change constantly. Those of us burdened with a legacy system and a management holding onto the past glorious days then your days seemed numbered. This is going to require a significant investment in energy, focus, and resource commitment.

We do need really different thinking. We need to ‘up our game’ in boldness of leadership and the totally, utterly unshakable belief in innovation, exploring new business models, grappling with all the available assets inside and outside the organization being pulled together in new digital ways, exploiting all the technologies as they ‘break’ and evolve. There seems no more “wait and see”, it has become “learn and experiment fast”

Where to start?

Firstly we do need to recognize technology is inseparable in what we doing, going forward. The blurring of our lives, of the breaking down of the different old industry demarcations, the blending of government, corporate and social engagements is giving increasing voice to each of us as individuals, all happening due to this exponential set of connections. I sense from many this is ‘epic’, exploding and life changing, with all of us simply learning to adapt and adjust.

The choice of apps, platforms, the number of connected devices is teaching us new ways of communicating, learning, interacting and extracting different value and needs out of the technology available which is all constantly evolving.

How does a large business keep pace with this exponential connection? Where is the starting point or the necessary change inventions one needs to bring in to understand the gaps and fill the voids, can we back-fill as we equally move forward?

The past business decision was based on evidence, validated and justified, it sort of evolved at a steady pace. The sheer scale and impact of how technology is evolving at increasing speed will need a massive mind shift.

Although each organization is having so many competing priorities, the gap between how it is organized today and building these required digital capabilities is getting wider, unless you work through this transformation plan in a clear, purposeful way. It has to begin  with a ground-up approach, small experiments that can quickly be scaled up or revised. It needs very hands-on engagement throughout the whole process.

A key need of this digital transformation is going to be asking the question of how can we build in ‘greater agility’ and what is presently stopping us from achieving this. Then it is the agility to achieve better response times to customers needs, to respond to market changes quicker, to translate insights into knowledge and then into the product and service innovations that meet ever-changing needs.

It is recognizing and then facing up to your present ‘pain points’ and the key competitive places that agility, digital understanding and translating this into outwardly facing outcomes will significantly improve your abilities to compete, in often volatile markets. It is shortening the time between understanding and reacting and this is where digital transformation offers both the ‘return’ promise or becomes the threat.

Forming a strategy, roadmap and business case needs real considerations

There are many considerations, each organization will be different. Yet all have a common need; the recognition each organization needs to develop its digital capabilities, organization-wide, not stuck in some IT department. It is a total company-wide set of activities that are affected. It is developing the digital capabilities across the organization by transforming the culture, the people’s digital skill set and the structures to get into sync, not just with newly defined organizational goals but also consistently adjusting to the rapid pace of change occurring in the marketplace, aligned to customers evolving needs.

The critical first points to address is the lack of something, be this the resource to undertake such a task, a lack of digital talent residing in the organization or digital savvy, the ability to make this a corporate priority and not leave this to limited pockets of divisions, functions or channels. It needs this powerful syncing and top-level focus and support.

Then we need to encourage and expand the risk appetite, in rapid experimentation and learning, to accelerate the infusion of digital talent, enhance the understanding of soft skills and the art of collaboration, in new teaming, in-goal and process identification and solution solving. Also in developing greater fluidity in structures, exploring and identification with the needs of new solutions to keep ‘feeding’ this back into the evolving roadmap. All of this needs to establish a new digital rhythm to encourage the flow of knowledge and understanding, to feed back into evolving solutions that will take time to develop and embed.

Then you face all the potential barriers that need early identification. The need for alignment across the organization, the ramping up of skills, breaking down those silo’s to stop any efforts from being disjointed, establishing different metrics that reflect this digital transformation journey and show proof of adoption and usage spread, constantly adjusting resources, building the new digital culture and finally, keeping the lights on in running today’s business, as you undertake this transformation. No easy task but one that needs a complete re-engineering,ending with a redesigned organization, fit for the digital future.

A very different type of orientation – a digital core reliant on the edges

So it is recognizing that digital transformation is multiples of connected intermediary goals, learning by doing, adjusting and evolving. Yet the critical change is this might be internally driven but it must be driving to a very different outwardly engaging result. The changes at the core, need to be totally connected to the outer edges of the business due to this hyper-connectedness. This shifts responsibilities to a more decentralized environment.

It is transforming to offer customer experiences, to engage deeper with multiple stakeholders, to make sure the last mile of the external engagement which are all operating at the edge, are the points in value understanding, so then it gets processed in the core where this more agile internal process responds, adapts and adjusts constantly.

The need for interconnecting both the internal world with the external world is partly why we are seeing such a high level of attention to platforms and managing in ecosystems, both in enterprise and broader systems of ecosystem thinking.

Finally, one book written by David L. Rogers “the digital transformation playbook” offers a good read covering this complex subject. He has broken down his view of digital transformation into these five handy yet critical focal points: For each domain of customers, competition, data needs, innovation and value he is suggesting these five strategic themes of: 1) Harness customer networks, 2) Build platforms, not just products, 3) Turn data into assets, 4) Innovate by rapid experimentation ad 5) Adapt your value proposition (constantly).

In summary

Digital transformation is about undertaking a systematic journey, built on interim building steps, to adjust to the learning and response. The reality is this is a long transforming journey that will take years to undertake for many established businesses that need to shed legacy, adjust and reorient their resources, processes and thinking to adapt to this connected world.

Going digital will need strong governance and leadership, consistent technology integration, a growing digital literacy for the operations, processes and all involved to enact change in roles, systems and supporting model.

