‘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 is the second and last 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.
Marco: I think it was quite an interesting project. Something that basically also shows that we can go well beyond the typical value we give to a customer. We can really help them to transform.
Sharif: That's a great example. I have some questions that are actually of importance to me as a coach and then we'll ask you about emerging technologies. The first thing I want to ask you about when it comes more to the processes. I don't really understand the concept of value exchange flows in business model innovation. What is that?
Marco: Okay. That's actually simple.
Sharif: Okay, please tell us.
Marco: I am sure you are familiar with the business model canvas.
Sharif: I am very much familiar with it, but I don't understand what value exchange flow is.
Marco: That's basically an alternative representation of a business model which is represented as a network, so each node of the network is a business actor like a company, a competitor, a customer, a provider, a supplier, and so on. Any business actor is represented as a node in that network.
Then the value flows are represented graphically as arrows that connect two different nodes, which means two different actors. The meaning of that arrow is that in a business model there is a certain type of value that one actor gives to another actor.
Sharif: Is it overlaid on top of the model?
Marco: It's just a different representation of a business model. The two representations have different characteristics. In SAP, the jargon for the business model canvas is the enterprise view and it’s is a decomposition of a business model in terms of the value creation part, value delivery part, value capture part and value proposition part.
But it is basically a decomposition. It's like taking business and representing the logical aspects in terms of fixed components. This other representation is called the Network View of a business model and represents the business model as a set of entities that exchange different type of value between them. It's very powerful when you have multiple actors exchanging value in a complicated way.
If you think about the platform business, for example, that's clearly a multi-sided model. It's clearly in the area where this kind of representation is pretty powerful, because the business model canvas assumes a linear value chain with suppliers, customers, channels etc. and of course in more complicated multi-sided setup you have to stretch the business model canvas.
The value exchange becomes even more powerful when you specify the different types of value. It can be money, but it can also be data, reputation, it can be exposure for advertisement, for example. It becomes very powerful when you are able to create a kind of archetypes or types of value that you can use and then compose those types of value in a consistent flow. Of course, the business model stands, if all the parties give and get the value with the right balance.
Sharif: Was this an innovation or something that you created on top of the model because Alex didn't really talk about it much.
Marco: This goes back to professor Jaap Gordijn, who was working on software engineering requirements, which means to formally represent requirements for complex system. And he invented this approach.
Then different practitioners in the innovation space adopted it to represent business models. SAP actually also adopted it. We call it Network View and our colleague Uli Eisert from BTS defined an SAP representation for the Network View. That becomes a complementary representation that we normally use.
Sharif: So, you have an enterprise view which is your typical value proposition and customer segment and all of that, and then you have the Network View which is the different nodes?
Marco: Right. The two are complementary and for some methods we also use the Network View. For example, for blockchain where you have a distributed setup or for the platform business which also makes sense.
Fabienne: Very interesting.
Fabienne: Like usually also in the workshops we often see that especially the multi-sided business models and a lot of people do not really get an understanding for it, so I think that is a good additional tool to make that a bit clearer.
Sharif: We got introduced to this concept called TRIZ.
Sharif: What is TRIZ?
Marco: That is actually a Russian term for the theory of inventive problem solving. I like the related SIT (systematic inventive thinking).
Sharif: So, it's the same thing as SIT?
Marco: Systematic inventive thinking is rooted more or less in TRIZ. It is the idea that you can decompose an entity into its components and you can recombine them with different type of operations like you're doing arithmetic: you add, you subtract, you multiply, you divide, you repurpose. You apply those operations to components of an entity. It could be a product, it could be a business model, it could be a service, it could be anything. This recombination generates creative ideas that are not obvious, and it can become a very creative technique.
Sharif: Can it be used in tandem with design thinking in the ideation process, for example?
Marco: Of course, it can. You can view Design thinking as a problem-solving approach with principles from ethnographic research, empathy, ideation etc. Then you can plug in a lot of different creative techniques. There is probably a library of those. You can look at this as one of those creative techniques.
Sharif: It would come in the ideation phase, yes?
Marco: Yes, definitely.
