One of the first things families notice at the Monterey Bay Aquarium in California is the 28-foot-high, 330,000-gallon tank that houses local marine and plant life. It was the aquarium’s main attraction for years until big brother emerged. Visitors who venture to the other side of the aquarium will confront a two-story, 1.2 million gallon tank full of beautiful pelagic fish gliding by. They arouse a chorus of “oohs”, “aahs” and often instill a person’s first sense of how infinite the planet’s oceans really are.
A string of such encounters can upend our perspective. Information technology has done the same, particularly for subscription businesses. What was once a suite of business and personal automation and accounting tools, IT has spawned solutions that compliment, enhance and now predict our lives.
“Whether it’s Uber reinventing the transportation business, Instagram changing the nature of photography or Netflix disrupting video content, what binds these companies is they brought digital thinking to the very heart of their companies, not just bolted it onto the side,” says Tom Goodwin, SVP of strategy and innovation at Havas Media.
“These companies realize that the modern age is a time of scarce attention and abundant connectivity. Where smartphones are our primary access and point to everything; where money and everything is digital; where the interface layer is; where the profit is; where physical assets and employees are liabilities. And where providing a slick, best-in-class human experience will create your company’s most profound business.”
When a technology truly arrives, like electricity, it blends into the background of society, Goodwin adds. He says car rental companies are an example where digital strategy stops somewhere in the middle of the customer experience. Booking a car is easy and if you’re a VIP member you might even see your car listed on a digital display when you arrive. “If I want to extend my booking or change locations it’s a painful series of phone calls,” Goodwin says. “If I want to upgrade, it’s frantic key-pressing.”
“You don’t need a head of digital or a digital department. In fact, you should banish the word digital as an entirely redundant word.”
So how can IT organizations keep pace with efficiencies and innovation, and integrate new solutions and platforms to drive business transformation? Here are the varied approaches adopted by two interesting companies:
Cognizant CEO Francisco D’Souza says IT organizations can both innovate and streamline their operations, producing a “dual mandate”. Cognizant has been one of the fastest growing companies in its industry, increasing annual revenues between 20 percent and 35 percent over the past five years.
“We have to innovate continuously to sustain our growth,” D’Souza says. “We cannot ignore the opportunities to partner with our clients on new, emerging technologies such as social, mobile, analytics and cloud (SMAC). But we also need to review our core business…How do we manage both?”
Senior leaders adopted The Three Horizons Model (3H) for portfolio management from The Alchemy of Growth. The book recommends companies view their business as a group of portfolios according to their growth – mission critical areas that are mature but still growing, followed by areas of competitive distinction, and then next-generation offerings that remain unproven. Cognizant then allocated resources across and then within each horizon. The company also developed different success factors for each horizon and measured the performance of each horizon against those measures.
What does this mean for IT organizations? Cognizant is an IT solutions provider. When it carved its business across the three horizons, it went like this:
Whether you’re selling IT solutions, using them or both, companies that take thoughtful and real-world measures to innovate are likely to improve their systems while protecting their core business. “It has ensured that we keep one foot firmly planted in the present as we step into the future with the other,” D’Souza says.
While not formally a subscription business, Zappos an acknowledged leader in having a laser-like focus on the customer experience. The online retailer spent 2014 reinventing itself as a holacracy – a form of organizational governance in which self-organized teams hold the authority and decision-making, contrary to the top-down approach of the classic hierarchy model.
Employees work in circles according to what they’re passionate about but those groups are rearranged as new projects emerge or when colleagues choose to pursue something else. Former managers offer coaching but don’t approve or reject ideas.
“It’s a radical approach and we’re passionate about trying it,” Zappos CTO Brent Cromley says. “We want everyone thinking about how we can improve things, not just a select few at a time or a group set aside to do innovation.”
Most of their 350 IT employees work in one or more of 50 circles but reorganization happens weekly to keep cross-pollinated thinking in play.
Cromley says he’s seen glimpses of big innovation since switching to a holacracy. One circle spontaneously emerged to create a consistent Zappos digital experience across all customer contact points. “This is a self-organized group passionate about solving this problem,” he says.