If there is one common denominator in the success story of various global enterprises, it is innovation. Innovation, or the lack of it, has a direct correlation with an enterprise establishing itself or losing ground to rising competition. The challenge for existing enterprises is to adopt startup business models that enable them to keep pace with innovation to survive in this rapidly evolving environment.
Challenges in ensuring business is innovation ready
Irrespective of the sector or size of business, traditional businesses face almost similar challenges when adopting new and innovative business models akin to startups.
Balancing traditional business structures and innovation: A Yale University research done by Professor Richard Foster reveals that the average lifespan of companies listed in the S&P 500 index is on the decline.1 From an average lifespan of 67 years in the 1920s, bigger enterprises today have an average lifespan of just 15 years2. The good news, however, is that enterprises can increase their average lifespan by adapting to innovative or technological business imperatives just like startups.
Difficulty in digital transformation: Transforming the business landscape digitally is another challenge faced by older enterprises. It is no surprise that the innovative nature and digital mindset of startups gives them a definite advantage in today’s ever evolving technological landscape.
Although bigger enterprises understand the need to transform digitally, the transition from traditional business structures to digitization is neither easy nor predictable. Many organizations that have embraced digital transformation are unable to fathom the exact ROI of the exercise. The extensive spends on such digitization attempts have also lead to budget constraints, restricting further attempts at such transformation.
Lack of replication of the fast-paced startup culture: The popularity of startups has underlined the fact that speed is everything in today’s business world. The fast-paced culture of startups using new technology advancements means they address customer grievances faster. Bigger and established business organizations are not always able to match this blinding speed, resulting in decline of their loyal customer base. With consumers having multiple options today, enterprises that are first to address any customer problems or feedback are likely to retain a higher share of a loyal customer base.
A roadmap for enterprises to blend agility and digitization
Startups today are synonymous with rapid and scalable innovations. Bigger corporations may not be short of ideas but there is a persuasive need for a rethinking of their approach. Corporations need to jettison their “safety first” approach, which is evident in the use of traditional management tools that presume a finite degree of certainty in the future. Corporations need to adopt a different set of management tools that measure business scalability differently and enable faster reaction times.
Adopting validated learning: Consumers today prefer companies that offer faster product development and quicker to come to the market. The concept of “validated learning” can help large corporations shorten their product development cycles by adopting a combination of business hypothesis-driven experimentation and validation through a customized measurement framework.
Unlike in traditional operating models where ideas are first adopted and then implemented across various verticals to understand if they are viable or not, validated learning ensures every test run of the idea is a unique iteration. Each such small idea being tested becomes an iteration in a larger universe of iterations.
With the validated learning process in place, enterprises can experiment with ideas in a “fail fast fail safe” mode. Unless business enterprises are able to accelerate idea validation and recalibration, they run the risk of being overtaken by smaller, nimbler rivals.
Embracing Agile systems: Since innovative ideas need innovative measurement and operative tools, enterprises are better off adopting an agile model for solution testing. Validated learning brings with it the need for newer testing systems. Testing platforms should allow business enterprises to specify a goal metric and analyze the same in real time, accelerating the enterprise’s go-to-market in the process.
For instance, in the software testing domain, successful enterprises have moved from a Waterfall methodology to agile development and testing systems. Traditionally, Quality Assurance teams had no role in the initial stages of the Product Development Life Cycle. With the adoption of agile frameworks and Accelerated Continuous Testing systems, every role from developer and tester to QA practitioner and business analyst is part of the product development process from the very start, resulting in shorter turnarounds.
Architecture transformation for agile delivery: The adoption of the agile framework requires a fundamental change in the underlying business architecture. Organizations are making use of Enterprise Architecture (EA)3 to support their business innovation initiatives. Enterprise architecture for present day digital transformation focuses more on problem solving without seeking extensive documentation. A data driven approach by Enterprise Architects thus allows organizations to seek sharper insights and trends, leading to better strategic decisions.
The role of automation in ensuring innovation-readiness
When it comes to business development, speed is paramount. Every single enterprise today is under pressure to be the first to reach the market or offer a solution to a consumer’s problem. Additionally, raising prices is not always possible amidst growing competition. As a result, enterprises are forced to economize operations to improve margins. Development automation and business process automation therefore become relevant in helping organizations churn out innovative products consistently.
Development automation: Here, enterprises aim to bypass the time consuming software development process by automating some phases of the process. Effectively, this means that enterprises seek business solutions with minimal coding requirements requiring fewer programmers. Enterprises going the development automation route plump for new technologies, methodologies, or frameworks that effectively reduce the complicated software development, resulting in faster product development. This can take the form of agile systems using iterative procedures as outlined earlier, or technology platforms with pre-validated development modules as outlined later in this article.
Business Process Automation (BPA): While development automation has its own advantages, enterprises across the globe are now gravitating towards a business process automation paradigm. BPA reduces time- and resource-intensiveness, allowing for automated processes using machines and technology. Automation not only helps enterprises save time and money, but also allows for quicker customer service, while drastically lessening the scope for human error.
Some business use cases where BPA is helping enterprises transform their day-to-day operations include:
Dealing with repetitive business processes: Organizations may require repetitive tasks like assembly on the manufacturing floor, inventory management, purchasing, or shipping. These tasks are now being replaced by automation services. BPA allows for reduction in manual work, diminishing the chances of human error and freeing human resources for other time-sensitive jobs.
Machine addressable decision making: Business like FinTech companies and banks are using BPA to accelerate their loan application processes by having automated systems in place. From running eligibility checks to financial analysis to conducting credit score checks of each applicant, these automated systems are able to instantaneously determine the exact loan amount the applicant qualifies for.
Automating risky jobs: Many organizations are replacing humans and deploying robots, unmanned trucks, or Unmanned Aerial Vehicles (UAVs) to do any hazardous jobs. This is being made possible due to adoption of effective BPA components.
The criticality of experimentation in innovation
Experimentation is often overlooked even as it remains a strong driver of innovation. A business enterprise may be ready to adopt digital transformation and use agile systems, but unless there is room for employees to experiment and learn, innovative products or services may be hard to come by. Successful business enterprises today have adopted various technological platforms with plug-n-play modules that allow for greater innovation and possible collaboration between various business verticals. Having teams ready and empowered to experiment is one thing, but having in place the underlying business platform to support and enable experimentation is quite another.
Product innovation may be possible to achieve but sooner or later the enterprise is bound to hit a ceiling as rivals compete to go one up against its offerings. On the other hand, platform-driven innovation by regular experimentation acts like a spring board. Once an enterprise has identified and established the right platform for innovation, it can be used to propel new business concepts, ensuring faster product development and increasing sales frequency.
In conclusion, larger corporations have a business case to learn from startups and embrace their “innovation first” business model to ensure constant reinvention. Organizations that balance traditional business models and contemporary approaches have brighter chances of nosing ahead of their rivals and staying ahead.
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