Innovation, Agility and Digitisation – Key Trends for 2014

c-06No business pundit on this planet has a crystal ball. But some of us have intuitive insight…

Every day, Clustre’s panel of partners sit down with the most influential ‘C’ level executives in British industry. And our opening question is always deceptively simple: “tell us, what is either exciting you or keeping you awake at night?

From that single query comes the most revealing insight into the trends, challenges, threats and opportunities that are concentrating the minds of senior executives.  And, for many of them, December is the month of big decisions and resolutions… the month when budgets for 2014 become the main focus of attention. So what are the issues that will dominate the New Year?

Well, the answer is fascinating. The insights we are receiving indicate a remarkable congruency across all industry sectors…

<strong>1. </strong><b>Become ever more innovative</b>:

‘C’ level execs now recognise that they have to become more innovative. Annoying new entrants have seriously raised the threat level already posed by established competitors. Many of these brash newcomers are small and very agile. They can move faster and react quicker to bring new game-changing propositions to market. And they are hitting management where it hurts most…

Make no mistake, these nimble players are not just nibbling at market share – they are biting off big chunks. They are forcing senior executives to reinvent the way things are done. Boards are being pressured not just to introduce new products but also to deliver them in better, far more efficient ways.

In the last six months the number of senior people with ‘Innovation’ in their job title has literally quadrupled. It’s a measure of just how seriously major enterprises are treating this threat.

I have also seen the emergence of many new ‘skunk works’ teams. Modelled on the legendary Lockheed Martin initiative this is a hugely revealing development. It shows not only the commitment to push boundaries but also the way in which management is responding to the imperative of change.  Recognising that most large, institutions are too ponderous to drive innovation, Boards are now entrusting the radical thinking to small, agile, independent groups. They are taking key thinkers out of the mainstream and giving them responsibility for delivering true innovation. It’s a sign of things to come.

<strong>2. Increasing business agility:</strong>

Executives in charge of major enterprises now see themselves – like Tom Hanks – as captains of massive container ships under attack from aggressive ‘pirate’ speedboats. Unable to turn quickly or outrun threats, they are dangerously exposed.

This risk of losing customers to highly innovative and much more agile rivals is very real.

And the threat simply won’t go away. It’s actually increasing. Audacious new rivals appear daily (sometimes hourly). So, faced with this stark compete or capitulate choice, companies are fighting back…

In a bid to become more agile, many are slimming down to their top fighting weight.  This corporate diet often involves a flab-reducing regime of downsizing and outsourcing.  Both are healthy initiatives – but one word of warning: a leaner enterprise is not necessarily an agile enterprise. Let me explain…

I know of several organisations that have embraced the need for agility. They have trained hard and trimmed their bureaucratic layers. They have enthusiastically pushed accountability and responsibility down the decision-making line. They have bought into the whole concept of empowerment.

But that’s about as far as it goes. It’s just an empty concept. Nothing is implemented because senior management has bought into the idea; but not the intention of ever devolving power. Lower management decisions are either cynically ignored or arrogantly countermanded. So, what started as a laudable initiative ends up as a bitter legacy of frustration and lost opportunity.

Similarly, I know a number of CIOs who genuinely want to implement a fully agile IT process across their business. They can see the big picture. Sadly, they don’t have the confidence and conviction to deliver it. Fearing a pushback from their less visionary senior colleagues, they opt for a diluted version. So the brilliant big picture slowly becomes blurred and distorted by compromise and political expediency. It’s a dying shame.

Fortune really does favour the brave. In 2014, businesses will be under increasing pressure to reduce time-to-market, to accelerate decision-making and to champion new ideas. They must find the courage to seize the initiative. And one way they can do this is by…

<strong>3. Becoming a digital enterprise:</strong>

Not to be confused with the current fad for mobile app gimmickry, going ‘digital’ is all about streamlining the flow of information between an organisation and its customers, employees and suppliers. Effectively, we’re talking straight-through processing – the ‘holy grail’ that’s focusing the minds of most big IT firms and consultancies. Indeed, many of them have been either acquiring creative agencies to build expertise in this area or launching major new digital practices of their own.

But going digital does come at a high price. As we crawl out of the deepest recession in living memory, the sheer cost of funding such an ambitious strategy is being seriously questioned. Respected critics argue that the support of business-critical Legacy systems and the protection of vulnerable corporate websites must be a higher, more immediate priority. And it’s difficult to argue against such eminently sensible logic.

While management wrestles with these issues, other even deeper concerns are also being raised. For example, the pioneering appeal of digitisation has created new tensions within IT departments. Digital is the sexy cutting edge of IT innovation. So why would the truly talented choose to work in the traditional Business As Usual function? BAU is banal!

This could have a profound impact on IT departments. It could well see departments split into dedicated ‘Functional’ (Legacy and BAU) and ‘Future’ (Digital enterprise) teams. This schism may well be the shape of things to come because one thing is certain… whatever the cost, whatever the structural upheaval, the future is definitely digital.

Finally, let me turn to two hot topics on the CIO’s ‘To-Do’ list for 2014…

<strong>4. Delivering an ‘Omnichannel’ experience:</strong>

The proliferation in ways to connect with customers and suppliers is putting enormous pressure on companies to create a total ‘Omnichannel’ experience… seamless, fully integrated, real time connectivity.

Although non-trivial this is now essential. With today’s almost infinite choice of channels, companies really cannot afford to lose ground – and market share – to rivals offering the ultimate consumer experience. And that explains why many CIOs are now embracing…

<b>5. Rules based platforms</b>:

This is going to be the big game-changer in business systems creation. Instead of buying software or creating your own bespoke systems – neither of which are quick or cheap choices – there is now a third option: the Rules-Based Platform.

Effectively, this allows complex systems to be created by end-users with little or no IT knowledge. And (here’s the killer stroke) it can all be done in days, weeks or at the very most months.

One possible application of this technology is to knit together disparate systems and channels. For cash-strapped CIOs, this could be the low-cost, low-tech solution for delivering that ‘Omnichannel’ experience.

Rules-based platforms are not new but they are fast coming of age. They are my tip for 2014 and worthy of the most serious consideration.

In January 1981 Olivia Newton-John recorded ‘Physical’ – the album that went on to dominate the charts that year. In 2014, I think digital will dominate in the same way – so, to parody those chart-topping lyrics, ‘Let’s get Digital’. Have a great new year.

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