‘Adopting specific mindsets and practices empowering the workforce to focus on higher value outcomes.’
Join us as we engage with thought leaders who are developing mindsets, techniques and templates to empower the workforce to focus on higher value outcomes whilst leveraging the new capabilities of the Intelligent Enterprise. This series of episodes continues from our first episode which focused on ‘Framing the challenge using the ‘Project Scope’.
This is the first part of an exciting 2-part in-depth interview and conversation with Marco Cigaina, Chief Principal at Idea Development and Service Growth (SAP Innovation Services, Applied Business Innovation) and author of the book “Innovation Management Framework: enabling and fostering innovation in your company“, Epistemy Press (2013).”
In the introduction of his book, Marco acknowledges that the need to innovate is essential, more than ever before. Firms are heavily relying on it, since customer needs and expectations nowadays become increasingly sophisticated and unpredictable, and the pace of technology and product lifecycles accelerates constantly. Not to forget today’s complexity of business environment!
Innovation is a hot topic!
Have firms acknowledged innovation management as one of the key business functions by formalizing their innovation practices and processes? Far from it! In fact, innovation management still didn’t find its proper way into the organizational DNA. Instead, not all firms have defined processes to evaluate the ideas generated through innovation programs, and only few have funds dedicated to incubating and commercializing those ideas deemed promising. There is no question about it: By neglecting the management of innovations, organizations highly risk losing market shares and their competitive advantage. The solution? Managing innovation requires a holistic, structure and consistent view. In his book, Marco introduces ‘The Innovation Management Framework’ concept which considers innovation from three complementary perspectives of Enterprise & Strategy, Processes & Methodologies, and People & Networks.
Marco Cigaina, Chief Principal at Idea Development and Service Growth (SAP Innovation Services, Applied Business Innovation)
Sharif Maghraby Lead Innovation Coach at Winnovate (powered by SAP), SAP Training and Development Institute.
Fabienne Oswald Marketing & Communications Lead, SAP Training and Development Institute.
Sharif: Can you tell us why it's important for us to stress on the fact that innovation is a people matter?
Marco: Innovation is indeed a “people matter”, because it has to do with ideas, creativity, passion, and ability to execute on those ideas. It is not only about individuals, but also teams that work together. In fact, you can have the best strategies, the best processes and the best technology in place, but everything ultimately revolves around people. Think of the different innovation stages: the point in time where a team needs to feel the motivation to innovate to even get started, the point where they need to have the right understanding of an environment, market, technology and then the execution stage. It's all about how people interact and work together towards the development and adoption of those innovations. In fact, when you think about how to manage innovation, there is a kind of mechanistic school of thought looking at it as a process with different steps, but in fact it's pretty clear that the behavior of people is fundamental and that's why elements like the culture of organizations, enablement of employees in companies and values and behaviors in the organization are so important.
Sharif: That's music to our ears.
Fabienne: Yes, I really loved that answer for a couple of reasons and it leads perfectly to one of the questions that we are having as well, which is actually around our new company strategy. No longer just delivering the intelligent enterprise but in the context of the experience economy. Marco what excites you most in this experience economy that we are in, when we are thinking of innovation specifically and also the application of X-data and O-data when it comes to the empathy phase in design thinking for instance but also the validation phase?
Marco: It's a pretty interesting evolution of our strategy, in fact. When it comes to the intelligent enterprise, a basic minimal view would be to think that we have to integrate different applications to enable it. In fact, I see two major perspectives. One is the fact that we look at enterprise systems along their evolution from manual to transactional, to digital, to intelligent, to self-driving, to autonomous; that's basically the evolution of the enterprise system. But, it has much more to do with a vision for a company that fully leverages the potential of technology to increase efficiency and empower employees to deliver the best experiences and invent new business models and revenue new streams. The experience economy is not new: we have been moving from agriculture to industry, from industry to services and then from services to experiences. There are multiple reasons for that. There are a lot of competing products in the market nowadays, there is an abundance of offerings and also over time, once you are happy with your basic needs, you are moving on to satisfy your higher purpose needs. Experiences then become key. Experiences are at the top of what a company can innovate on, because you can actually look at the concrete experiences of your current end customers, potential new customers and build new business models around that. By analyzing what customers really need and the experience they go through, you can really go back and design or re-design the right combination and bundle of products, services and touch points. And, once you have done this, of course, you need processes and technology in order to deliver that. It's a really unifying perspective that sits at the core of customer-centric innovation. In fact, I think, we are really in a very special position as a company as we can combine the ability to execute and optimize which is basically in our DNA with innovation, now attaching experience management to innovation processes.
Sharif: Great. Very useful and very interesting. Okay, so we are going to dive into the IMF book. I am just curious to know what was the key driving force to develop and author the IMF book?
