Rice & Fish for Digital Business Innovation

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Many of us know about Rice Fish Culture, which involves farmers introducing fish into their rice fields. This technique is good for both the fish and the rice. Safely hidden from birds, the fish thrive in the dense rice plants, while they in turn provide a source of fertilizer with their droppings, eat insect pests and help to circulate oxygen around the rice field. Keeping fish in rice fields can increase rice yields by up to 10% – plus they have the additional supplies of fish.

Most of the large Enterprise companies are also following same principle – focusing on Innovation, which will work in partnership with its major businesses to meet evolving customer needs and stay ahead of the shifting competitive landscape, similar to rice-fish culture. The end goal for the Innovation Group to serve as a catalyst for the company to quickly transform its business models, processes and programs, and user experience all while successfully managing within an enhanced risk and regulatory environment.

Titanic Theory

Image Credits: EPA

On the evening of April 14, 1912, the RMS Titanic collided with an iceberg in the north Atlantic and sunk two hours and 40 minutes later. Of its 2,200 passengers and crew, only 705 survived, plucked out of 16 lifeboat. Imagine how many more might have lived if crew members had thought of the iceberg as not just the cause of the disaster but a life-saving solution. The iceberg rose high above the water and stretched some 400 feet in length. The lifeboats might have ferried people there to look for a flat spot. The Titanic itself was navigable for a while and might have been able to pull close enough to the iceberg for people to scramble on. Such a rescue operation was not without precedent: Some 60 years before, 127 of 176 passengers emigrating from Ireland to Canada saved themselves in the Gulf of St. Lawrence by climbing aboard an ice floe.

Many of large enterprise are capable today to determine iceberg and use them for their own success.

FedEx and UPS : Their businesses should have been destroyed with email, PDFs, etc. cutting into the highly lucrative overnight letter business. Instead, they moved aggressively into supply chain and logistics, helping enable a lot of what we take for granted today in terms of e-commerce. They’ve also been fast movers on adopting new technologies for things like package tracking, vehicle routing as well as integrating their data through APIs with customers.

Hilton Hotels eschewed conventional market research that groups people broadly by age, income, and occasion such as “leisure versus business” or “long stay versus short stay” in favor of asking people to describe what they want in a hotel and when and why they want it. Based on the results, the company was able to construct a map of what really matters to consumers. It could separate the hospitality market into multiple categories—demand spaces—such as “cool and hip” and “recharge and refresh,” and allocate each of its brands to one or more of them. The results were startling. Not only did the demand space analysis help separate and reduce cannibalization among Hilton’s nine brands; it also uncovered an opportunity to reposition the company’s flagship brand into the “recharge and refresh” space. This was a high-growth area making up 25% of the market—and it was therefore far more attractive than the travel segment that Hilton had previously targeted. In only a few years, demand-centric growth at Hilton contributed to a dramatic improvement in the value of the business.

In 2013, Hilton’s private equity owner took the company public at a 27% premium over the 2007 purchase price. It was the largest IPO ever for a hotel operator.

Lean Business Process

Image Credits: AP Photo/Tony Gutierrez

Most innovative enterprise companies—3M, General Electric, and Procter & Gamble, for example—have long succeeded by developing new products in nearby markets that lead to incremental profitable growth. Younger, tech-based innovators such as Apple, Amazon, and Google have aggressively followed a similar strategy. As markets mature and competition increases, growth in the core portfolio inevitably slows. Introducing new products means going up against entrenched competition, and even companies that innovate successfully in existing markets often end up cannibalizing sales of their own brands. Adjacencies help innovative companies open new avenues for growth through exposure to markets in which they benefit from 100% of the share that they achieve.

 Fashion retailer Zara, part of the Inditex Group, the world’s largest apparel seller. Zara lives by speed. The typical fashion retailer is organized around individual functions to gain scale and cost advantages; as a result, product development, manufacturing, and delivery take months. Zara gets new styles to market in two to four weeks. To do so, it uses a cross-functional, integrated organization to accelerate decision-making and eliminate delays in functional handoffs. Design, procurement, manufacturing, and delivery are all organized into teams that work closely with store managers to quicken responsiveness to shifting market trends. Team performance is assessed on the basis of common metrics and incentives that focus on go-to-market speed and rapid lead times. It is a great example of business process optimization and metric driven approach

From an innovation perspective, there are two aspects to speed: the rate at which companies develop new products and services, and the rate at which they deliver those products and services to market. Some companies emphasize one or the other; for example, innovation leaders stress development and fast followers focus on delivery. That said, companies that have designed their systems, organizations, processes, and cultures for speed in either context tend to have four things in common: they apply lean processes, prototype and iterate, have dedicated innovation partner, and follow the right metrics. Example – Bridgestone: Selling tires as a service

Doing the Work Right and the Right Work by leveraging right digital platform & Partner

 This two-fold focus of process design—on execution as well as on decision-making. Do the work right is all about the process of execution, and it involves the same principles that are core to the lean approach in manufacturing and other domains: eliminating waste, reducing costs, shortening timelines, improving quality, and increasing efficiency.

