Innovation at the Speed of Life
1 September 2006 Matt Bross
While technological innovation is important, it is meaningless without creative thinking about business strategy. Jim Banks finds out how to drive innovation across the business from BT's chief technology officer, Matt Bross.
All too often, innovation is a term applied to the development of new technology, either as a product in itself or as part of the infrastructure that delivers services to customers. This is due in part to the ever-faster pace of technology development, the management of which is often a major challenge in itself. Such a limited definition of innovation, however, may ultimately prove harmful to a business.
"The pace of technological innovation is accelerating like never before," says Matt Bross, chief technology officer for BT. "I believe that never in history has there been so much meaningful innovation going on, even during the dotcom boom, which really only saw a lot of cloning of good ideas. The rate of change is at an all-time high. What we are seeing today is innovation at the speed of life."
As a leader in a highly competitive, IT-intensive industry, BT knows more than most about the challenges of managing the ever-faster pace of technology development. The company and its offshoots bring thousands of new products to market each year, and BT constantly refines the capability of its service offerings as its technology platform evolves.
Furthermore, independent research agencies such as Forrester consistently rate BT as a leader in fostering innovation, praising its processes and strategies.
21CN: WHAT IS OPEN ARCHITECTURE?
There is a lot of interest in next-generation networks, but how are they different to legacy networks and why is the architecture considered to be truly disruptive? In the traditional world, services such as voice require their own discrete networks with discrete infrastructure, systems, management and services to support them.
In an IP world, services are applications. For example, voice becomes one of many applications running on a common platform and the systems, services and management processes are shared. In essence the transport layer – the electronics that convert communications signals and convey the communications to their destination – is separated from the session control or signalling.
This separation leads to an 'open architecture' that challenges traditional business models. With open architectures, it is possible for thousands of applications providers to 'experiment' with new, attractive applications that can be launched quickly and relatively cheaply.
INNOVATING ACROSS ORGANISATIONS
21CN will make the UK the first country in the world to move its core telecommunications infrastructure to a next-generation all-IP network, enabling BT and third parties to deliver a wide range of new products and services to customers, both business and private.
The aim is to achieve reduced complexity and a significantly lower cost base, with savings of £1bn per annum estimated by 2008/09.
To achieve its goals for 21CN, BT must work with many technology partners, including Alcatel, Ciena, Cisco, Ericsson, Huawei, Siemens, Lucent and Fujitsu. It cannot maximise this opportunity on its own.
This means that when it is looking at how to manage innovation, BT cannot focus solely on technology, nor can it look entirely within its own organisation for the ideas that will deliver value.
When looking at how to manage creative thinking effectively, BT realised that technology will never deliver on its potential impact on BT's products offering – nor on customer satisfaction – unless the term innovation is given a broader definition.
Therefore, sharing creative processes with its partners and seeking to innovate around its business model as much as its technology have become important factors. This is where CEOs of other companies can learn a crucial lesson from BT. "You must innovate how you do innovation," says Bross.
DEVELOP IT AND BUSINESS STRATEGY
To show how technology and business strategy are entirely co-dependent, Bross cites the example of debit / credit cards, which nearly all of us now use without questioning the systems and processes that underpin them.
The technology behind the execution of payment transactions is not the foremost thought in customers' minds when using their payment cards. Nevertheless, if that technology fails, then customers' experience is negatively impacted and the brand will suffer.
In this case, a firm's business strategy and its technology are inextricably linked. So ultimately, Bross stresses that innovation around technology must be accompanied by innovation around business models. Overall, innovation is therefore the job of the CEO as much as the CTO.
For Bross and BT, the way to guarantee that innovation will deliver fully on its potential value is to not only instil an innovative culture within an organisation, but also to have a clearly defined yet flexible structure through which innovation can be harvested, managed and delivered to market.
The development of such a system must be nurtured by all senior executives, including the CEO, and cannot be the sole responsibility of technical personnel.
The defined structure for harnessing creative thinking and achieving sustainable innovation at BT is known as open innovation.
This project has many strands, including the offer of bonuses and rewards for BT employees who can contribute new ideas that positively impact the organisation's delivery of products and services.
Internal resource management, which brings the HR department into the innovation equation, is key.
"You must incentivise people in the organisation to drive enhancement of your customers' experience and get every man and woman in your organisation to understand their contribution to innovation.
Our new ideas scheme works on the basis of awarding points for the impact of an idea and it involves our global staff, who are at the coalface in terms of delivering on our broader corporate strategy," remarks Bross.
He also believes that BT as an organisation must increasingly look beyond its own internal assets and connect to a much larger universe of creative thinkers, including developers outside the company, in order to maximise innovative capability. Thus, one of the key strands to the open innovation programme is to harness the skills and imaginations of external developers throughout the world by providing access to software and hardware elements already nurtured within BT.
"Globalisation is driving innovation," says Bross. "There are great ideas coming out of China, India, Latin America, Asia and Israel, for example. We are trying to explore opportunities wherever they exist and fuse them together to bring together the best thinking in the world. Working with developers in those markets also helps us to develop solutions for the market and to price them appropriately."
Identifying technological creativity, wherever in the world it may emerge, and fusing it with the corporation's own internal skills and capabilities, establishes networks of innovation that drive development forward.
The model is enabled by providing external access to certain building blocks, such as BT's software development kit, and to solutions around storage, digital networking and so forth developed within BT, which can then be used as the basis for new products and services.
This approach is what transforms closed innovation into open innovation, and shows the importance of bold, new thinking around business models as well as technology.
Adapting business models around new technology is the key step to fostering innovation effectively. "Business and technological innovation are inseparable," explains Bross.
"Our open innovation programme is changing the way that innovation works. We have created the innovation continuum. Products are cloned very quickly, so innovation is about much more than just bringing clever products to market."
He emphasises that a disconnect at any stage between technological innovation and the point of customer contact will destroy value.
Whether it is a clever invention that is poorly productised, a clever product that is poorly delivered to market, or a well-delivered product from a company that cannot scale up in line with its success in the market, failures at any stage will damage a company's success and limit its chances of capitalising on its innovative thinking.
"It is an innovation chain reaction that drives sustainability," states Bross. "This is essential to all markets. The continuum is the key."
Bross believes that building the innovation continuum requires firms to understand the importance of each stage of development and delivery around new ideas, encourage the engagement of all staff, reward creative thinking and open their organisations to partners.
With the correct structures in place, the complexity caused by this approach can be sufficiently well managed to justify the investment of time, effort and money it requires. After all, if a global entity as complex and multifaceted as BT can manage it, then it is surely a goal that other organisations can attain.
For their part, CEOs can begin by instilling a culture of innovation from the top down, involving staff at all levels in order to make use of the people already within the organisation. Employees not only have an interest in making the business succeed, they also have the knowledge gained day by day from their role in the company.
CEOs can also oversee and encourage the efforts of technical experts within the business as they attempt to bridge the gap between technology development and business strategy. "When you are looking at how to drive change within your corporation and in the lives of your customers, you must remember that while technology is important, it's people – not boxes – that make things work," says Bross.
Encouraging creative thinking around business models, service delivery, staff incentivisation and partnering is every bit as important as technological innovation.
This has been proven by the approach BT has adopted, and is a mindset from which companies of all sizes in all industries can benefit, if they are willing to make the necessary changes. Kick-starting the process is the responsibility of the CEO. Continuing them becomes the responsibility of every senior executive and every member of the workforce.