Marco: In essence, it was about rotating the perspective. When in 2010 I joined SAP service innovation team to explore new topics, we spoke with customers around innovation and we realized we need to rotate our perspective. Innovation is not simply having our products adopted. If you look at it from the customer point of view, then you have to really look at innovation from their perspective, which is not about adopting our products per se, it's about innovating their business. In order to help them to innovate their business, you need some capabilities. You need to be able to research, you need to be able to ideate, you need to be able to progress ideas through the innovation funnel and you need to commercialize and monetize them. Therefore I rotated my perspective: it's not about pushing our products into a customer, it's about being in their shoes and actually helping them to innovate. Then, in order to help them to innovate, I needed, and we needed as a team, a reference model. That’s when the journey started. I did two years of research to write that book, going through quite a number of indirect research with books, with articles, with papers, etc. But I also talked with a lot of practitioners. For example, I had a chance to talk with people from IDEO and other companies. At that time we had in place a customer advisory board run by our team, which gave me the chance to talk a lot with C level representatives of important companies across the globe. It was really global: from America to APJ to Europe. That was invaluable, because I realized there was a real need for a reference model for innovation management. And, it might seem redundant to have a new reference model. If you look at the pure quantity of innovation management concepts, innovation management practices and methodology tools, you might be overwhelmed.
Sharif: Yes, it's true.
Marco: That's exactly the problem, because all of those might not be comprehensive and not necessarily consistent with each other. You don't know when to apply what, and in which sequence. In fact, I perceived that customers were looking for a consistent, comprehensive and logical way to look at innovation management: first from a conceptual perspective to think in those terms, then to compare different practices and finally act on them. At that time design thinking was emerging quite clearly already, but there were already many complementary methods and tools, like the lean startup and the business model canvas. How do you make sense of all of them together? How can they work together? What do you do first and how do you orchestrate all of that for your specific company? That actually was not trivial at all and I realized that there was a need for something concise and very logical that people could refer to. The main trigger was revealed when we conducted a of survey in late 2011 with some customers and got some interesting findings. First, that innovation is very broad, which means companies in different industries are looking for different types of innovation, not only around products and technology but also around services, processes, business models etc... So, indeed innovation is broad. Second, that distributed models for innovation are becoming more prominent, as companies realize more and more that they cannot be alone and they need to cooperate. They need to source ideas from other companies, institutions, independent professionals, etc. In that survey we also realized that all executives share the need for having innovation management evolve from an art to business discipline. And that was really the trigger, so we decided to invest time and set up an initial structure that could serve any company.
Sharif: That's very good. I think what I love about the book, and I am using it as a reference, is that’s it’s based on serious research and it's also quite simple. I like the way that at the end of each chapter, you succinctly summarize the taxonomy. Okay. When we go into the process of co-innovating with customers, what would you say are some of the more effective strategies that have been developed at SAP to enable the process of co-innovation with customers?
Marco: Well, I think SAP is well-versed in collaborating with customers - if you think about Sapphire or the SAP user groups or the customer influence program. Then I think that design thinking also contributed to enable collaboration with customers around identifying new use cases and scenarios and working with them together. We also have the SAP customer engagement initiative in place and other ways in which customers discover our content, for example, like open SAP. I think there is a spectrum of measures, practices and programs in place that really help SAP to co-innovate with customers.
Fabienne: Okay. Fantastic. Let's dig in a little bit deeper. In your work, why was it important for you to develop an innovation taxonomy?
Marco: Yes, sure. We need a common language when we speak about innovation. That is the essence. We had a customer coming to us, for example, asking, "How can we become more innovative and how can we increase our ability to innovate?" but it's almost sure that when you go more in-depth in the conversation you realize that you are not necessarily using the same terms. For example, people often the term “disruptive” and “breakthrough” innovation interchangeably. Obviously, if you don't have a common terminology as a foundation for a conversation and working together, then there is a risk of misunderstanding. That's why I went back to the books, so to say, and found out the origin for each term, who actually authored it and what is the true meaning. And then I also tried to combine them in a consistent taxonomy. A key element is the object of innovation and this is related to the scope. Then, what is new in that object that you are innovating and it could be many different things: it could be a business model, it could be a process, it could be a solution. That would be basically the scope. For the type of scope, you can have different scales defining to what extent it is new. Is it just a component of it, so maybe the screen of a PC or is it the entire architecture of the PC? Then when it comes to the related change, you have to ask yourself “to whom is it new”? It means innovation also deals with perspective of stakeholders, because it can be new for a customer but maybe it's not new for you as a company. Alternatively, it can be new for you as a company, but maybe it's not new for the industry. So the perspective also counts. Then, the extent of the change can be incremental, or it can be breakthrough. You could introduce, for example, a new CD player versus moving from disc to online music. Then, the impact on the industry becomes evident and that’s basically where the distinction between ‘sustaining’ and ‘disruptive’ makes sense. Sustaining means, basically, you reinforce the current business. Disruptive can basically change the industry. Bottom line, it is important to have a common terminology otherwise all the reasoning about innovation measures and practices can be misunderstood.