Fabienne: Thank you so much for the time. What are some of the latest emerging technologies and trends you are most excited about in this specific context of, for instance, strategy and enterprise?
Marco: When I actually look at this matter, I always think it from two sides. I think in terms of business on one side and I think in terms of technology on the other. When I think in terms of business, my simplified way is to start with the individual, then the company and then the business networks and then the whole society. If you think in those terms, then you look at technology and you ask yourself, "What do I do with those?"
The most interesting ones, I think are the technologies in the areas of artificial intelligence and machine learning. Then there is the Internet of things, virtual and augmented reality, and blockchain. Those are probably the most relevant ones. The matter is, you have those two sides. You have this hierarchy of individual companies, business networks and the entire society and those new technologies are constantly emerging.
You can actually try to correlate the two sides. When it comes to the individual, for example, you can think about the application of machine learning for digital assistants to help. We also have our SAP vision - the so-called augmented me or the individual which is enhanced by the possibility of artificial intelligence.
Sharif: Yes, the human plus or transhuman.
Marco: Basically an “empowered me”.
Marco: I hope we remain human as long as we can, because those technologies give us a lot of possibilities to enhance our abilities, our power, our reach, etc. When you go one level up and you think about the company, it's not just about artificial intelligence. For example, virtual and augmented reality can enhance our perception of space. Then you go another level up, where you have the enterprise and the same technology can be an enabler for big changes when it comes to understanding data, improving processes, accelerating the ways to create new business models, etc.
That is our territory. That's the way you start thinking how you apply those technologies for the enterprise. You can also move one level up to the business networks where you have technologies like blockchain. They help to create distributed processes, distributed business models… who knows… maybe in the future even those distributed autonomous organizations that the blockchain community is preaching about! Ultimately the uppermost level is society itself.
When I first think about these emerging technologies, I always think about those two sides. I think about the business side in those four levels and I think about those technologies in terms of their potential for transformative impact.
It was the theme behind all my work afterwards. Information technology is now so prominent, that you cannot speak about business without IT and the other way around. The separation between the two is now completely obsolete.
And my intent with this innovation management framework was to create a foundation for business innovation and to move my attention to this correlation between business and IT.
Fabienne: Thank you so much. It's very interesting. For me, I am a big fan as well what you started with, the whole topic on culture. The better an innovation culture has been established in an organization, the easier is to really leverage those new technologies in the best possible way.
Marco: Yes. Do you know what I think is a real need nowadays, as these technologies emerge and are introduced and progressively have an impact? It’s the need to conceptualize the impact of these technologies, to understand them, make sense of them and understand where to apply them and where not to apply them. It is becoming such a prominent topic today that I dedicated a lot of time in the last few years to that.
When a technology like blockchain or machine learning is emerging, we really have to understand the essence of it and what does it mean for our business. The pace at which this is happening is incredibly fast. I think we are all challenged to conceptualize and understand the application of these emerging technologies.
Sharif: The comment you just made reminds me of one of my favorite quotes from coaching which is, "By the time I had figured out all the answers they had changed all the questions!"
Fabienne: Fantastic. Thank you so much, Marco. We would love to get your insights because when we are facilitating our workshops in consultancy services with Winnovate we get a lot of questions from our customers about how we can measure the impact of innovation in a company?
Marco: When you think about innovation measurement, you could move from the simple to the complicated. The simple way would be to look at innovation as a black box and simply say - I’ve spent some resources on innovation and I even don't want to know what it’s all about, but I want to get some output out of it. That's what’s formally known as the logical model. Input, innovation, output.
Sharif: What's the output? Ideas, return on investment?
Marco: That’s probably the simplest way, but then you can really start measuring. You can measure the different types of input like money, people, time, effort, etc. You can measure the output like new products, new services, incremental revenue, etc.
The second level is to look “into the box”. To look into the innovation activities and start doing a little bit of measurement in terms of, "How efficient am I?" Or, for example, "Which practices work?” or “Am I able to convert the input into output because of design thinking or because of idea management?” or “How many ideas am I discarding?” or “How many ideas am I taking?” or “What is the ROI of the average innovation project?" and so on.
