Monday, December 13, 2010

Why "Value Thinking" is important for being innovative?

I work in a IT service firm and there is a continual expectation from our customers on “innovation”. The target audience are customers who outsource or offshore IT, business arena of work to save costs, leverage value and focus on their “core” area. We all know this very well and this is the story of outsourcing in general- Let’s not get there as that will fill another 20 pages! :-)). In this blog and in this context, I am only picking a subsection which is “innovation” and that seems to be the expectation from everyone. Fair one, is’nt! When they are outsourcing millions of dollars, the expectation from them on firms to innovate is obvious, right? Even when I am paying continual $$’s for my vegetables-fruits-on-demand-service provider, I am expecting him to be innovative. Don’t ask me how but I am expecting as I am paying some $$’s. :-))

Here is the small disconnect and the premise of my blog- All Indian and US IT firms can definitely innovate on process and technology but to innovate on customers business requires “value thinking”. IT firms have “operations/delivery” folks and “relationship/engagement” folks – These folks seamlessly integrate the fabric of delivering services to the customer expectations. The disconnect on innovation comes specifically on “value thinking” as you move upwards to innovate on customer’s business, “changed mindset” from the service providers/customers and “courage” [required leadership trait]. All these three are interconnected and it’s important to join these three so that we get the holistic picture!

Let me expand on “innovation”- I agree with everyone on customers valuing business result or outcome of applied innovation but the issue here again is related to courage. IT service firms core business is system integration, technology integration, consulting on aligning business and technology- IT Service firm’s core business is not necessarily always improving the “customer business” [atleast from a balance sheet perspective]. Firm X (IT Service Firm) may win a large outsourcing contract with a healthcare giant- Firm X cannot set up new hospitals or create a revolutionary way of handling physicians or create cutting edge surgeries or attract patients/payers for that healthcare giant under innovation [that is the core business model for healthcare giant]- Here is what Firm X can do under “innovation”:
  • Can definitely innovate on “process” and “technology” as they are experts in that area and they are contracted for that!·
  • Can definitely brain storm with the healthcare giant on their areas of business innovation- 5 W’s[Who, What, When, Why, Where] and 1 H [How] should be triggered for Firm X’s involvement in business innovation? Most of the business innovation will have some IT component to it and Firm X can facilitate that IT part for that business innovation and be a part of the healthcare giant’s innovation eco system. This definitely requires “time” and “energy” from the healthcare giant and its not a one-way street. Companies like Walmart, TESCO, P&G have spent enough time with suppliers to enable them in their innovation eco-system so that they can reap benefits.
  • Firm X also need to baseline the current state of process and technology innovation [which is a “hygiene factor”] and sign off on the customer expectations and prepare a road map of future expectations with the healthcare giant on innovation. This has to talk about time and energy required from both parties etc. Now without all these, just talking about innovation either with the customer or internally does not make sense and it will join the league of over-abused jargons in management or leadership! We definitely don’t want Scott Adams have “innovation” in the buzzword bingo contest where “Wally” records these from the pointy haired boss!!

I believe the traits required for “value thinking” for a customer is as follows:

  1. Keep on reading on the area that you are working- It can be analyst reports, It can be google alerts on your area, It can be books etc. Because at the end of the day, all are inter-connected and the ability of the leader to connect the dots become super critical in an age where there is no information asymmetry. Reading and Connecting the dots is an important trait- For example, hypothetically speaking, this healthcare giant would have created a revolutionary mechanism on pricing with payers on outcomes or would have created a unique way of doing surgery. How do we leverage Firm X internal knowledge or expertise to enable healthcare giant’s business innovation? Can we explore that? It can be a sensitive area but internally we should be able to connect the dots. Can we do an innovation introduction as outlined by “Michael Schrage”: http://blogs.hbr.org/schrage/2010/11/when-your-best-customers-reall.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29
  2. Have the courage to face failure- Firm X engagement/relationship/delivery folks should go to a customer and propose something new. It can be a failure but the attempt to “challenge the status quo” has to be there in action. It should not be there to give advice to the team- it has to be there in practical demonstration. This is not a enlightenment session where the team should know how to challenge the status quo but it has to be a practical demonstration on how it is done to the team. Most of the times, we tend to have self-doubts about our approach or idea and the whole thing dies before it is presented. I define “courage” as the ability to face criticism from customer or internally and still have the confidence in your idea or approach. At the end of the day, if you present 10 approaches to customer and if 3 are treated as failure, you still emerge at 70% success rate on new things. That requires enormous homework, connecting the dots and courage. As you can see, all are inter-connected.
  3. To expand further on courage, we should think of us as tiger in the mirror and not as sheeps- if we think we are sheeps infront of the customer, we will behave like one. This is a direct analogy but it is applicable- What will happen finally? Will the customer eat us? No- we have to create an impression where we are genuinely trying to do the thinking part along with the customer. And whenever you do thinking, you always have the possibility of going wrong- Its okay. Check out a tiger- Even if it makes mistakes, it does not sulk. :-) don’t know whether it is a right analogy but I somehow like the posture of a tiger.
  4. Stay Hungry, Stay Foolish- there was an amazing publication called The Whole Earth Catalog. It was created by Stewart Brand in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions. Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s- On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish.

