Business Innovation … harnessing intelligence and technology to transform your business, and entire industry
September 1, 2018
Raconteur’s new study on business innovation is an excellent summary of approaches, technologies and organisations that are transforming business:
Business innovation is when an organisation introduces new processes, services, or products to affect positive change in their business. This can include improving existing methods or practices, or starting from scratch. Ultimately the goal is to reinvigorate a business, creating new value and boosting growth and/or productivity.
Why does business innovation matter?
Business innovation matters for one simple reason: value. In order for your business to thrive, it is crucial to be continually innovating and improving. Successful business innovation means finding new revenue opportunities, optimising existing channels and, ultimately, generating higher profits. It should also give companies an advantage over their competitors.
Three models of business innovation
There is more than one way to innovate and organisations of different ages and sizes will have different reasons for embarking on a process of business innovation. For some it may be a case of re-assessing the ways in which the business generates revenue, for others it may be necessary to move into a different industry altogether – or even to create a brand new one! Before embarking on any innovation cycle, it is important that organisations understand the various different business innovation models available to them.
1. Innovate your revenue model
If increasing profits is the main driver for business innovation, many organisations may choose to change their revenue model as a first port-of-call. This can involve re-assessing the products or services offered or taking another look at the company’s pricing strategy. Innovation does not have to be radical, sometimes changing even one element can yield significant results.
2. Innovate your business model
This model of business innovation requires organisations to identify which of their processes, products or services could be improved to boost the company’s profitability. Innovation in this case could refer to forming new partnerships, outsourcing specific tasks or implementing new technologies.
3. Innovate your industry model
Arguably the most radical model of business innovation, ambitious organisations can choose to change industry completely for the purposes of innovation – or even create a whole new industry for themselves. Indeed, companies can win a new lease of life by following examples such as Virgin’s move from aeroplanes to broadband.
Three industries embracing business innovation
1. Legal services
Cambridge-based law firm, Taylor Vinters, has partnered with artificial intelligence-focused startups Pekama and ThoughtRiver. At the same time, it has sold off other elements of its business, such as regional real estate, that were deemed a distraction from core aims.
The firm’s managing partner, Ed Turner, explains: “Assuming it’s an accepted proposition that fundamental change is going to be necessary, it’s important to understand the purpose of your organisation and why there’s a need for it in the future. Having a clear understanding of that is absolutely essential, particularly in the mid-market.”
For Taylor Vinters, the focus is now on entrepreneurship and innovation, with tech partnerships forming an important part of the firm’s offering, opening doors to a whole new client base.
When it comes to business innovation, the packaging sector offers some of the most exciting examples around. Public opinion and global expectations of sustainability, health, and convenience dictate packaging design and currently the tide is turning against plastic. This has encouraged retailers and manufacturers to explore alternative materials and led to the rapid development of fibre-based materials and creative inventions, such as biodegradable seaweed pouches for ketchup.
New technology has also allowed companies – particularly those in the food and beverage sector – to innovate and adapt to meet new demands. Online grocery retailer, Ocado has embraced “co-botics”, where robots work alongside human employees. Robots deliver pallets of goods to humans who pick out the specific customer orders. It is likely that this is where the future of automated packaging lies, delivering a superior performance than could be achieved by either robots or humans working alone.
By keeping an ear to the ground, and an open mind when it comes to technology, the packaging sector has put business innovation at the centre of all operations.
It is not only the private sector which must be constantly looking to innovate. The NHS is one of the largest employers in the world and with increasing demand placed on it by the UK’s aging population, finding ways to cut costs and improve services is crucial.
To do this, the NHS is harnessing new technologies and making much better use of data. Along with implementing artificially intelligent chatbots to help patients self-serve, the NHS Blood and Transplant department has begun working with digital consultancy T-Impact to improve and automate its process for matching donated hearts with recipients. This has resulted in the world’s first allocation of a heart using a cloud-based system.
This streamlined process has removed 40 steps that were performed manually by staff, creating a 68 per cent reduction in NHS administration time. “These are the sort of improvements that well-run digital transformation programmes can deliver,” says Keith Stagner, chief executive of T-Impact.
What technologies are driving business innovation?
The power and potential of artificial intelligence (AI) cannot be overstated.Almost every industry and realm of life is set to be transformed by it, with the estimation that by 2020, 95 per cent of all customer interactions will be carried out by some form of AI. When it comes to business innovation, it is one of the most exciting technologies available, with firms such as PwC estimating that it could add $15.7 trillion to the global economy by 2030.