When we look into the black box, it becomes a white box. You can be as sophisticated as you want to track what is inside the innovation box. Then you can have another level of sophistication and not only look at the activities that you are doing, but also the capabilities that you establish. For example, investing in enabling people in design thinking. Even if they don't do anything and the activity is zero, you’ve still invested in a potential capacity.
I think the model becomes complete if you don’t think only in terms of the output of your innovation activities, but you rather in terms of the business outcome. In order to measure the real impact of innovation you need to logically track the implication of your innovation activities down to your business models, your internal organization, your customers and the financial return. You can think about measuring innovation in these terms.
Also, there are a lot of qualitative learnings that are actually a side effect of the innovation process that you should also incorporate in the way you represent the value of innovation. This is very important, because maybe you failed at an experiment but maybe that experiment actually revealed that the old strategy is wrong and you have to take the strategy in a different direction. Is that really a failure?
If you think that is a failure and you invested money for a failed experiment and you say, "Well, this is a disaster," but maybe you now have the right strategy, which is invaluable, to move forward. That's why the qualitative part, the learnings and also the way you communicate with the different stakeholders play a vital role. That's that essence of it.
Sharif: Very, very helpful. We often get asked to help co-create or co-design an innovation lab or design thinking space. What insights do you have for us about how we might go about that?
Marco: It depends on what you mean by ‘lab’ because you need a vision, mission and business model for that lab. You need to define the services that the lab will provide to the rest of the organization. You also need methods to implement those services. You need people behind it too. Besides the physical lab and the concrete environment, there should be a concept behind it and an organization that runs on it.
From that perspective, I think that the right physical environment plays an important role to put people in the right mood to innovate. Also, you need the resources for people to experiment and collaborate. It's a lot about the whole construct that you build around it.
Sharif: Let's build on that. Imagine you have an SME made up of 25 people. They come to us and say, "Help us co-create an innovation space or help us design our space for it to be conducive to innovation."
What would be some of the services that the company needs to provide and the lab needs to provide back to the organization? And keep in mind that the train is still running in execution mode, but we’ve allocated a small squad of people to help us search and explore and not just to tick the innovation boxes.
Marco: Yes. Understood. I will start with the simplest and the most impactful practices. I would start definitely enabling people in how they run collaborative session. The design thinking would be a foundation. Why? Because if a group around a lab is able to run those collaborative sessions themselves, maybe they run those collaborative sessions with our help initially but then they are able also to offer that as a service to the rest of their organization.
That’s important because you will never be able to plan or have all those important competencies in advance. That would be impossible. But if you can connect people together, then you can be much more dynamic in the way you manage team competencies.
You also have a much more powerful and broader effect psychologically, because people start seeing that innovation has a lot to do with sharing, collaboration and teamwork. You really need to have somebody able to run those collaborative sessions.
I would start by running one or two workshops ourselves and then enable them to run those collaborative sessions themselves without our help, because that would have a multiplier effect. People will participate in those sessions, get a good experience out of it, talk about it. That’s a positive impact!
The second initiative probably would be to launch an ideation campaign in their company. It's a small thing all in all, but it also helps engage employees. It is also a clear signal that the company believes in innovation, that they want to listen to their employees and that employees are not just there to execute the processes, but they also have a mind, a soul and they can be creative. That would also force management to better explain the strategic direction - where they want to go. That would be my step number two.
Step number three, is probably to help the people in that setup to think in business terms. Maybe teaching the business model canvas or tools of that kind, so that they avoid the typical mistakes. Not starting from the technology stand-point, but always having the business perspective in mind. These three things; enabling collaboration via a design thinking session, launching an ideation campaign and teaching something related to the business model canvas are simple. They are not so costly or demanding so te. It's a small investment, all in all.
If you add to that at a certain point of maturity a kind of “yearly innovation day” where people meet and exchange their successes and fears, then you have the ingredients for a start. This recipe may not applicable to any company, but I think this could be an easy “starter-kit”, so to say.
Sharif: For the ideation campaign do you recommend the idea management framework that's an internal tool or there are other newer tools you suggest?