Lastly, to achieve a different result that provides a return for all this undertaking and effort will mean ensuring the customer journey, the touchpoints and the experiences meet the customers’ needs, not those internally imposed ones, build on the business expected needs.

Value will be driven by the market and the customer, not top down but bottom up and this will need a very different orientation to innovation through platforms and ecosystems to build communities of common purpose.

The future will be driven by communities of vested interest, that keep evolving, adjusting the value proposition constantly, to meet the constantly evolving customer needs, and that will need a highly fluid, agile and adaptive organization, working in multiple structures, adjusting in evolutionary ways, reliant on everything digital.

Digital transformation is truly transforming for all of us.

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Add in the magic ‘need’ so innovation can benefit from this business digital transformation and we begin to shift around in our chairs even more. What would it mean if we ‘went’ digital and transformed ourselves for innovation within our organisation?

I’ll be honest here, all the answers can’t be distilled here in this one post as digital is all evolving but I thought an opening set of thoughts on ‘digital transformation’ might trigger greater discussion and identification.

So what is a digital transformation?

We needed to step back and ask, what is truly transformational? Scott Anthony, the MD of Innosight wrote recently on this: “What do you really mean by business transformation”. He broke down the fundamental different categories of the effort put in to achieve some ‘sort’ of transformation.

The first is operational or doing what you are currently doing, better, faster or cheaper.

The second category focuses on the operational model, doing ‘things’ in a fundamentally different way

His final one has the most promise and peril, that is strategic. This is as he puts it transformation with a big capital “T” because it involves changing the very essence of a company.

So defining transformation when it is dropped into the next conversation is to ask what do you truly mean? He goes on to suggest a dual transformation might be an answer. I could really expand on that one but not here as I would subscribe to this myself as we need to have a dual mentality of an exploit and explore in our innovation activity. As a taster on this, I wrote something here.

We should link up digital transformation into its business purpose.

Undergoing any transformation must be for a reason (well hopefully) as it does incur a lot of pain before you get to the gain. Moving closer to our innovation need we can see digital transformation everywhere, it is actually all around us. The customer today feels a growing empowerment, in choice in personalization, in knowing the products or service they are buying are meeting their needs and these are becoming increasingly intelligent to meet these needs.

Companies need to increasingly interact with customers, as close or actually in real-time to learn, adapt and deliver to the needs. This requires a company to become far more ‘highly automated and adaptive’.

To get to this transforming point we need to build in a faster adaptation of business strategies and turn out faster innovation outcomes that meet these needs as key to this. Our transformation journey needs to embrace the cloud, mobile, data and networks and relies on higher levels of analytics to interpret and translate information, into insights, into ideas, into innovation that delivers on the ‘needs’ the customer wants solutions too.

Now that really does become transforming.

There is a rub here, most transformation projects seem to fail.

McKinsey in 2011 identified that 72% of transformation programs fail to deliver on their targets so there is an awful lot of thinking, planning and working through any transformation to make sure you end up with the 28% of the success stories.

I could outline countless ways to work through different examples, set about a strategic and operational digital transformation roadmap, to combine effective knowledge from people and excellence gained from what you need to do in IT and your technologies to get this going, but I will not here, as this is an opening primer, not a solution.

Yet if we want to enable innovation and digital transformation we need to work through three phases of detailed work:

1. The appropriate identification to analyse existing strategy, identify the competitive forces, understand the business model drivers and pull together in an outline the objectives, performance and value opportunities;
2. Set about planning these out, analyse, discovering potential pain points, the critical success factors, benchmarking others, defining the innovation and transformational need;
3. We go to the creation part, what we can do and this requires producing different strategic maps, scorecards, value maps, performance measures and finally how we would prioritise innovation and those transformation initiatives.

Now that calls for some hard work and again, outside the scope here in providing just this teaser.

So we recognise digital transformation needs to lead somewhere, well it is really most likely to fundamentally alter your (innovation) business model.

I like this as a definition to tighten down digital but it opens us up to the darker side of digital transformation, the risk of digital disruption. They don’t necessarily go hand in hand as most advisors want you to believe as your pathway to becoming the ‘great disruptors’ but taking the global centre for business transformation at IMD and offering this definition it gives us more of a handle on where digital transformation will end up.

“Digital disruption is the impact of digital technologies and business models on a company’s value proposition and market position. Digital business transformation is an organisational change journey to adopt digital technologies and business models to improve performance. It involves challenging the assumptions that have underpinned prior success and stress-testing the ways in which companies deliver value to customers. It means changing the organisation itself, including its operations, culture, revenue model, and more”

We need to recognise digital does transform; it means lots (and lots of change) to get innovation repositioned. We need to ask can this lead to disruption, ours and others for competitive advantage?

Digital transformation is not just investing in more technology or making available the processes online, in the cloud or through mobile apps. That breed of digitalizing is nothing new, most have moved part way to this. We are talking here about:

“Digital transformation meaning nothing less than making strategic and comprehensive process and structure changes, throughout the business, using new, customer-oriented approaches. Ones that are so focused on the customer centric part, as this delivers the direction (of focus) and then the pathway towards enablement that moves you to the final innovation delivery. Innovation that meets and even exceeds the customer need as identified, through these digital insights”

Only then is an organisation truly transforming into a top competitor for the new era for innovation delivery. This means processes, IT, change management, training and lots of it and having a clearly defined program.

So we come back to “why the pain?”

On the whole, digital transformation both increases revenue and decreases costs and inevitably your management will want to go there.

The upside for achieving greater growth and revenue comes from the experience of greater customer engagement. If you broaden out your multiple channels, you achieve a greater number of touch points. The more customers make use of multiple channels it is estimated can provide three times more valuable than pursuing that traditional single channel. As you chase for engagement, you seek customer experiences and this leads you to expect and look for growing market share.