To summarize, the key traits for “value thinking” which is essential for innovation are:

  • Read and connect the dots
  • Stay Hungry and Stay Foolish
  • Have the courage to face failure and challenge the status quo
  • Make mistakes as it indicates that we are trying rather than just order-taking
  • Always baseline quantitatively and involve the customer genuinely- This helps in showing improvement or progress

21 comments:

hezedgodson said...

As you mentioned in the first para we dont expect the "vegetables-fruits-on-demand-service provider" for innovation, but IT firm have to.

Your blog is more informative to learn the possibilites of innovation. Looking forward from you on the approaches how we can suggest innovation for the Customer. To be clear - How to fix an appointment with the Customer to learn his process and suggest improvements, with the right words, so that it turns to a business deal.

Anonymous said...

Aha! Traits required for “value thinking”, point no. 4
Stolen lines from a TED talk! ;p

Dave said...

Come on. Who can read this? What about something engaging, like the meaning of life?!

Veena said...

Amazing post Prakash..You have really thought through a lot of aspects and having actually seen what works on the ground have really shared a priceless post. Please continue to post and share these pearls with us.

Veena

Harry said...

Hi Prakash,

I completely agree to the fact of value thinking and how important is to be innovative in the line of business which we are into.

I work for the financial services where innovative is a must and the customer expects you to come out with a process innovation everytime u speak to him, which is cost saving as offshoring is all about saving $.

In my case I have the innovative idea.But how to present it? whom to present it? how to nurture that idea and sell it? This is where many of the persons are struck and the idea is dead.

Appreciate if you could elabrote it to one step below of few important details of how it has to be done and what are the points that needs to be considered to put it forward so that at the day end I get a satisfaction that I have done something apart from my routine work.

I want to stay hungry and Stay foolish

Shoba Jagannathan said...

Yes Prakash, it makes sense for IT firms to apply innovation on what is our core area to help the innovation in the customer's core area.
Coming to courage I would say "No idea is a bad idea" and it is better to have tried and lost than never to have tried at all :)
Nice post connecting "value thinking" and Innovation.

Prakash Gurumoorthy said...

@ Harry and @Godson- Approaching the customer on innovation can be on one of many ways but I would tend to start with "engagement". It can be a minor engagement with an investment or a paid one with no rider on success or failure. Its an attempt. Period. This is what Michael Schrage calls as "innovation introduction". The problem I perceive on innovation is simple- Everyone likes to talk about it but in terms of concrete actionables, they backoff if they need to spend time specifically.

Prakash Gurumoorthy said...

Thanks Veena and Shoba for the encouraging words!

Prakash Gurumoorthy said...

Mr.Anonymous- The point 4 trait of "Stay Hungry and Stay Foolish" is NOT from a TED talk. Its from Steve Jobs stanford graduation ceremony transcript- Maybe the TED guys lifted from Steve Jobs....Nevertheless, I found this relevant for "value thinking".

Prakash Gurumoorthy said...

@Dave- Haha...Meaning of Life will come shortly. Keep watching the space...My son is already giving me those pearls of wisdom every day...

Varun said...

This is an extremely well-written article that hits the nail on the head with regard to innovation from a vendor perspective, Prakash. I especially loved the point that speaks about the importance of laying out a roadmap for the future, without which all talk and gyan about innovation without the target state clearly defined does not provide any value. It is also heartening to note that a number of firms are recognizing the value of innovation and ensuring that their employees understand the same too!

Keep them coming:)!

lalit said...

Nice Post Prakash.. Agree with you that the jargon is being used very extensively these days !!

Also, Innovation could be anything which is more efficient & better way of doing things & need not neccasarily be a big change (this is the mis conception most people have)

Looking forward for your next post

Six Sigma for all said...

Hi Prakash,

Hit on the Bulls Eye!!!