Marco: Actually, our innovation management tool is a very nice tool.
Fabienne: Yes, we use it with campaigns like One Billion Lives.
Sharif: We have a question from Thomas: We are pushing our customers towards adopting leading practices and adopting our Cloud platforms for extensibility especially in a move to S/4HANA. How might you convince a heavily customized legacy ERP customer who has a significant internal team maintaining a bunch of Z-developments to take that proposed path
Fabienne: In a nutshell, how do we get people to the Cloud?
Marco: You need to have a certain level of technical readiness in order to be able to leverage all the new development that SAP produces. From that point of view, we are suggesting being better positioned to leverage our development work. From the point of view of how to approach this, it’s about is showing them the business value of the different scenarios that you have in the new version and the possibilities that a new version has. It’s not the technical perspective that will convince them, but more the potential and possibility to transform certain processes or the ability to develop differentiating scenarios and thus generate new business value.
Sharif: That's very helpful Marco, thanks.
Fabienne: I have one final question that fits nicely with how we started on the topic of experience data. Do you have a view of how you might incorporate experience data with the next generation of innovation services at SAP?
Marco: I think experience management could be an incredibly effective channel to open up the innovation process. Think about it. Innovation starts with research and ends with customer adoption. How do you close the loop? That's where I see the place for experience management. The customer at the end of the day is the alfa and the omega of the process. With experience management, we can reveal hidden needs that we will never be able to disclose with individual interaction or more traditional approaches.
It's an incredible source of inspiration for the identification of hidden needs that then can be used to spark innovation challenges. At the same time, it can really enrich the progressive reduction of uncertainty along the process with experiments and feedback at the different stages from research to ideation to the MVP to commercialization.
Sharif: Or even during the empathy phase or during scoping...
Marco: Absolutely. I see the possibility to inject experience data along the whole process. I see this is incredibly exciting!
Sharif: Very good. One more question and then we will ask you to say anything that you think is important and then ask us a question and then we are closed. This is a fun question. I want you to, please, predict five new job titles or careers that don't exist today that will exist in 2030.
Marco: Interesting. Let me think.
Marco: Well, I’m thinking about the area of artificial intelligence and I think one job could be somebody that helps to have machines and people work together. Like a machine-people mediator or an AI-people mediator.
Next one, I’m thinking about the fact that management is going to change to go with all of this so maybe a “holocracy director”. Basically, an organization where you don't have management and the system self-organizes.
Sharif: Like an orchestrator?
Marco: Yes, but for a completely different process.
Sharif: Nice, nice. Fascinating.
Marco: Then maybe the “chief purpose officer”, the CPO.
Fabienne: Yes, I met Julie Barrier in Waldorf and her current role is Vice President, Purpose-Driven Brand Experience, Marketing, & Selling.
Sharif: So, this person makes sure that the essence of the DNA of the company is linked to a massive transformational purpose (MTP) and cascades throughout the organization and is it's represented in marketing and comms but more on the purpose side?
Marco: The fourth one could be the “automation director”. Going from 0% automation to 50% may be relatively easy, but moving from 90% to 99% would be extremely complicated, so we will need a “chief automation officer”. We will definitely need somebody in charge of orchestrating that last mile of automation.
Maybe the last one is, let me be a bit more fun, is kind of a “business art director”. When business becomes so automatized and so efficient, we will end up with people that only need to deal with the creative human artistic part!
Sharif: That's really great because I have my own take on this and that’s that artists, musicians, writers, coaches, and people who are involved in that tangible face-to-face, human aspect will be highly in demand. And also, people who are craftsman. People who work in carpentry or calligraphy and make things with love and with a very high level of craftsmanship. I think that’s going to be very, very appreciated even when you have 3D printing and factory automation and things like that.
Sharif: That's fantastic, thank you for that. We've got five minutes left and it's open for you if you feel that there is any other message or any other concept that you would like us to convey, you can share or if you would like to ask us any questions, you can do that as well.
Marco: It was my pleasure. Thanks.
Sharif: Thank you very much.
Fabienne: Thank you so much Marco, for all your time.