The lowering of costs comes down the road, as you pilot through any digital transformation journey as you go closer to a platform unification and optimisation of staff, and technology as you gain from that invested dollar in insights, information, data and analysis if you have deployed your strategy to raise collaboration and productivity. The multiple dollar questions are how do you set about doing this?

More information, greater personalization is both unpredictable in what it yields and is an ongoing process. It never finishes because the point of digital transformation is to continually adapt, to knowledge flowing in as customer needs continually change and your job is to keep up and deliver on them.

Innovation & Digital Transformation eventually get joined at the hip.

The key to innovation is clear; it is experimentation and this needs flexibility, to adapt, be agile, to test ideas. To achieve this you have to go digital. The magnitude becomes the ability to scale fast, to clarify the scope quickly and have a high level of frequency to perform. Turning this digital insight into concepts and ideas, and then as fast as possible into innovation outcomes that respond to the needs and digital insights you gleaned from your customers.

What do we need that is different from today?

We need to know (like never before) what value is in the increasing data flowing into our organization, we need tools and methods to translate this, we need dynamic dashboards to inform to ‘right-speed’ the operations that show where we are in investment strategies, in priorities, in delivery management, in workforce and resource delivery, what delivery model is required for the type of innovation going through the system and lastly the development methodology we are applying to this to take it through the system. These call for a different approach to the innovation process.

Instantly our collaborative platforms need to be transformed. We need multiple crowdsourcing that captures the outside but also the inside of the organisation. Data and knowledge need to get tightly fused into the process and that means more predictive analytics.

We need to move towards a greater fluency and all working within the delivery of innovation need to understand increasingly the different intersections of technology and business and work at breaking down the barriers, resolving the hold ups and equating more risk comes in as we speed up and engage.

We need to encourage the ‘art’ of not just minimum viable product practices from lean practices, but far more importantly minimum viable transformation that has at its core validated learning, how it all interacts to form a cohesive innovation delivery point. So to achieve this MVT we need to rethink business systems and the whole go-to-market potential that includes what service supports, the customer engagement levels, the channel strategies and the eventual distributions.

Is it possible? Let me finish on one example already successfully working in today’s market.

One company that has been excelling at insight capture is the Spanish fashion retailer Zara, owned by Inditex. It tells a digital transformational story.

The key to their transformational success has been how they treat insights. Insights gained from Zara sales associates and managers are critical to Zara’s business model, which are based on sensing shifts in fashion trends and delivering clothes that exemplify them before they become passé.

To do this Zara trains store managers and sales associates to elicit feedback from customers about what they like, dislike, and would purchase if it were available. They also communicate their own ideas about what will or won’t sell.

These insights are captured in Zara stores around the world and reviewed by-product designers at corporate headquarters. Zara’s has become a vertically integrated structure, in which manufacturing and supply chains are located in Europe for the fastest-moving product lines, gets products to stores in as little as 10 days with most sourcing coming from Asia or Latin America.

Most important for Zara, the business model encourages customers to visit the stores often to get the styles they want, because clothes are produced in limited quantities and stock turns over quickly.

For Zara, the quality and timeliness of employee insights help the company identify what will sell, with few misses.

In fact, less than 1 percent of Zara’s products fail—versus 10 percent for competitors—despite producing nearly 10 times more kinds of products per year. Zara’s store managers and employees are doing more than simply reporting what customers tell them. They are using their knowledge of fashion trends, their professional experience, and their ability to ask the right questions.

At a time when most retailers are “deskilling” frontline jobs and requiring less of their employees, Zara is counting on them to be the eyes and ears of the company, and Zara is paying more for those skills.

(This case on Zara was extracted from IMD).

It combines much of the digital transformation underway. It involves technology delivering on the knowledge and insights of people who are engaging with their customers.

My end of post message: Sticking to traditional ways of doing business not only means missing out on the benefits of digital transformation—in today’s dynamic marketplace, it’s no longer even safe, it just means you are the eventual loser or lost completely.

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Publishing note:  This blog post was originally written on behalf of Hype and with their permission I have added to my own site as well.

The post Digital transformation – the need to transform our innovation approaches first appeared on Building Your Innovation & Ecosystem Intelligence.

We need to radically improve our abilities to engage, relate and discover new innovation opportunities at a completely different level of faster performance.

There are many issues both strategic and tactical to work through, to extract the rich potential from any digital transformation for new innovation growth outcomes

The final part of a seven-part series – new dawn or your worst nightmare?’

The array of new digital technologies that we are trying to connect organizations into, for the world of digital insights, is going to be highly disruptive or empowering, for all organizations. It has the potential to radically alter our organization’s performance.

These are powerful technical forces that are going to connect the digital age inside organizations, these will require a deep thinking through for all the ‘points of impact’ this will have.

Digital is presently moving way ahead for the systems our organizations have presently in place. What does need changing to ultimately yield the innovation returns we will be looking for?

Expectations and reality needs resetting, the hard work is not ‘just’ in connecting the technology, it is its impact that it will have across the organization to be able to ‘react, respond and reorganize’ in very different ways from today’s practices.

We are dealing with a completely different set of mindsets, skills, procedures, governance, processes and responsibilities. To gain from the digital evolution taking place we need a robust, comprehensive and radical overhaul of much of what is going on within our organizations.

Many of our existing systems will need a radical redesign
The innovation system is not broken (yet) but it is totally inadequate in its present form to capitalise on this influx of new opportunities digital connecting can bring.