Lot many people talk about Innovation and its need for survival but very few actually really understand what kind of transformations is required.

Innovation is all about enriching the flexibility to change the Value system and bringing the cultural shift in the organisation.

Value thinking is the real key or the base for this. I appreciate your views and look forwards for more jems of your experience.

Naveen Saksena

Yogashish said...

Prakash - First of all very interesting subject and matching write up. As we have taken a dipper dive in this area, we know challenges in hand.

Its time to change the course of action for IT companies. Its logical movement from body shopping era to delivery ownership to business partnership. We can use different vocab to describe this phenomenon, Staff aug, Time and Material, Fix bid, Managed service and finally Business aligned delivery. It requires structural change in way the IT companies operating. I guess "value add" or "innovation" expectations are early clues for next level of maturity for IT companies.

Prakash Vaidhyanathan said...

Hi Prakash,
This is a brilliant post with excellent pointers. There are many of us within IT especially in the support realm who can work with their eyes closed - similar issues and similar solution. How different is such a job from that of say an A/P clerk?

We had a great post in ch1 on socializing mundane jobs and making them fun. If innovation can start right from such mundane jobs, the opportunities/scope are enormous for us to explore.

Chanda & Mahen said...

WoW, amazing to see Prakash that you did take out time from your busy schedule to share this master piece of thoughts. I subscribe to it 100%.

However, I would like to list out some of the challenges:

1. Ability to think and act like a leader - Specially, in case of India; I find we are lacking leadership qualities like never before.

2. Market, Stock market and number driven companies: In a world where quarter to quarter is focused on, very difficult for employees to go beyond there deliverables or numbers. There are very few companies like Apple or Google who goes etc miles for innovation. Mostly, I see copy caters.

3. Naming convention: How many companies do you see with positions like Client Innovation Officer or Company Innovation Head etc?

4. Long-term prospective: How many of us can think beyond a year or two today?

5. Ability to read: in this twitter world, people have lost the ability to read a large volume of content. Whereas, we are generating highest volume of content in the history.

6. Freedom: Does companies allow or encourage the risk taking at the cost of direct impact of top lines?

Prakash Gurumoorthy said...

@ Mahendra- Fair points but a lot of innovation is happening at India and China. In fact, most companies today have an Innovation Head or a Innovation Officer. Companies do encourage and give freedom for sure. A lot of companies are also listening to the end customer for innovation- It has moved from employees, partners to end consumers as well.

For example:
1) HTC phone has a polite ringer. The ringer goes mute when the phone is flipped. This was a feedback from a user!!
2) Nestle experiments all new flavours of Maggi based on end user feedback
3) HP created DreamScreen after speaking with 2500+ Indian families

Corporates have portals, sites for this activity- quite notable ones are:
1) www.innovationforeveryone.com by VW
2) Gojiyo by Godrej
3) HLL has got a kiosk concept

Prakash Gurumoorthy said...

Thanks Varun, Lalit, Naveen, Prakash and Yogashish for your insights and views. Keep them flowing- I will be writing 2 more posts on this!

Would love to hear from you guys.

Rajesh said...

Innovating on process / technology will be accounted for through self-selection: in order to stay competitive, if continuous improvement on efficiency / effectiveness of process / technology does not occur, firm X will lose out to competition. I have a slightly different take on customers' expectations of innovation and it has everything to do with improving "customer business". Customers are willing to remove the distinction between "IT firms" and "Strategy firms" and are willing to pay trusted advisors. The role of trusted advisors will be rewarded and the key expectation of them is often the answer to the questions "How can I remain not only relevant but also competitive; who is willing to have their skin in the game (with me) from ideation to implementation?" It is therefore not surprising to see that "IT firms" strive to provide strategic consulting while "Strategy firms" are gradually expanding into technology solutions delivery.

Prakash Gurumoorthy said...

Absolutely Rajesh- I think customers also need to realize what amount of time they need to spend with "trusted advisors" and thats what Michael Schrage elaborates. Yeah IT firms are moving "upstream" and strategy firms are moving "downstream". My focus on this blog was more to understand "value thinking" and how we can practice that as individuals as that is the need of the hour...

Sanga said...

Since I work in a company which recently added the phrase "Practical Innovation" to its name, I say I agree with you :).

We have to start exploring the possibilities of being more than the technical solution providers.

I think many IT consultancies have taken note of the importance of domain expertise. In my own place there are more of BAs (Business Analysts) whose main purpose is to understand the intricacies of the clients' business and come up with suggestions.