“Everything invented in the past 150 years will be reinvented using AI within the next 15 years,” predicts San Francisco-based Randy Dean, chief business officer at Launchpad.AI.
It is already having a transformative effect in a number of industries. In sales AI can help strengthen pitches by detecting and reacting to consumer emotions. Japanese investment bank, Daiwa Securities, found that customer purchase rate increased by 2.7 times after they implemented AI technology.
In the healthcare and pharmaceutical sectors, AI tools have been built which can sort and accumulate medical knowledge and data on a scale humans could only dream of. At one end of the spectrum sit dosage error deduction and virtual nursing assistants, at the other: genome sequencing. AI has brought the time and cost of sequencing someone’s genome, which is the unique arrangement of their DNA, down to 24 hours and just $1,000 respectively.
2. Ultrafast internet
It has long been acknowledged that time is money, and the most important tool for business innovation is one which can help organisations move faster.
In the UK, rural provider Gigaclear offers a fixed line service bringing speeds of 900 megabits per second (for reference, “superfast internet” starts at 24 Mbps), but in South Korea speeds of 2500 Mbps have already been achieved. And mobile networks will be transformed as well, with the advent of 5G making speeds of 1000 Mbsp possible on a smartphone.
To put this in the context of business innovation: it will now be possible to restore a medium-sized corporate server in a little over an hour, compared with 28 days before.
Businesses will be able to share data between remote facilities in near-instant fashion. For example, ProLabs is a connectivity hardware manufacturer with production facilities in Gloucestershire and California. Anthony Clarkson, chief technology officer of ProLabs, says: “Having ultrafast fibre connectivity has enabled our group to harmonise production by instantly sharing data, such as test reports and production templates, which are key to the production facility. This allows significant operational savings. None of this would have been possible on a traditional copper internet connection.”
Who is responsible for business innovation?
In a 2017 PwC study of global chief executives, nearly 25 per cent had innovation at the top of their priority list for the year ahead, but is it really CEOs who can drive business innovation?
It is vital that business leaders foster an environment where innovation is a natural part of company culture. “It is vital that our organisations are able to attract people with the right tech skills, but also to develop those skills internally,” says PwC chairman and senior partner Kevin Ellis. “As well as recruiting people with digital skills, organisations need to focus on training their people to be adaptive, creative and critical thinkers.”
However, although top-down leadership of business innovation is crucial, there are key roles and departments whose collaboration and expert knowledge are necessary to affect the changes.
1. The IT team
In 2015, Raconteur launched a study of workplace innovation, in collaboration with Google for Work. This study revealed that over a quarter of respondents saw IT as the main driver of innovation – a view which has barely changed since. With technology at the core of business, those with the ability to master it have the power to spark change. Not to mention that the IT department has close working relationships with every part of a business, which allows them to drive innovation and improve collaboration across the organisation.
2. Chief data officer
Still a fairly new role, it is the generally-held view that most large companies will have appointed a chief data officer (CDO) by 2019.
Smart use of data is key to business innovation, and CDOs are responsible for highlighting where opportunities and threats lie. Richard Merrygold, director of group data protection at Homeserve says: “CDOs need to sell the benefits. The CDO role is one of looking for efficiencies, simplifying needs, demonstrating cost-benefits, and encouraging businesses to be open and transparent.”
Through their CDOs companies are becoming empowered, and the data they work with is fuelling their business innovation, where information is corralled, analytics are powerful and data use is nimble.
3. Chief transformation officer
According to LinkedIn, there are 121 chief transformation officers (CTOs) in the UK, along with hundreds more business transformation officers, digital transformation officers and the like.
But it’s not a job title that’s been around for very long, emerging over the past decade or so as organisations realise the need to be more responsive to change.
The term chief transformation officer has a wide meaning: some CTOs see themselves as visionaries, while others are essentially project managers for an overhaul of an organisation’s processes, often through technological change.
Either way, a successful CTO could be exactly the person to take up responsibility for driving business innovation. “We’re all living through intense change, the pace of which is only accelerating,” says Jason Dormieux, global chief transformation officer at media agency Wavemaker. “Regardless of title, all companies need people whose obsession is around what products and services they can build in order to help their customers take advantage of the opportunities that this disruption brings.”