It will potentially just choke up and come to a grinding halt unless we seriously step back and re-evaluate the innovation process, its needs, tools, frameworks and its ‘new way of working’. We need to redraw the innovation system and its management structure, procedures and governance.

There is this need to blend technology post digital with people in significantly different ways. Innovation calls for better automation and its management understanding to design all these into its system. Information systems and their data outputs might generate but humans have to frame the challenges and problems they are in search of answers.

So how can digital technology be leveraged more effectively as an engine for innovation and future growth when we are seeing current innovation constraints and impediments?

Is the innovation process fit for the new purpose? Clearly not. It needs a radical overhaul to support the digital technologies and the ‘insights’ coming towards it.

To embrace digital innovation there is a lot to work through, here is my initial attempt.

As we move towards this age of digital innovation, what do we face?

• “We are faced with a truly pervasive global network making more things possible, the biggest value proposition of technology has shifted to the new, deeply super-connected, scalable-to-billions, always-on ways of working that digital business now represents. The upshot: Nearly everyone today is connected to everyone else in the world 24/7, with the devices in their pockets and purses” (View of Dion Hinchcliffe in his article “The internet inside the Enterprise“). Innovation needs to race to catch up and respond, so as to capitalize on it.

• Equally in Dion Hinchcliffe’s view, which I can recognize: “the Internet has proven itself countless times as that uber laboratory of innovation, trying — quite literally — millions of new ideas in scale, continuously finding the way forward on how best to create value over networks, sustain it, and to relentlessly find new models that have the least friction, cost, the highest velocity, most agility, and best ability to tap into shared innovation.” These observations point towards a very different design and structure within organizations to achieve these ideas to scale.

• What will be the new management skills and leadership competencies required to achieve continuous innovation and transformation within organizations? What will need to change, what needs to be brought in and equally, thrown away from today’s practices?

• What are the new forms of organizational design that will be required as ‘adequate’ for an environment of unremitting change? The present innovation system is not ‘fit for digital innovation purpose’ today.

• To learn to apply the application of technology in support of the business, to cope with the new mantra of making it ‘cheaper, faster, and better‘, combined with the increasingly need to ‘communicate, collaborate, and engage‘ across businesses, customers and stakeholders 24/7, we will need very different, more agile and adaptive systems.

• Everything about technology is poised to upend the current model in organizations, from architecture, software development, processes, the way to manage and offer a very different level of service delivery in new business models, rates of change, and cooperation and co-creation needs.

• Boards will need to balance the need for stable, resilient, dependable systems and infrastructure as they go through a ‘state of flux’ in this push for investing in new digital initiatives They must clarify what is essential ‘to make us more agile, innovative and responsive.’

• The worry of dealing with increasing risk; cyber risk, organization risk and the organization’s ability to capitalize on any discovered insights before others do, all raise the risks and threats. Boards just have a real aversion to risk and how this will play out as we digitally connect will partly determine the winners and losers due to their risk appetite.

• To help ‘modify’ the risk concerns at board level, the CTO, CIO or CDO or all three, need to stop talking about the potential of these technologies and more the language of business. Frame this not in terms of cost or disruption but in revenue and new organizational opportunity.

• The need is to establish a digital strategy, which represents all the opinions and the fusion of business and IT, as they are becoming one of the same, as digital is becoming a unifying concept and pervasive and all business has an increasing digital element.

• There is this need for cognitive alignment as it will be increasingly about sense-making, learning, understanding pattern recognitions, gaining debate, and consensus for alignment within the leadership teams.

We certainly need a very different organisational design to digitally innovate?

• The radical shift for the innovator is the need to define the right challenges, in constructing the digital brief, in building the parameters and inputs to be able to ‘extract’ the data that leads to information and knowledge that eventually connects to final valuable insight. Today we are not so good at that.

• The human part within the new innovation process will still be the framers of the task, interpreters of the information and synthesizers of the result. They will be guided by the digital knowledge and techniques they deploy to help them in this. Framing and synthesizing becomes essential skill.

• Developing those abilities and skills in interpreting and synthesizing the data and insights will become essential attributes so to attain the understanding to deliver those “higher scale of richer, more innovative insights” expected.

• The ‘crunching’ of large data sets, will this be simply be left to the analytic person? Someone deploying different techniques, algorithms and predictive solutions. Will they have the necessary understanding or business experience? Who will have oversight or determine interpretation?

• Much will rest on the way these new insights can be communicated back into the organization, to be translated and to be turned into new profitable innovation offerings.

• This ability to align analytics, extract important insights and spot the potential commercial value will become critical. These have the potential to determine the organization’s future.

• There is this need to spot more of those ‘weak signals’ to learn from, using predictive and pattern recognition tools and methods, generating ideas or insights that fit within briefs or parameters that align to the organization’s strategic needs.

• What value judgements will be constructed to rank and grade ideas or insights, so as to begin to formulate the commercial response in new innovation activities.

• Trending, producing insights, scenarios and patterns of discovery, will need both computer and human power of understanding. Forecasting potential, spotting the breaking needs, segmenting the markets and validating assumptions and trigger points for solutions will become a pivotal role.

• Listening, filtering, and constructing user experiences that allow interactions and knowledge sharing will be essential. It will be again the analytics, the discovery process and the event management techniques will partly determine the value and richness of these engagements.

What about the need to build new capabilities?

• There is this increasing need to develop sense-and-response capabilities, increasing ambiguity and uncertainty over time will change our ICT thinking.

• A constant change or extraction continuously  from the cloud or data lake will require  flexible processes, constant adapting, needing highly agile responses

• There will be increased demand for visualization and managing decisions in responsive, agile and adroit ways. Constantly communicating the ‘breaking’ story will be essential.