Sharif: Very good. You know when IDEO talks about innovation or design thinking, one of the key concepts they talk about is this ability to embrace ambiguity. Given the high level of uncertainty and complexity that encompasses the journey of innovation how might we support our customers and our partners to embrace ambiguity?
Marco: First, I think it's a matter of discipline. Let me explain why. As I mentioned before, innovation is, you could say, 10% creativity and 90% discipline. A good part of this discipline is about progressively removing the uncertainty. It's obvious that innovation at the very beginning of the processes has to do with fuzzy concepts, fuzzy ideas, uncertain plans, etc. You need to have a certain discipline in place to decompose that uncertainty into hypotheses and assumptions. Then you need to progressively validate your assumptions and remove them over time. In successful case you ultimately remove most of the uncertainty until you are later on in “execution mode”, like for any other project. One one of the way the lean startup approach teaches us to do is basically apply the scientific method, so initially seek like a researcher. You have a lot of data that doesn't make sense. You are uncertain. But then over time you develop a kind of “theory about the world” in scope, i.e. your assumptions as an innovator. Then you do a lot of activities to progressively remove the uncertainty and validate your solutions. At the end of the day, you will end up with an execution perspective. It's a lot about discipline, it's a lot about how you progressively remove uncertainty. Of course not everything at the same time.
Sharif: Okay, this brings me to a question that's not on our list and I think that you are the right man to answer this question. How is what we are talking about related to the scientific method?
Marco: I probably anticipated the answer but let me elaborate on that. Because this is actually the essence of one of the most famous methodologies in innovation management which is the lean startup approach. The idea of those methods is that innovators are like scientists in a lab. Think about it. You are dealing with the unknown, just like a scientist. All the success of the modern economy and technology deals with scientific methods so why not apply some of the principles of the scientific method to innovation. In fact, you're thinking in terms of the scientific method when you say, "Well, it is uncertain, so I don't know if my customer will like this product or which type of customer will like this product, or if I have the right capabilities. But I can make assumptions." This is basically the essence of an MVP, minimum viable product approach. You create a small reduced version of your product or service. You do a test on that, which means you concretely set up a test where you anticipate the possible results based on your current understanding. You learn from those tests and then you adjust, not only your assumptions, but also the minimum viable product itself. In essence this is how the scientific method applies to innovation. It helps you to remove uncertainty over time.
Sharif: I think what was really interesting for me. Last summer at the five-day master Bootcamp with Alex Osterwalder in Switzerland he kept telling us that "You have to progressively lower the risk and uncertainty."
Marco: Absolutely. By the way, that's why in our SAP innovation service organization we actually developed this concept. We have different phases: explore, discover, design and deliver - but along those phases, you need to validate assumptions. We actually came out with four dimensions. We have the three that are classic for design thinking which desirability, viability, and feasibility are. We added a fourth one which is scalability. If you think in those terms, you have depict the stages horizontally and then you have those dimensions for validation at each stage. You potentially have different types of methods and ways to validate your assumptions along those dimensions. Of course, that basically gives you a simple framework to move forward with your innovation that considers the desirability, visibility and feasibility and the ability to scale.
Sharif: I agree.
Marco: With the addition that in this way you can develop concrete tools and methods in one specific dimension, for example, you can use the business model canvas as a way to represent viability. Then you can validate the assumption of that business model later on but in this structure, a scientific approach which apparently seems remote from innovation is actually built into it.
Fabienne: Marco I would be really interested to hear a little bit more from your extensive experience from co-innovating and helping our customers. After you have introduced an innovation management framework, what is one of your recent examples of really successful innovation that you've been able to support our customers with?
Marco: There is a company where their CIO wanted to convert its IT department into an innovation center. For different reasons, he came to us. That was exactly a couple of weeks after the book was published so I went there and had the pleasure to give him one of the first copies. His question was: “How can we move from information services to innovation services and be able to better serve the business needs and become a player for business innovation within their company?” The way we approached that was the following: we set up two work streams, one was the innovation management stream and the second one was the change management stream; because you need to define where you want to go, but you also need to help the customer to change towards the endpoint. Initially we had a vision, mission and business model for those innovation services that the customer wanted to offer within their organization. Then we referred to the innovation management framework to define the set of innovation services. For each of those services, we analyzed the required innovation methodologies. For example, design thinking or idea management or business model innovation, etc. Then we created a governance and sketched out the roles they needed in order to execute on that. In parallel, the change management colleagues from BTS designed the related stakeholder management training and management approach to make it happen. It crossed over with the innovation management stream when it came to the training on the methodologies. This was actually the start for that organization to learn and embrace methodologies that were new to them, because they were “just” an IT department. First, they started doing design thinking workshops, first with our help, then without our help so they were enabled in the design thinking. Second, they started doing experiments with the SAP innovation management tool so basically trying to collect ideas from the employees - first in their own department then they tried to extend it. Then they started organizing innovation days. Last year the CIO won the award for the best CIO in his country! Stay posted for part 2 of this interview where we discuss value drivers in business models, emerging technology trends, innovation metrics and the best way to kick-start an innovation culture in your organization.