European and USA companies look to innovation centres to replace broken R&D model
A global report The Innovation Game: Why and How Businesses are Investing in Innovation Centres by Altimeter Group’s Brian Solis and Capgemini Consulting, the global strategy and transformation consulting arm of the Capgemini Group, reveals that leading businesses continue to struggle with innovation, with the traditional R&D model viewed as ‘broken’. The report uncovers a shifting approach to digital innovation, with R&D teams at large, traditional corporations viewed as ill-equipped to rise to the challenge of digital Darwinism. In response, companies are increasingly looking to launch physical ‘innovation centres’ in major global technology hubs such as Silicon Valley to leverage an ecosystem of startups, venture capitalists, accelerators, vendors, and academic institutions.
Brian Solis, Principal Analyst at Altimeter Group, said: “For the world’s largest organizations, innovation has never been more important – or more difficult. We find ourselves in a world where disruption is imminent and can come from anywhere and these digital-savvy competitors are threatening the very fabric of many established industries. Without constant innovation, once dominant players are finding their tried and trusted paths to innovation are now dead ends. It’s time to innovate or die!”
Jerome Buvat, Global Head of Research at Capgemini Consulting, said: “Many organizations are solving the issue of embracing innovation by partnering with or acquiring technology startups, but too often this is a sole focus. A more equal balance between external and internal thinking is required. Innovation centres are proving an effective means to cultivate the agile startup mentality needed to remain at the forefront of the market, but it is clear that establishing an effective centre has many challenges.”
Altimeter and Capgemini Consulting researched the innovation centre efforts of the largest 200 companies globally across five sectors including Automotive, Financial Services, Consumer Products & Retail, Manufacturing and Telecoms. In addition, they also conducted focus group interviews with senior executives responsible for overseeing innovation-related activities at leading organizations.
Key findings of the new study reveal a varied approach to innovation centres, in terms of locations, focus areas and governance models:
· 38 percent of the leading 200 companies have set up innovation centres in a global tech hub
· The US and Europe have the largest share with 29 percent of total innovation centres respectively followed by Asia at 25 percent
· Silicon Valley is the most attractive area to locate an innovation centre for leading organizations – 61 percent of companies have established one or more centres in the Valley. But many more hubs are emerging – the top 10 cities in our analysis represent only 35 percent of total innovation centres
· The most popular areas of research for innovation centres remain well-established technologies such as mobility (63 percent) and big data/analytics (51 percent)
· Less mature technologies, including 3D printing (5 percent), virtual reality (13 percent) and robotics (13 percent), are currently less of a research priority
· Innovation centres help to accelerate the generation and implementation of new ideas, attract talent, drive employee engagement, and establish partnerships with startups
· The report identified four main types of innovation centres:
o In-house Innovation Labs - the innovation engine for their companies, these centres perform all innovation activities from inception to prototyping using an in-house approach.
o University Residence - in this model, companies invest to set up a centre at a university campus to drive innovation through university researchers
o Community Anchor – these innovation centres actively identify mentors and provide opportunity to startups to work actively with the company to test the startup’s products within the company and with their customers
o Innovation Outposts – these are essentially small teams that are based in technology hubs, typically Silicon Valley. For large organizations, the idea is to be involved in the tech community, without committing significant investment.
· Penetration varies significantly between sectors; Manufacturing is a clear leader at 58 percent, but despite facing increasing pressures from digital disruptions, Financial Services lags at only 28 percent.
However, while innovation centres are receiving substantial investments from many global organizations and some are seeing significant benefits, establishing a successful centre is proving a challenge - the report quotes a seasoned innovation expert as saying that 80-90 percent of these centres fail.
Innovation has to be properly focused
The report advises that for organizations seeking to move away from a traditional innovation model, investment in physical centres can deliver huge potential business returns. However, their purpose must be clearly defined and well aligned to the business’ needs.
To deploy successful innovation centres, the report recommends the following strategies be employed:
· Define a clear purpose
· Create a strong governance model, with senior leadership support, to implement innovations across the enterprise
· Have an optimal focus – neither too futuristic, nor too close to current business operations
· Closely involve business units to avoid isolation
· Create a truly cross-functional team that thrives in both structured and unstructured environments
· Operate with a degree of budgetary freedom, but know when to abandon projects
· Work with a diverse group of partners in the innovation ecosystem, but use sound judgment when selecting them
Seamless integration of innovation at Walmart
The report cites an illustrative example of well-focused, integrated innovation at Walmart. The integration of Walmart Labs – Walmart’s innovation centre – within the larger Walmart global ecommerce unit, that is running the company’s global websites, enables e-commerce innovations to be seamlessly plugged into its online sites. A team at the Walmart Labs helped develop Walmart’s internal search engine in just nine months, which drove a 20 percent increase in online sales conversions.
AT&T innovates close to home
AT&T has established a network of ‘Foundry’ innovation centres in various locations, including Silicon Valley and Israel. The Foundry also has centres in Plano and Atlanta, both of which are locations for important AT&T business units, which have been set up with the express intent of being close to the company. AT&T’s Foundry innovation centres have cut the time from idea to launch, while collaboration with startups has delivered successful solutions such as a personalized video bill service and self-optimizing network. The Foundry helps to drive a culture of innovation and creativity into the larger AT&T organization, and move AT&T from a telecom to a technology company.
“The advent of thriving technology hubs, and the appetite of new digital entrants to relentlessly disrupt and innovate, has created an innovation ecosystem that traditional organizations can tap into,” concludes Fernando Alvarez, Global Chief Digital Officer, Capgemini Consulting. “By combining the culture and approach of innovation centres with the budget fire power and access to customers that they enjoy, traditional organizations have an excellent opportunity to innovate and re-energize their capabilities.”