• The increasing value of purpose-designed intelligent dashboards to allow decision-making and the appropriate information to flow to the decision-maker, as well as the governance trail of where, when and who made what decision becomes important.

• Whole areas of research, testing, experimentation, and modelling will become increasingly automated but the framing parameters will again require growing specialisation and understanding.

• The ability to test combinations, to work through countless data points will generate new possibilities but these again need clearly framing well, so as to avoid drowning in data, ‘for the sake of it’.

• The ability to engage in and across different communities will allow for richer understanding. These communities will be internal, business partner ones, customer and other stakeholder communities all contributing and engaging.

• The emotions, feeling and often unexplained human behaviour will always intervene somehow. It will depend on the robustness and strength and belief in automation on personal as well as organizational levels. This needs careful management the engagement.

• Lastly, and I think most important, you do have to keep asking that question of “what are you trying to do, resolve and understand” because data for data’s sake will just simply just let you drown in it, equally change for change sake.

We need to begin to really think through this as a complete redesign.

There are a host more areas to draw out in any digital innovation system we do need to surface and resolve.  To achieve that new position of understanding is a really hard piece of work required to determine and redesign the new digital innovation process.

It cannot be a simple ‘bolt-on’ job, it needs a radical redesign. We should grab this ‘moment of time’ to think what a new innovation system, fit for the post-digital age really should look and operate like.

Organizations will be in their search for understanding what needs to change within their innovation systems as soon as they realize that today’s design can’t cope.

What is needed depends on how each wants to ’embrace’ digital. It will need a real depth of understanding and working through.

I’m on it, are you? Its BIG and breathing down your neck. Welcome to the age of digital innovation.
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*** This is the final part of a seven part exploratory ‘open thinking’ about digital technology and its potential impact on innovation as we know it today. These have been published daily over the last week.

The intent was not to provide definitive answers so much at this stage, it is more about raising our thinking about our lack of providing an adequate innovation system for the changes caused by embracing the digital technologies coming towards us.***

The post So Welcome to the Age of Digital Innovation first appeared on Building Your Innovation & Ecosystem Intelligence.

Now it might turn into a stampede, based on real ‘digital’ need.

We have made solid progress in the use of out-of-the box software for capturing ideas at the ‘fuzzy front end.’

We have developed pipelines and use product life cycle software systems to manage this through to commercialisation.

Yet today we still have a fragmented, often broken innovation process, very reliant on the manual processes, where the human intervention dominates.

Can this be changed? Technology must form a greater core of the innovation process.

We still are very reliant on stage gate intervention points, often more due to dogma and imposed oversight by committees occasionally meeting.

Decisions are determined by the human, based less on hard knowledge or dynamic intelligence, often these have tended to be thinner on the ground to validate concepts and judgement becomes highly personal and reliant on (past) experience. What can we change within this? There are leading practices to compare and contrast with but we do need to push this automating the innovation process further, in different ways.

Part six of a seven-part series

Perhaps all this can know change, with adopting a broader more connected engagement process and take this out, we can constantly engage in community collaborations to test and experiment than before.

We can quickly go into the market through digital technology to engage with our communities of interest to confirm or influence a design or concept and shape it.

We can gain ‘scale of insights’ quickly all the way through the new product life-cycle, validating, adjusting, adapting through to commercialization.

In the past innovation took a linear route, very reliant on a manual process.
I recently had some different exchanges with Jeffrey Philips, over at Ovo Innovation, a long time sparring partner on innovation thinking.

From his organization’s work he suggested top of mind there are five key activities, which are typically completed manually today:

1) Defining a specific challenge or opportunity, 2) Gathering trends and developing alternative future scenarios 3) Understanding/Validating customer needs through research 4) Generating ideas/solutions through brainstorming and from these 5) Developing and Prototyping ideas.

Given some more time I am sure this list would grow. Jeffrey certainly suggests many of these tasks can be accomplished through some form of automating the process, I’d agree.

I’d suggest for many the innovation process in organizations are even more manually conducted in collecting data, validating actions or decisions, communicating the status, working through project tasks, etc.

We are very reliant on manual systems for much within our innovation work.

I don’t think we can afford to let this continue, it often slows decisions and activities significantly down. I know of consumer goods companies that work on 18 to 24 months for incremental products from conception to commercialization. Is this good enough or just comfortable enough for those involved?

Market trends are changing faster and becoming shorter, so opportunity windows are narrowing. Risks of missing out are constantly increasing for those who are not focusing intently on that critical ‘time to market’ and not constantly streaming their innovation system, looking to automate it where ever they can.

Bob Cooper, creator of the Stage-Gate system recently warned, in their ongoing research data “did you know that”…..1) 76% of businesses have already too many development project for the limited resources available. 2) 81% of businesses have unbalanced portfolios full of small bets, 3) 90% of businesses have “few or no” high value projects in their development pipeline and 4) 75% of businesses profess to poor project prioritization.

What happens when all this digital knowledge and insights starts hitting our desks, having to work through a manual or semi-manual system seeking to capitalize on a ‘breaking’ opportunity? It will be a real choke point.

 Opportunity spots where we can speed up this manual process.

Jeffrey suggested some immediate places where there was some clear automating opportunities but we agreed these were ‘just the tip of the innovation iceberg’

• Many innovation teams have gathered and analysed trends by hand, attempting to forecast their impact in the future, to understand emerging needs and alternative future scenarios.

• Also market research has required intensive customer interaction, which has tended to be reliant on face-to-face or observation. Equally the heavy use of surveys and large data sets has tended to have significant human involvement. This is significantly changing through the use of technology and numerous analytical tools and predictive methods.

