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Innovating for a digital future: breaking through the paradox - Deloitte Survey


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20 June 2012: Innovation is social, not the preserve of lone geniuses; anarchic and anti-organisational, as well as needing failure and risk to succeed according to Professional Services firm Deloitte, in its 2012 Innovating for a Digital Future report. Undertaking qualitative research with 30 Technology, Media and Telecommunications (TMT) organisations including Facebook, Google, Microsoft, Telstra, the ABC and the BBC, the report case studies how to ceaselessly drive beyond core products or entrenched ways of working, to successfully innovate.

Co-author of the paper Deloitte Partner Mason Davies said: “Our research shows that leaders operate across four organisational dimensions to successfully innovate - strategy and vision; environment and culture; organisation and design of work; and leadership and talent.

“Strategy for leaders involves setting the tone by expecting innovation across the enterprise; creating an innovation pyramid strategy; and having ‘unreasonable expectations’.  If Google’s Larry Page hadn’t challenged the Google staffer’s idea ‘to scan encyclopaedias and put them online’, to think bigger and ‘make every book in the world accessible to all’, we wouldn’t have the world famous search engine we know today,” Davies said.

Google uses the ‘wisdom of the crowd’ to filter ideas and progress initiatives. But all participants agree they have to balance stimulating innovation and controlling risk and spend. “Innovation must achieve return on investment,” Davies said. “In Google’s case an idea progresses only if Google knows how to scale it or it will achieve a game-changing shift.”

Deloitte Partner and co-author Adam Canwell said: “It isn’t always the single stunning insight that creates innovation. Innovation mostly happens when people get together and build on each other’s ideas.

“Funnily enough this need creates a paradox in organisations. Our research, and Deloitte’s own experience, shows that innovation needs both silos of expertise with deep technical knowledge, as well as units that cut across those silos where innovators build and challenge each other. Both the ABC and Telstra’s digital business units do this well,” he said.

Gerd Schenkel, former banker and founder of UBank now leads Telstra Digital. He said: “We formed Telstra Digital last year to establish a new environment to deliver a comprehensive digital sales and service experience across all customer segments and covering all digital channels, including web, mobile apps, social media, live chat and telesales.”

“In the digital economy, a provider’s market value is determined by the value it contributes to its customers. Hence, talent, leadership and culture are critical success factors.

“Increasingly, we crowd source customer service involving our customers, as well as customer service staff. We now have customers chatting with us and each other live on Facebook www.facebook.com/telstra24x7, engaging on Twitter www.twitter.com/telstra and jumping on Crowd Support to help each other www.telstra.com/crowdsupport. It works,” Schenkel said.

“If there is something that unites all of the organisations we spoke to,” said Technology, Media and Telecommunications Partner Stuart Johnston, “it’s their fundamental belief that the only long term differentiator they have is their people. And that their people – if provided with the right environment and supportive organisation – will successfully innovate beyond where they are now.”

Leaders need to give their teams room to manoeuvre Johnston said. “Too often organisations kill off innovations before they have a chance to succeed. In fact it is unlikely that Facebook, Amazon, Google or Twitter would have been created by an established TMT organisation. Many of these organisations have also built a culture which recognises failure as an important part of the innovation process, and not the basis to punish staff or to stop investing. They get the need to anticipate the magnitude and the imminence of digital disruption in their industry.

“The trick for large organisations is to constantly re-consider what it is they do better than anyone else and challenge where this capability can be better leveraged or extended. Alongside this permanent, ‘under the microscope thinking’, it is critical that organisations also facilitate their people’s capacity to act on new opportunities or threats. To respond to new competitors, new regulation, new trends, new consumer behaviours, while also investing in a few longer term ‘bold plays’. It’s not easy and getting the balance right is clearly important,” Johnston said.

Davies added, as well as managing your approach to innovation, our study showed that” to be at the forefront in innovation, you have to be at the frontline of the ‘war for talent’.

“Talented people need to be incentivised and their performance ‘baked-in’ to performance management measures. So leaders need to recruit for their organisation’s future, focus on retaining top talent, and expand their talent pool beyond traditional boundaries.

“The ABC does this well with its 360 degree approach to commissioning. This creates production efficiencies and more audience-focussed outcomes. It also speeds up the process for testing new ideas and embedding them in new projects,” Davies explained.

ABC Managing Director Mark Scott said: “During the past decade the ABC has developed a strong reputation for innovation, constantly finding new ways to connect with and engage audiences. Our Innovation Division has been the driving force behind the development of ABC online, iview and the host of popular ABC mobile apps, and has played a key role in multiplatform development across the corporation."

About the report

In developing the Innovating for a Digital Future report Deloitte combined our own innovation expertise with perspectives derived from interviews with leaders across the TMT sector over the past 18 months. The approach was to understand how the phenomenon of digital transformation was impacting them and their businesses. We looked at whether incumbent players were re-shaping their businesses to take advantage of digital, and whether they were re-sizing to cut the cost out of legacy business. In Australia, Telstra’s recognition that, while its roots were in engineering, it had to become a customer-driven sales and marketing company in order to remain relevant and prosper is documented through Telstra Digital. The ABC is also a relevant example with its first mover approach to digital multi-channelling, building a comprehensive online catch-up television offering, ABC iView, and exploring hyper-localised digital broadband content gathering – much of it user generated.

Please click here to download a copy of the report.

 

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