For the “The Innovation Game: Why and How Businesses are Investing in Innovation Centres” report, through web-based research conducted in February-July 2015, Capgemini Consulting and Altimeter analysed the largest 200 companies globally (based on the Bloomberg list), across five sectors (Automotive, Financial Services, Consumer Products & Retail, Manufacturing and Telecom), selecting the 40 largest companies by revenue within each sector. In the same period, they also conducted focus interviews with senior executives responsible for overseeing innovation-related activities at leading organizations, most having revenues greater than $5bn. For the purposes of this research, a company was considered to have an innovation centre only if at least one of its centres was located in the following tech hubs: Silicon Valley, Tel Aviv, Los Angeles, Seattle, New York City, Boston, London, Toronto, Vancouver, Chicago, Paris, Sydney, Sao Paulo, Moscow, Berlin, Waterloo (Canada), Singapore, Melbourne, Bangalore and Santiago (list based on the Telefonica Innovation Hub “Startup Ecosystem Report”, 2012).
To download a copy of the report visit – The Innovation Game: Why and How Businesses are Investing in Innovation Centres.
Automation of repetitive tasks leads to higher value work
Two-thirds of global office workers feel they are constantly doing the same tasks over and over again. That’s according to a new study (2021 Office Worker Survey) from automation software company UiPath.
Whether emailing, inputting data, or scheduling calls and meetings, the majority of those surveyed said they waste on average four and a half hours a week on time-consuming tasks that they think could be automated.
Not only is the undertaking of such repetitious and mundane tasks a waste of time for employees, and therefore for businesses, but it can also have a negative impact on employees’ motivation and productivity. And the research backs this up with more than half (58%) of those surveyed saying that undertaking such repetitive tasks doesn’t allow them to be as creative as they’d like to be.
“When repetitive, unrewarding tasks are handled by people, it takes time and this can cause delays and reduce both employee and customer satisfaction,” Gavin Mee, Managing Director of UiPath Northern Europe tells Business Chief. “Repetitive tasks can also be tedious, which often leads to stress and an increased likelihood to leave a job.”
And these tasks exist at all levels within an organisation, right up to executive level, where there are “small daily tasks that can be automated, such as scheduling, logging onto systems and creating reports”, adds Mee.
Automation can free employees to focus on higher value work
By automating some or all of these repetitive tasks, employees at whatever level of the organisation are freed up to focus on meaningful work that is creative, collaborative and strategic, something that will not only help them feel more engaged, but also benefit the organisation.
“Automation can free people to do more engaging, rewarding and higher value work,” says Mee, highlighting that 68% of global workers believe automation will make them more productive and 60% of executives agree that automation will enable people to focus on more strategic work. “Importantly, 57% of executives also say that automation increases employee engagement, all important factors to achieving business objectives.”
These aren’t the only benefits, however. One of the problems with employees doing some of these repetitive tasks manually is that “people are fallible and make mistakes”, says Mee, whereas automation boosts accuracy and reduces manual errors by 57%, according to Forrester Research. Compliance is also improved, according to 92% of global organisations.
Repetitive tasks that can be automated
Any repetitive process can be automated, Mee explains, from paying invoices to dealing with enquiries, or authorising documents and managing insurance claims. “The process will vary from business to business, but office workers have identified and created software robots to assist with thousands of common tasks they want automated.”
These include inputting data or creating data sets, a time-consuming task that 59% of those surveyed globally said was the task they would most like to automate, with scheduling of calls and meetings (57%) and sending template or reminder emails (60%) also top of the automation list. Far fewer believed, however, that tasks such as liaising with their team or customers could be automated, illustrating the higher value of such tasks.
“By employing software robots to undertake such tasks, they can be handled much more quickly,” adds Mee pointing to OTP Bank Romania, which during the pandemic used an automation to process requests to postpone bank loan instalments. “This reduced the processing time of a single request from 10 minutes to 20 seconds, allowing the bank to cope with a 125% increase in the number of calls received by call centre agents.”
Mee says: “Automation accelerates digital transformation, according to 63% of global executives. It also drives major cost savings and improves business metrics, and because software robots can ramp-up quickly to meet spikes in demand, it improves resilience.
Five business areas that can be automated
Mee outlines five business areas where automation can really make a difference.
- Contact centres Whether a customer seeks help online, in-store or with an agent, the entire customer service journey can be automated – from initial interaction to reaching a satisfying outcome
- Finance and accounting Automation enables firms to manage tasks such as invoice processing, ensuring accuracy and preventing mistakes
- Human resources Automations can be used across the HR team to manage things like payroll, assessing job candidates, and on-boarding
- IT IT teams are often swamped in daily activity like on-boarding or off-boarding employees. Deploying virtual machines, provisioning, configuring, and maintaining infrastructure. These tasks are ideal for automation
- Legal There are many important administrative tasks undertaken by legal teams that can be automated. Often, legal professionals are creating their own robots to help them manage this work. In legal and compliance processes, that means attorneys and paralegals can respond more quickly to increasing demands from clients and internal stakeholders. Robots don’t store data, and the data they use is encrypted in transit and at rest, which improves risk profiling and compliance.
“To embark on an automation journey, organisations need to create a Centre of Excellence in which technical expertise is fostered,” explains Mee. “This group of experts can begin automating processes quickly to show return on investment and gain buy-in. This effort leads to greater interest from within the organisation, which often kick-starts a strategic focus on embedding automation.”