• Idea Generation has often completely relied on a number of people ‘brainstorming’ or generating ideas and we have learnt this needs to be less random in the event and more specific to problems we believe need to be solved.

• Then we have been reliant on traditional prototyping methods that again rely on people to form a crude representation of a concept or idea. These were reliant on ‘hand-crafting’ prototypes, reliant on people with some skills and scheduling the time to complete these but the extensive use of 3D printing is radically altering this.

We can recognize each of these has changed over the recent years. They are being automated wherever possible through pattern recognition methodologies, predictive analysis, trending evaluation methods where there is less human interaction but more interactions with a prototype, simulation.

Now with the recent introduction of 3D printing the designing  a prototype or even a finished product, has become highly valuable, it is shifting and beginning to disrupt many of the traditional ways of ‘machining’, undertaken in the past. For example, in the dentistry business where the dentist they can make the part using ‘on premise’ 3D fabrication.

We have been seeing better-structured approaches, mixed in with unstructured methods and framing techniques to pull out ideas, challenge existing, often entrenched thinking and breakthrough roadblocks to keep moving our innovation work forward. All continue to improve but still miss opportunities to automate in some way or another.

As we have used software to collect information and ideas at the front end (idea management systems) this has made the innovation process far more automated, interesting and participative.

What is needed is to push the thinking on how to automate the innovation process even more.

We see start-ups adopting agile methods, lean processes and new practices, new visualization tools and frameworks, and designing techniques as they are unencumbered by a legacy, yet for the most part, large organizations have been slow to adopt these on a wider corporate practice. They still experiment but do not adopt these as organizational practice although this is changing constantly as they value these techniques.

These need pushing deeper into large business organizations. We need a functional group that explores, experiments and seeks broad adoption of many different tools and pioneering methods in our organizations, so they become increasingly part of the daily toolkits we use. Design thinking, business model design, and lean for example, all should be adopted as everyday tools. Each helps innovation.

Can this be pushed further; can we perhaps become more radical?
Digital technology might be giving us the tools to shape our environments in very powerful and different ways. We can amplify what is going on, we can capture all the interactions, we can discover, explore and extrapolate better and at growing scale.

Less randomness, more of a quest for rational answers but we still need to frame the questions we want answered and that still seems to remain difficult for us humans to do. Even here technology can give us increasing intelligence to spot patterns.

There is so much to be realized, connected and enabled for the higher scale, richer, more innovative business outcomes but it is a massive undertaking that is only just being kicked off by the current ‘internet of things. It will eventually become the ‘integration of everything’ but the disruption and realization of what needs changing is only just dawning on many.

Managing digital knowledge that adds value and growth

External insights coming from market and customer intelligence will not fully take hold as Enterprise knowledge throughout the organization, without real, deep integration of systems designed to ‘receive, translate and diffuse’ valuable knowledge from all this digital information flowing in. A new system of knowledge adoption needs designing in.

Receiving the knowledge alone will not turn these into higher scales, richer, more innovation business outcomes that have real growth value unless we realize the massive ‘mismatch’ between digital flowing in and the physical attempting to cope with this.

We need to think about our innovation system designs a whole lot deeper to allow these new digital technologies and the insights to be worked through the innovation process. Speed is becoming ever more important, for new solutions to be turned out the other end as new innovations.

We need to design a complete innovation system otherwise we will be investing in a front-loaded area alone, limiting digital impact and that will not deliver the power of actual growth expected or needed from our innovation activities so as to deliver new valuable outcomes. Approaching the innovation process holistically helps.

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*** This is the sixth in a seven-part exploratory ‘open thinking’ about digital technology and its potential impact on innovation as we know it today. These will be published daily over the next week. The intent is not to offer definitive answers so much at this stage, it is more about raising our thinking.***

The post The Need to Automate the Innovation Process first appeared on Building Your Innovation & Ecosystem Intelligence.

Part five of a seven-part series

The outcomes of the investment are expected to provide clear returns and these might include but are not limited to:

1) different customization of services 2) quicker response to market trends in new offerings 3) identifying real-time cost optimizations, 4) concentrating on faster, more accurate decision-making to give new competitive edges 5) better and more holistic R&D 6) automating even further the supply chain management, 7) alter your approach channels to market, 8) move your business into new adjacencies or even white spaces and finally 9) design new business models and value propositions.

There will be lots of new moving parts to grapple with to be future innovation agile.

Equally, our senior managers will be digitally challenged

As machine learning or digital inflows occur, the pace will become even more rapid and the leaders will be called upon to create the new innovation forms. The mental capacity and physical adroitness will continue to multiply through digital technologies and the need to be agile in responding. There is going to be significant advances in cognitive work but will this be human or digital brains doing the work?

If we foresee a deeply driven digital world, the new place for human intervention is “where do I actually add value and where do I need to get out-of-the-way and let data take me?”

So we are going to be potentially more data-driven, less intuition driven. Your whole domain expertise will eventually be stripped away.

The challenges within the leadership of our organizations are to somehow envision how the physical world and digital world can be ‘pulled’ together.

That critical need of applying the different forms of intelligence and experiences and provide the ways to network and build from these ideas and insights into tangible values that fit with the organization’s objectives.

The key to leading in a data-driven world recently was suggested in a McKinsey article on the Manager and the Machine will be 1) learning to ask good questions, 2) attacking exceptions, 3) tolerating more ambiguity and 4) focusing as much as possible on employing ‘soft’ skills where insight gets turned into messages that resonate with the organization to see as innovation potential will require that human touch.

