This Is How We Innovate

The figure above on the right, inspired by “Zone to Win” of Geoffrey Moore, further distinguishes four organizational fields of action, in which the upper row corresponds to "Exploit" and the lower row to "Explore".

The “Incubation Zone” is what we want to talk about in this article: how to explore new digital ways to create value. But for what purpose exactly? To know “The Why" precisely is essential to be able to recognize the right means on how to innovate. "The Why" can be well understood by looking at the Incubation Zone in the respective context of the other three zones. In our case as Digital Transformation Partner and B2B Multi Cloud Service Integrator, this means the following:

The Performance Zone is about our own b2b business lines, which probably will reach the end of their life cycle in the foreseeable future, but are still valuable to customers today. So maybe let us think about managing plain server hardware which will eventually be obsolete due to the public and private cloud services. In this case, incubating innovations means finding ways to be more efficient and to defend the business against price competition, e.g., by automation through Artificial Intelligence or Robotic Process Automation (RPA).

The Transformation Zone is about our own b2b business lines, which also will reach the end of their life cycle in the foreseeable future, but where there is an opportunity to transform core competencies into something similar new. So maybe let us think about managing applications, like SAP applications, for b2b customers within traditional data centers. In this case, incubating innovations could mean to help the business line to provide Managed Application Services on public or private cloud platforms.

The Productivity Zone is about creating great value for our b2b customers in exciting and disruptive ways, provided by scaling products and platforms. This could, for example, mean, to provide a blockchain track’n’trace solution for food safety, where cross-market recall campaigns can be managed in real time with low transaction costs and high transparency (more information was featured in last months’ newsletter).

Why this distinction? Well, depending on the addressed zone, the "how to innovate" can vary a lot. So please keep in mind, that for this article purposes, our following four key learnings are primarily addressing the external value view, i.e., incubation for the Productivity Zone.

Intrapreneurship

The first one sounds trivial but it is not. If you ask the insights we have gained as the question “What should be the focus of the innovation strategy?”, you will usually receive the right answer (from our point of view): “The good business idea or the employee who wants to realize his idea?” Yes, it is the employee in his role as an internal entrepreneur (“Intrapreneur”). Why? Well, in organizational reality, there is usually no magic product factory where good ideas inserted, and successful digital products come out. And it's highly doubtful if there can be such a straightforward approach in the first place. In our experience, it always takes an Intrapreneur who fights for his or her idea and who also takes on tasks that are otherwise not in his responsibilities. Without the effort and passion of that individual, the idea alone often becomes worthless.

This assessment certainly sounds comprehensible at first glance. But what does business reality look like? As a typical innovation manager, you are more likely asked by your boss which innovations are in the stage XY, when the last innovation workshop was and how many ideas are in the backlog, rather than which Intrapreneurs have attracted positive attention recently, how you helped them and whether they can get to know them.

The distinction between focusing people or ideas has enormous implications on the design of innovation management. In the first case, you are primarily designing services to help Intrapreneurs being successful. In the second case, your focus is on developing processes, selection criteria and quality gates.

Our recommendation: focus on the Intrapreneur!

Showcases

Well, let us assume you found potential Intrapreneurs within your organization. What do they do?

1. Develop high concept pitches, elevator pitches, and full pitch decks?
2. Develop business cases with three-year planning?
3. Challenge their ideas with the internal innovation community?

Option 1 and Option 2 are fundamentally good ideas if the organization is controlled in a very commercially oriented way and even the smallest investment decision is to be approved by top management. However, this probably means, for example, that "Dragons' Den" events have to be planned and implemented at regular intervals, where some Intrapreneurs pitch and the jury (= the top management) selects the top cases for which the first steps are financed. A lot of time is lost here.

Option 3 is a great way to involve the workforce in innovation topics on a broad basis. However, it is not necessarily helping the Intrapreneur to realize his idea. In our case, for example, as Multi-Cloud Service Integrator, most Intrapreneurs and innovations are within the context of a specific vertical knowledge domain, such as Utilities, Media & Entertainment or Retail / CPG. In this case, it is more helpful to challenge the customers rather than the internal workforce.

Showcases are our solution. Showcases are digital prototypes or “Minimal Viable Products” (MVP), where manageable invests are done to show how an innovative technology solves a domain or industry-specific challenge in a tangible way.

Our Intrapreneurs can easily start realizing their showcases if the following questions are answered:

• Is there a strategic fit with our corporate strategy?
• Are customers (or partners and start-ups) involved right from the beginning?
• Is the value proposition clearly defined, e.g., is it clear what and whose problem is to be solved?

Showcases are great tools for plenty of purposes:

• You want to integrate partners and startups in the sense of Open Innovation? Let us talk about showcases!
• Do talents need new challenges? Let them design showcases!
• Do employees want to be trained in new technology? Let them implement showcases!
• ...

Best of all: You can't fail with showcases. Even if the underlying business idea turns out to be an error: at the very least, you have learned something new and strengthened a customer or partner relationship.

A showcase is also the conclusion to the “Incubation Zone”. It provides the perfect grounding for addressing production stability in the “Productivity Zone” and for launching the professional product development.

By the way: showcase-based innovation strategies have only really become (commercially) feasible through Cloud Native Software Development: the architectural revolution enables potential cost savings of between 65 and 99 percent, which is why even small investments can suffice for great showcases.