Culture is not an obstacle to innovation – mindset is!
Jack Welch, former CEO of GE, was quoted as saying “If you don't have a competitive advantage, don't compete.”
Competitive advantage is often what keeps enterprises pushing the boundaries of innovation, with technology playing an enabler force in these endeavors.
Gartner defines "competitive advantage" as the difference between a company and its competitors that matters to customers. That difference forces competitors to transform their business just to compete.
The information technology marketplace is an example of continual innovation driven by the desire to identify a competitive advantage. Every time a vendor introduces a new innovation, a new competitive advantage, the competitors are forced to respond. This creates a cycle of “advance and respond” that drives transformation. Digital technology accelerates this cycle, making it more difficult to erect and maintain barriers to entry.
The emergence of Fintech startups has proven that competitive advantage is not limited to the size of an organization or the depth of its financial pockets. Rather it is the ability to quickly, and continuously, identify and exploit technological advances to drive opportunities.
Fintech Innovation spoke to Peter Doherty, Principal Solutions Consultant for Asia Pacific and Japan at ServiceNow to look at the challenges that face CIOs and business leaders across Asia’s financial services industry in their quest for competitive advantage.
Do you have to be small in order to be agile?
Peter Doherty: I think smaller doesn’t necessarily mean “smaller in size”. It could well mean smaller as in like a boutique bank. So it is having boutique services that are very much focused on the customer segment that they want. Once you start doing that you have that sort of focus, or you want to get closer with your customers.
To be successful, should digital transformation be a massive enterprise-wide undertaking?
Peter Doherty: Digital transformation doesn’t have to be a massive exercise across the whole of the services of an organization. Some of the more innovative ones will look at it and ask questions like “What are the legacy type systems that I have? And which one of these can I break down, and deconstruct and maybe use things like public cloud and roll them as micro services so I can quickly go and adapt and innovate? I don’t have to have 3 months of build and then regression testing, and all that sort of stuff. We talked about the airlines that did this the other day.
How can organizations avoid creating siloes of innovation even as the embrace small development teams?
Peter Doherty: That is one of the challenges that any organizations have that goes to the DevOps type of environment. Successful ones build teams around the outcomes they are going to deliver to the customers – not the product.
So they might have wealth management as one of the things, or they might have high value customers as another one and they will bring the developers, apps, paperwork together. Now there has to be a high level of collaboration between all those things to make sure that things work the same way.
That’s why it is a cultural thing. You have to have a culture in the organization that fosters a sharing of skills, know-how and experience between the different teams. Otherwise, you will create the same siloes of the past.
IT becomes more of a governor across those different pieces to make sure that they are developing within guidelines, create service catalogs from which different teams can pull in the right amounts of resources for the job at hand.
We often hear culture as being blamed for lack of innovation. What is your take on this?
Peter Doherty: I am not sure if it is the culture. I think it is more a mindset. Take for instance the idea of self-service. At work, people follow a mindset built around how things have been done for many years. There is an order to how things get done. People are mandated to follow company guidelines – no matter how archaic.
But when these same people go home, they throw away the mindset of restrictions and embrace openness to new things, new concepts, or new ideas. Outside of the confines of work, we all embrace some form of self-service allowing us to do things in ways that are intuitive to us, personalized to our preferences.
How is enterprise service management evolving?
Peter Doherty: I think the big game changers for enterprise service management will be things like artificial intelligence and machine learning. There is so much we can do with these technologies – whether it is the routing of something’s wrong; being able to understand and then route it to the correct respondent groups or even based on what you’ve said, come back with “Here’s a fix to something similar that someone else had six months ago” or “Here’s the link to the knowledge article”.
Focused on who you are, the group that you are in, and the job that you perform. That is going to absolutely change enterprise service management because now we will be pushing a lot of stuff through machine learning, through artificial intelligence. So it is only the things that we haven’t been able to automate that will need to go to a person to do.
Gartner anticipates that the emergence of digital business, i.e., the creation of new business designs by blurring the digital and the physical worlds, will place the emphasis on business model innovation, rather than on the deployment of new technology.
It recommends that CIOs and IT leaders approach competitive advantage with the following in mind:
- What opportunities are being created by external forces that we can exploit?
- How can we adopt and adapt ideas from other industries?
- How long do we have to exploit the competitive advantage before others respond?
- What differences will customers or competitors notice about our company using this advantage?