How will digital automation improve and balance our innovation management?

As data flows in we will need to rationalise the decision-making, we will be seeking out for the gathering of data more fact-based observations. The intervention of personal opinions and “experience” will become highly challenged and hopefully on the endangered list.

We can look to insights as possibly better predictions of success by lessening the risk factors of no knowledge or very limited understanding and underpin the assumptions with ‘trends’ and rich insights to validate directions and emerging solutions

We will be able to explore the ‘worlds’ trending on those topics relevant to our needs, knowledge and innovative thinking. Exploring consumer behaviours, technology trends, competitor monitoring and significantly granular insights to shifts taking place in real-time and near-time.

We might discover the unexpected and the surprising and not rely on instinct, sixth senses or ‘our past experiences.’ This may increasingly clash in the validating, we need to ensure this increase in insights will yield better ideation. As time goes by and we become more reliant on digital technology our idea management thinking will become distinctly different, less based on a hunch, feel or (sadly) experience.

We will be even more under pressure as if the data is ‘open and common’ for all to ‘trawl and gather’ then you are in a race to capitalize on this before your competitors is able to learn or react to it.

Through validation we can constantly confirm or question the business case, and we can test hypotheses and experiments. We can check assumptions for validity far more and across broader communities than in the past.

Having data, and creating a history you can equally be more backward looking to judge success and failure and use these different understanding and analyses to design more predictive forward-looking models and framing techniques that capture differently or improve your pattern recognition.

The growing science and value of analytics for innovation

Innovation analytics will become an integral part of the entire innovation life-cycle to make smarter decisions and to optimise the innovation performance along its value building chain.

Having clear data-analytic strategies that break down the information into something commercially useful will require more searching for ‘weak signals’ that contain those real nuggets of insight.

The early mover has to have a speed and pace of decision much higher. The emergence of customized dashboards will dramatically advance but working on the parameters that feed into these will be a real challenge.

The need to analyse, synthesize, transform into actionable events and value-enhancing insights will be based more on fact-based decisions but the human interventions become more responding to exceptions not stage-gate managing everything.

Analytics will evolve into providing answers or guiding you to create descriptive answers, situational to why this is happening, predictive in what this might mean or trending towards, prescriptive in validating choice options and finally simply evaluating the risks, the choices of doing something or not due to this data and insights.

Adjusting our thinking on risk

Technology insights can provide a better mitigation risk, it can equally fine-tune innovation but it can equally make it far more complicated. Massive amounts of data can complicate decision-making, determining the right decisions and next steps.

Technology will require opening up the present risk mitigation process to capitalize on emerging opportunities at greater speed and higher levels of compromise, to meet that emerging opportunity ‘seen’ requiring it to be turned into commercial offering quickly, so competitive advantage can be gained.

Getting the parameters right, this digital innovation criteria will potentially determine the direction of the organization and where it places its resources.

McKinsey talks of democratizing and managing will be determined more by pattern insights, and clear insights, less upon waiting for a top manager’s decision as the defined strategy and business development directions become sharper, enabling this ‘decision-making’ to be made much closer to the market or the information source.

The urgency of Leadership

Leadership will have to become far more effective in decision-making and digitally savvy, so as to provide the guidance and strategic frameworks required for the governance and direction digital technology is required to go, to meet the organization’s stated objectives, and those will change constantly as better insights flow in. Defining those needs and the expected returns does sharpen everyone’s minds.

Tom Davenport of Babson College and MIT made some helpful suggestions about the general use of the phenomenon of big data, and add its project attributes so leadership understands its increasing value.

He suggests these are 1) describing the data you are using, 2) where the data comes from, 3) the problem you are wanting to solve and 4) wherein the company you will use the insights to solve what. This as he suggests “provides clarity” and we all need that with the present easy use of “big data,” which impresses no one.

The changes wrought by applying all the different digital technologies promise far more than the adoption of a more fluid core that Haydn Shaughnessy has written about,  as “understanding a new hierarchy of enterprise needs.  Adopting a new, adaptable infrastructure where technology, humans and competitive conditions intersect and can interact in real-time.

Leadership needs to respond quickly to the demands and additional strains this will place on their organization to provide guidance, strategic direction and above all the right resources to capitalize on all the changes this will bring. To expect to achieve a ‘real’ return from the investments being made or asked for in new growth and innovating value.

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*** This is the fifth of a seven-part exploratory ‘open thinking’ about digital technology and its potential impact on innovation as we know it today. These will be published daily over the next week. The intent is not to provide definitive answers so much at this stage, it is more about raising our thinking.***

* Sopheon through its software applications have been outlining some of their arguments for improving innovation due to big data and analytics and these helped me kick start part of my own thinking here.

The post The need to respond quickly to new business objectives first appeared on Building Your Innovation & Ecosystem Intelligence.

It must be a little overwhelming when many responsible for IT have for years not had any strategic involvement and not been given clear line-of-business oversight.

Business management equally has over the years built up an ‘arm’s distance’ to IT and found ways to overcome barriers they felt were seemingly put in their way when it came to ‘bringing in’ the technology they deemed as essential.

Something needs to change going forward. Both the business manager and the IT need to find ways to exchange, collaborate and share. It is in their ‘vested’ interest but more importantly for the future health of the business itself.

Part four of a seven-part series

Over a number of years IT and the business seem to have grown apart. IT worked on keeping all that surrounds the ‘systems of record’ and tended to push away or outsource many of the ‘systems of engagement’ to others, either third parties or line-of-business.

Email, for example, stayed within their domain but collaborative tools, the building of online communities, and supply chain systems tended to be handed over to the expert group and they provided the ‘back-end’ support.

