"Innovation" is the buzzword of our era, as organizations across industries seek out new revenue models while simultaneously growing their already strong brands.
This type of evolution can be especially challenging, even for companies managed by CEOs boasting a wealth of knowledge and resources. Compartmentalizing is one of the most difficult aspects of any innovative journey, because it means setting aside time and energy for various tasks.
The hard truth is that innovation is not a part-time job. It requires support from the entirety of an organization, especially its senior leaders. But even if the entire company buys into this new approach, there’s the matter of developing a digital transformation strategy, identifying new business models, and determining deficiencies within your organization.
As you can imagine, this can be extremely time-consuming. And if done the wrong way, it can mean you wasted an exorbitant amount of time, money, and resources on innovation projects that never entirely got off the ground.
The good news? It doesn’t have to be that way.
Innovation consultants are trained to recognize potential pitfalls and develop relationships with core team members to figure out the best way forward. All firms are different, and that’s why these consultants spend time understanding how a company functions, where operations can be streamlined, and the best way to attack innovation.
In the season finale of Pivot Factory Podcast, host and CEO of Pivot Factory Michael Leadbetter explains what’s happening on the ground with regards to digital innovation. What’s common across industries is that CEOs are cognizant that disruption is coming for them—if it hasn’t already arrived—but they’re ill-equipped to handle the fallout. In response, they're hitting the panic button and hiring teams of consultants, making the trip to Silicon Valley in search of the holy grail, and hiring expensive gurus, only to emerge on the other side without any meaningful change or insights.
The following are excerpts (edited for clarity) from Michael’s podcast breaking down innovation consulting, and in particular, Pivot Factory’s Digital Transformation Assessment.
The State Of Digital Disruption
Large Organizations Don’t Know What To Do About Disruption
Here we are in 2019. CEOs and leadership teams of all of these organizations intellectually know disruption is here. That's number one. It is no longer the case where people don't really understand it. They know that 50 percent of organizations on the S&P 500 have disappeared. They know in 10 years, the next 50 percent are going to disappear. So, intellectually, CEOs of these large organizations get it.
But what happens is basically one of two things...and this is consistent: number one, large organizations simply don't know where to stop. You talk to these large organizations and they say, "We know disruptions coming, we just do not know what to do about it. Do we hire a team? Do we hire a chief innovation officer? Do we hire McKinsey? Do we hire Accenture? Do we go to Silicon Valley? What do we do?" They just simply don't know where to stop. Path number two is they start, and it doesn't work. What I'm yet to see in a consistent way, or in a really meaningful way, is a large number of organizations who have effectively engaged on a digital transformation journey, which has delivered sufficient and systemic innovation, to make sure that their company will survive.
Unclear About Next Steps, Organizations Panic
Path number two: When they actually start the innovation journey, here's what typically happens. A CEO reads a book, goes to a conference, [and] he's very up to speed with the news, and he or she appreciates that something has to happen...The whole executive team goes out to Silicon Valley, possibly Tel Aviv, as well, possibly New York. They do this tour around Silicon Valley. The second thing that happens is gurus are hired. These extremely expensive speakers come in, [costing] $50,000, $100,000, and talk about disruption. Then a lot of time and effort is invested in opening up innovation centers, opening up labs, opening up hubs, hiring teams and quote unquote "doing innovation," coming up with lean methodologies, and coming up with project plans.
What typically happens is there is no real meaningful output, right? So at the end there isn't a list of initiatives which have created $50 million in new revenue stream, or a list of initiatives which have equipped the organization to be ready for the Fourth Industrial Revolution. So after a two- to three-year period, these innovations often end up being canceled. So the innovation labs are shut down, the chief innovation officer is fired, his or her team is fired. And the real problem with that is in today's world of rapidly developing exponential technologies, if you spent two or three years floundering, in the old days that’s equivalent to spending four years floundering, eight years floundering, because the technologies are moving so quickly.
Here’s How Large Organizations Should Respond
Phases 1 & 2: Education and Assessment
So what should a large organization do? How do you begin this journey? At Pivot Factory, we design a three-step process, and this is really based on the work we've done in the field. So we suggest the following: First of all, you need education. What's happening now is so different and so unique that you need to educate your senior leadership team, and then the rest of your organization, as to what is going on? What is this disruption? How quickly are exponential technologies changing? What are the new business models? Where's disruption coming from? And spoiler alert, disruption is not coming from your industry, it's coming from outside your industry. If we just look at the recent T-Mobile announcement. T-Mobile is opening up a banking app. If you're in a retail banking business, you've just been disrupted, but not by your competitors. You've just been disrupted by T-Mobile, a telephone company.
Secondly, assessment is very important for organizations to assess where they are. Do you have the mindset? Does your team believe that there's need for disruption? Do you have the right tools in place? Are you able to build an innovation strategy? Are you able to manage a portfolio of innovations? Do you have enough innovations going on that will lead to both sufficient and systemic innovation? It's no good spending millions and millions of dollars and hiring a huge team focused on a list of innovation projects that really aren't going to move the needle. If you're a multi-billion-dollar company and you have a project that's going to move the needle by $50,000, is that really effective? Does that really help? What you really should be focused on is innovation products that are going to move the needle by $50 million.
Phase 3: Executing Innovation
Part three: Can you execute on innovation? Can you actually do this? Can you create a list of innovation projects and then systematically work through them? So here's why we think our strategy is the best. We collectively have worked with Singularity University, we work with Salim Ismail at ExO Works, we’ve worked across a lot of different industries at the CEO level. And the strategy that we put together works because, number one, we can start very quickly in a very lightweight way and get some early wins on the table. A lot of innovation fails because there are no early wins. You need wins in the first few months to show that you're moving in the right direction. And by early wins we mean revenue. An early win is delivering revenue, or it means showing a path to cost savings. Our strategy works because we get in there quickly, and we show early wins.
Understanding The Digital Transformation Assessment
Digital Transformation Assessment: How It Works
The digital transformation assessment has been proven to be extremely effective. We can very quickly show the president or CEO of a company where they have deficiencies. You may have the right mindset, you may have the right leadership team, but if you don't have the right portfolio, strategy [for] innovation, it's not going to be sufficient innovation to ensure that you can thrive in the future. And finally, our approach to providing guided execution of actually coming in and helping you execute on innovation, we found that that's also extremely powerful. Let me give you a case study. One of our clients...they're at about the $30 million level now. They have aspirations to grow exponentially. They want to be many, many multiple times larger than that.
Now they already have the right mindset. The team's convinced, and they're actually moving rapidly toward digitization. They're actually moving to a very well-known software as a service package to connect their buyers and sellers and all their different supply chain initiatives. However, they recognize that there are dozens of innovation initiatives, innovation projects that they need to drive forward so that they have sufficient innovation. They have enough ongoing change to make sure they survive in the future. And that's why they're bringing in Pivot Factory. They need an outside source to come in and keep them honest...to keep these moving forward. That's why we believe in this approach of education and mindset shift [and], providing a Digital Transformation Assessment, so you really understand where you are before you start the journey.
If you’re looking for an innovation consultant to get your company where it needs to go, Pivot Factory is an advisory services firm that focuses on the trends of disruption, and how companies can react through innovation. Contact Pivot Factory today.
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The Pivot Factory Podcast is a Morey Creative Studios production.
The Pivot Factory Podcast is hosted by Michael Leadbetter, and engineered and produced by Michael Conforti, Rashed Mian and Christopher Twarowski. Jed Morey is the executive producer.