The buy side of innovation

Political cycles can seemingly turn on a dime, as we have all witnessed just in the last few weeks. The business cycle, too, has noticeably moved from fetal position–defensive to cautiously positive, with many companies now taking a decidedly post-recessionary posture. The basic viewpoint is: Now that restructuring is under control (more or less), let’s not miss the next wave of growth and innovation. So the formula for achieving 2010 plans requires not only diligent execution on the cost side, but also over-delivery on the revenue side. But is this possible? Can we make innovation a friend and not an accident? Are there more revolutionary ways to apply “innovation” and telecom/IT technology to improve both top and bottom lines? What best practices can be shared in using innovation to serve customers, build capabilities and still improve costs. How can we “source” innovation in a more scientific, but urgent way?

Two sides of the coin

Two aspects are in play here — a sell side and a buy side. First, we all acknowledge there is plenty of slack in take-up for sell-to, of existing products to customers. The fiber is being laid and apps are being downloaded, so quadruple-play bundles, eyeballs and smartphones (with or without calling plans) will be up-sold in 2010, regardless. Tech companies are re-packaging and marketing servers, software and solutions under sexy new banners like “cloud” and “virtual” — a lot of this is new, but a lot of this is just business as usual. The buy-from, what and where, is the part that is really in flux. What new solutions should cablecos source and sell to the re-discovered small- and medium-sized business segment? What virtual and tangible solutions should big iron telcos develop, package and market to the overall enterprise segment, which itself enjoys a global buyer’s market these days? And how does any corporate customer down-select its suppliers on the innovation and time-to-market dimensions, anyway? The buy side is the major under-exploited lever in this equation.

The good news is that the inventory of “buy side” innovation technologies is bulging, as IP addresses proliferate by two orders of magnitude with IP v6 and as the 3 S’s become truly robust and enterprise-ready: blazing seeds, open standards and true security. Recently, for a global Fortune 20 industry leader, we prioritized over 100 such already “maturing” technologies. For the next three years. These technologies encompassed core networking and infrastructure areas such as: location-based services, tablets, open-source everything, unified portals, the seven flavors of cloud computing, solid-state storage, dynamic virtualization, to what it means to deliver on a true green IT manifesto. We explored deploying innovations to enrich and even game-change “experiences” for the full range of stakeholders: from employee experiences via collaboration 2.0, prediction markets, virtual desktops, to customer experiences via video-enabled selling, Web analytics, open innovation, social listening and response tools (linked to synchronized customer databases), to global supply partner experiences (and regulators), who just want one portal to sign on and fuller transparency. Who are the best-of-breed players, and is there a compromise choice for a global customer — or for a service provider selling to that customer?

Not to mention, customers are insisting on getting to the get-what, five times faster than before: they want best pricing, yes, but they want services, suppliers and solutions that leverage Web-oriented applications architectures, scrums, Agile, kanbans, eXtreme programming, on-the-move encryption and the like. Are you ready to deliver on the full buy-side gauntlet?

The crucible of execution

Lessons abound on how to get this done, just to show progress, forget about perfection:

1. Source innovation globally — This sounds basic, but most companies simply look to existing suppliers from home markets. Did you recall that social networking pioneered in Korea and instant messaging first went mass market in China? Technology and even outsourcing contracts should pierce the global veil.
2. Don’t compromise on business benefits — Most of the technology examples listed above are not single-play ideas. When you deliver video in the workplace, it’s cheaper and enables new experiences, both inside and outside the firewall. Time-to-market is following Moore’s Law in its own way, just look at the consumer electronics booths at every CES. Also, remember it’s still a buyer’s market all up and down the food chain, not just against you — so squeeze more out of your suppliers of innovation services, consultants included!
3. Don’t be afraid to lose — Most companies want to bat a thousand when they really need to plan for triples, singles and strikeouts too. Yes, you need to launch and prioritize innovation pilots on a “plan now, do now” versus a “plan later, do later” rhythm — but try first to pilot five times the number of ideas you previously thought you could handle
4. Think wireless too — Full speed, reliable converged apps will be available to us all, even from handheld portals; for whatever enterprise solution you are considering for any part of your company, just make sure to add the “how will we do it in wireless” question. The Web is a commerce engine; it’s a capability and a platform — it’s also about to be Full Monty wireless. Don’t get blindsided by a competitor who realizes this sooner than you.
5. Look for the unexpected — Some bottlenecks may be exposed and even eliminated. For instance the fact that devices are becoming network-free, and communities are IP-connected means that service providers now have full information access to (opt in) customers, real-time traffic, day-part splits and target economics. Maybe this eventually means an end to calling plans for postpaid customers and an end to networks for prepaid? Less complexity, higher revenue yields, more supply chain flexibility — now I would buy that.

Closing the loop

It’s not an easy task, but getting more scientific about what and how you source innovation will be a game-changer competitively in the next business cycle. The winners will embrace a broader definition of the business domains in which technology can be planned, piloted and deployed — whether it’s telecom, IT, a service a solution or just another blur of the boundaries.

Most companies are still in the foxhole, but when they peek their heads out this year, they will need some innovation marching orders pronto, on both the what and the how of it all. Will you be ready?

Alex Liu is a partner at A T Kearney and leads the firm’s communications, media and technology practice in North America. Reach him at Alex.liu@atkearney.com.