Much within IT has been handed over to lines of business to design and manage. Will this need to change back?

Today, the lines of business are rapidly handling increased system designs to meet their own needs and are seemingly encouraged to do so. IT often seems to have been assigned the back-end task of ensuring they can work, are safe and don’t corrupt those all-important organizational ‘systems of records’.

The changes in customer experiences and the engagement within these communities, the open innovation activities prompted by research and development, the stand alone systems for manufacturing design and improvements, have all seen a massive proliferation of either independent systems with minimum integration, or systems to site upon systems, adding complexity and poor line of corporate oversight.

An awful lot of business intelligence is sitting in silo’s where there is limited ability or even no incentive to explore these in different ways. The Enterprise core is limited and not really connected to much of the value-generating parts as we would wish. Knowledge is not flowing across and up and down organizations unless with some considerable manual effort.

There is a time for real change – technology and business need to be redesigned

We are in need of recognizing this new wave of external connected technology needs to be well-connected within our organizations. There are so many forces of constraint, forces of proliferation that need to come together but this is a massive, significant task for an organization to signal its (final) determination to achieve.

The implementation of ERP for many was a painful experience, not because it was not needed, it seemed such a wrenching change. Any significant technological overhaul will make that set of experiences a ‘walk in the park’ compared to this set of challenges that is being thrown at us today. The changes we will be facing to accommodate new technologies and their realization of value will need an even greater evolution, ERP will fade into the background as a new Enterprise Innovation Planning (EIP) system evolves

The real need is to deliver a new integrated engagement platform

We need not just a new innovation management system, we need a modern engagement platform. We need to integrate and sync so many transaction and stand-alone systems that have been allowed to proliferate over the years to meet specific business needs. The growing pressure will be demanded to find solutions that provide a cohesive and business-focused approach to the new social enterprise where we seek engagement at scale into a multiple array of communities and advocates that has data and innovation as its core.

There is such a business / IT / customer divide where the social push is shifting and still very emergent, where the new competitive advantage will be based on ease of acquisition, ease of use, clarity and diversity of choice and variety so innovations will be more tailored to the individual.

The demand for increased autonomy, personal choice will come up against the organization that is totally unprepared in adapting to this rapidly changing world. Organizations are lacking the right type of resources and a comprehensive view of what needs to be connected and integrated, what is presently underway is going to change many of our current industries today as they all become partly a software businesses.

How can we connect, enable and deliver better innovative outcomes?

There is so much to be realized, connected and enabled for the higher scale, richer, more innovative business outcomes but it is a massive undertaking that is only just being ‘kicked off’ by the current internet of things. It will eventually become the integration of everything but the disruption and realization of what needs changing is only just dawning on many.

External insights and Intelligence will not become Enterprise knowledge that flows without real, deep integration. Receiving the knowledge alone will not turn these into higher scales, richer, more innovative business outcomes that have real growth value unless we realize the massive ‘mismatch’ between digital flowing in and the physical attempting to cope with this.

I would think unless the innovation systems within organizations are not dramatically altered and that is calling for a massive investment and some really tough strategic decisions of what and where to place those strategic bets and much of the technology needed is only being designed today that focuses mainly on the incoming part.

A painful and frustrating journey is ahead of us all

Turning big data and its insights into commercial successful innovation outcomes may be a very painful journey for many organizations. Business and IT have got to find radically different ways to collaborate and align.

We need new models of work, more community-centric, non-hierarchical, dynamic and fluid, in a sharing economy where the evolution of apps and new devices will all have an increasing impact, based on collaborative technology. I’ve previously written on this as “the proliferation of transitory moments”

The enterprise design will be radical in redesign and upheaval.

Much of the hype today about all this big data and the analytics behind it is great but the handoff back into existing infrastructures will mean most of it will never be realizable. It certainly can’t be handled by today’s innovation management system where knowledge is lacking and physical intervention is built on the wrong premise of managing innovation activity.

We need to review organizational engagement. Much has to change, be uprooted and completely revisited to begin to design a new digital and physical integrated innovation system.

To master digital technologies and what that can bring in new innovation and value requires a coordination and collaboration of business and IT, each needs to become involved in what the other is doing, thinking and planning and make these plans integrated through a new organizational set of process and procedural designs.

We need to reconsider enterprise architecture for this 21st digital century where increased autonomy, choice and resources can adapt, disrupt, refine, grow and renew constantly in a digital enterprise collaboration that allows data and voice to be heard….and acted upon.

I liked a comment recently from Beth Comstock, the Senior Vice President of GE in a recent interview on the imperative of speed commented: “If we left it up to each business to figure out their data and software, we would not be taking advantage of the scale of the company”.

She is totally right, decisions being made today around digital technology are broad room and highly strategic. IT going forward shapes the organization’s future.

Who is going to take the lead in your organization to design digital technologies into the very fabric of the organization? It can’t be left to one person or another, this is a total leadership challenge.

IT need to find ways to engage fully within the board room, across all line of business and drive the changes up into each conversation and strategic discussion for the foreseeable future.

How organizations design and connect digital technologies with profitable innovation outcomes will decide most organization’s futures going forward, markets, customers and investors will be judging this ability very critically over the next few years.

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***This is the fourth of a seven-part exploratory ‘open thinking’ about digital technology and its potential impact on innovation as we know it today. These will be published daily over the next week. The intent is not to offer definitive answers so much at this stage, it is more about raising our thinking.***

The post IT is Struggling to be the Digital Technology Master first appeared on Building Your Innovation & Ecosystem Intelligence.