New tools can make a big difference, and across all industries, new technologies, especially digital and data-based technologies, are powerful tools. At leading companies, technology is evolving from a functional silo to a foundation for breakthrough innovation in products, services, and business models. Technology-enabled innovation comes in many flavors. It can mean using advanced analytics to improve decision-making, employing digital technologies to retool manufacturing, and harnessing mobile capabilities to improve marketing, to name just a few.

The crux in all cases is the creation of a platform that can be leveraged repeatedly to deliver impact. In our experience, technology platforms can bring benefits in at least four areas: cost and timeline reduction, often though automation; business transformation; the enhancement of process; and, most significant, business model innovation through the creation of new types of products and services.

Adopting these practices is far from easy—companies encounter a host of organizational and cultural hurdles—and it typically involves a journey that is measured in years. The challenges can be daunting: breaking down organizational silos, shifting to an agile process, moving from a heavy IT architecture to modular systems, and overcoming internal resistance. One of the most difficult—and important—organizational and cultural shifts is moving from a traditional “waterfall” approach to idea development, in which stopping a project is seen as tantamount to failure, to an agile approach that sets as many ideas racing as possible and quickly and happily kills off the ones that fail to show potential. Companies that make this change also become good at taking in ideas from all kinds of sources, including internal idea labs, external scouting, thought leader monitoring, vendor relationships, crowd sourcing, and academic partnerships. Most critical part is to involve experts or consultants to optimize business process and lay down business process automation roadmap.

Few Examples –

 L’Oréal

The $30.5 billion cosmetics giant L’Oréal is smartly investing in a future where makeup isn’t sold predominantly amid the hawking din of department store cosmetics counters. Last June, L’Oréal’s US-based tech lab launched its first product, an app called Makeup ­Genius, which uses a phone’s front-facing camera to host the digital equivalent of a counter-side makeover. It recruited the firm behind many jaw dropping visuals in the movie The Curious Case of Benjamin Button to create startlingly realistic effects when users move and pucker.

 Panera Bread

Panera is in a crowded category called “quick service” that has suddenly found digital religion: Competing players like Starbucks and Pizza Hut, say, are rolling out ordering technology. But Panera leads them all with a full reboot called Panera 2.0, which includes far-reaching revisions to how customers dine in and out, how food is prepared, and how it’s delivered. The change began last year, and is currently being rolled out across all its 1,800 U.S. restaurants—and boosts sales and traffic so much that Panera has to invest 35 more hours a week in labor for each upgraded cafe.

It’s a process Panera began planning for in 2011. “From security to our network bandwidth to our processing speeds to our resiliency and recoverability, we’ve made huge investments in the back end,” says Blaine Hurst, EVP of Technology and Transformation. The core of Panera 2.0 happens in one of two places: either on the Panera app on a customer’s own mobile device, or at a kiosk of tablets in the restaurant. On the app, to-go users can place a mobile order up to five days in advance and pick up food from a separate shelf in the restaurant, thereby skipping the line. Or dine-in users can order on their phone from their table (or at the kiosk), and food will be delivered to them.

Customers can customize dishes as they order, and the system will remember users’ favorites—so long as they’re enrolled in the restaurant’s digital loyalty program, MyPanera. Response is strong: Already, about 50% of all transactions happen through the program. And all this increased customization has meant changes in the kitchen. New checkpoints were built into the food-making process—moments when chefs have to check that they’re fulfilling the order properly, so that the actual food is made as seamlessly as it’s ordered.

 Indigo Airline

It took a spunky airline to demonstrate that even in India’s crowded aviation market, low fares do not necessarily beget low-quality service. The no-frills IndiGo has blossomed into the country’s largest airline—it took delivery of its 100th aircraft in November 2014 and reached a high of 33% market share—as well as its rare profitable one. The 10-year-old airline has flown 82 million passengers with 550 daily flights, and is in a prime position for the future: India is forecast to become the world’s third-largest aviation market by 2020 and the largest by 2030.

IndiGo pulls this off by balancing a cool factor with innovations meant to cut costs while also pleasing customers. It has step-less ramps to cut down boarding times and a pit-stop approach to aircraft cleaning to slash turnaround times. Last year, it brought in pioneering measures such as 48-hour advance check-ins at no extra change, dedicated stair lifts for passengers with special needs, and options for fliers to donate toward reducing the carbon footprint. An on-board Braille guide helps visual-impaired passengers communicate with the crew. Behind the scenes, IndiGo has developed an “aircraft communication addressing and reporting systems”—a digital data link to convey short messages about flight status and other key information between the aircraft and ground stations via satellite. All of that is aimed at achieving the standard most passengers will hold it to: meeting its catchy unofficial tagline, “On time, every time.”

So, if you are thinking about Innovation, who is your partner in Innovation? www.persistent.com

Image Credits: magmanews.com

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