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12/5/17

By Chris Davis and Brandon Metzger for CIO.com

Technology is transforming our world at an unprecedented rate. New technologies like virtual assistants and augmented reality are changing consumer expectations faster than ever. The impact of cybersecurity breaches is intensifying. And digital enablers are allowing upstarts to steal market share from incumbents in a matter of months or years, rather than decades.

While it is tempting to believe that these disruptive times will eventually stabilize, our analysis suggests that the rate of technological progress will only accelerate. If this year indeed represents both the fastest rate of change we ever haveexperienced, and the slowest rate of change we ever will experience—as many experts have posited—then this raises a critical question for executives in all industries:

How do I understand the consequences of accelerating technological change, and position my company to capitalize on the opportunities presented by emerging paradigms?

To accomplish this, companies can develop innovation systems that consist of a variety of methods and processes, ranging from strategic foresight to a portfolio of corporate innovation programs. One such program — innovation labs — is gaining steam in corporate America, with some of the biggest and best-known companies opening new outposts focused on developing and scaling breakthrough technologies, processes, and business models.

Through Metis Strategy’s work with Fortune 500 companies and rapidly growing businesses alike, we have identified seven critical factors to consider when creating such a corporate innovation lab.

1. Define the charter

The charter is a concise description of the innovation lab’s objectives and its method for achieving them. But a charter is not just lofty PR: many of the best innovation labs use their charter as a guiding light that provides a deeper sense of purpose and direction. Subsequently, the charter should also clarify what the lab is not focused on.

Consider the differences between the charters of Lowe’s Innovation Lab and of Bayer’s U.S. Innovation Center and Science Hub:

While Lowe’s focuses on identifying and utilizing new technologies to enhance the retail experience, Bayer’s priority is forming partnerships to accelerate drug discovery. Given their differences, it should be no surprise that these innovation labs utilize different metrics, governance models, funding sources, and innovation ecosystems to accomplish their objectives.

2. Identify innovation metrics

Large companies thrive when business conditions are certain and their targets are clear. While execution metrics can measure the performance of existing business models, they are less capable of accurately quantifying progress at innovation labs, where the work is sometimes less precise, longer term, or more conceptual. Kyle Nel, Executive Director of Lowe’s Innovation Lab, has noted that “it does not make sense to apply mature metrics to something in its nascent form.”

Innovation labs can develop a portfolio of innovation metrics to measure not only the results of the innovation effort, but also the preconditions and innovation process itself.

With this focus on measuring both process and progress, innovation metrics help labs assess their innovation maturity, but may also bolster the support of their executive sponsors, especially in the early days. For example, Harvard Business Review notes that “revenue generated by new products,” an output metric, is the metric most commonly used by senior innovation executives. By establishing a portfolio of innovation metrics that also includes input and development metrics, the conversation can shift from focusing solely on results to focusing also on the maturing evolution of the innovation capability. This ability to develop unique innovation metrics has helped Nel push back when Lowe’s executives expect significant revenue growth from new and disruptive products.

3. Employ a process for innovation

Innovation is as much a cultural attitude as it is a business process. A generic approach to innovation may begin by defining the customer and uncovering their unmet need, formulating a hypothesis on what product or service the company can offer to meet that need, and validating the hypothesis by using customer feedback to rapidly experiment and iterate. Further, to foster the right mindset, innovation labs should:

That said, many of the best labs develop unique processes influenced by their charter. Consider Lowe’s Innovation Lab (LIL), which uses a narrative-driven approach to identify and articulate opportunities. First, LIL conducts market research, compiles trend data, and collects customer feedback on unmet needs and pain points. Next, LIL shares this information with science fiction writers who create strategic documents in the form of comic books, which follow characters through a narrative arc that illustrates a new solution to the character’s problem. Then Lowe’s executives use the comic books to make prioritization decisions, and, finally, LIL works with its partners to create the solutions introduced in the comics.

Another example of an organization employing a unique process is X, Alphabet’s “moonshot factory,” which is charged with creating world-changing companies that could eventually become the next Google. X adheres to a three-part formulafor identifying opportunities: (1) it must address a huge problem, (2) it must propose a radical solution, and (3) it must employ a relatively feasible technology.

Using this formula, X has spun out numerous subsidiaries under the Alphabet umbrella. One of those companies is Waymo, the autonomous vehicle pioneer that Morgan Stanley recently suggested could be worth $70 billion.

4. Who and how to recruit

If companies believe an innovation lab will help them more effectively navigate the waters of disruption, it is essential that they recruit for passion and cognitive diversity, rather than just skill. Labs often include a wide range of technical and non-technical roles, from data scientists and designers to experts in anthropology and psychology. Breadth and depth of both skill set and mindset are essential components of a successful innovation lab that creatively explores new technologies and business models.

Ideal job candidates should be innate risk-seekers, strong questioners and connectors, and comfortable with failure and restarts. Deloitte Center for the Edge Co-Chair John Hagel described people who have these traits as personifying the “passion of the explorer.”

Organizations searching for these passionate explorers will find advantages and disadvantages in looking both internally and externally. Internal employees may more deeply understand the customer, but they also may have difficulty looking at problems from a different perspective. External hires may bring new viewpoints and skills, but recruitment may prove challenging.

Companies can use several tactics to attract talent. Buzzfeed’s Open Lab for Journalism, Technology and the Arts, for example, targets specific individuals and groups based on their past projects. Recruitment efforts have been successful, in part, because Buzzfeed offers company resources that support their creative freedoms. Alternatively, companies can be deliberate in how they share their innovation initiatives with the public. For example, Airbus has a blog that reports news from the company’s A3 innovation lab, Airbus Ventures, and from other teams across its innovation ecosystem. This type of focused communication both targets and attracts an audience of individuals who are the most knowledgeable and interested in innovation currently taking place within the industry, and, in so doing, Airbus can create an informal pool of potential new hires.

5. Establish a funding source and budget

The process for establishing a funding source will differ depending on the company. For example, Allstate CIO Suren Gupta has described how a formal Innovation Council evaluates ideas and allocates funding. At other companies, if the innovation ties closely to a particular business unit, then funding may come from that group’s budget.

Though the specifics will vary, a generic process for establishing funding may include

The actual size of the budget depends on whether a lab is building the technology itself, partnering with other organizations, or acquiring a company, product or talent. Amazon and Google have spent millions of dollars developing parcel delivery drones. Meanwhile, companies like UPS and Daimler AG have opted to partner with—and make strategic investments in—established drone makers. This lowers both the risk and the cost of innovation while still allowing the company to develop new capabilities.

Regardless of how funding is established—or the size of the budget itself—it is critical to measure how much money was spent at each stage of the process: preparation (i.e. percentage of capital budget allocated to innovation projects), development (i.e. R&D spending at each phase of development the innovation process), and results (i.e. percentage of sales from innovation projects). As with the portfolio approach to general innovation metrics, the use of financial metrics across the innovation lifecycle reduces the focus on ROI, which can cripple innovative projects in the early stages.

6. Where to locate the lab

Silicon Valley is the quintessential innovation ecosystem. The region’s unique characteristics undoubtedly make Silicon Valley the right innovation ecosystem for many labs—particularly those charged with discovering and/or acquiring startups, or gaining business and technical intelligence about emerging technologies.

Other locations should not be overlooked, however. Cities such as New York City, Austin, and Chicago in the U.S.; London, Paris and Berlin in Europe; Tel Aviv in the Middle East; and Singapore, Shanghai and Tokyo in Asia all offer rapidly maturing innovation ecosystems, each with their own unique advantages and disadvantages.

To determine the ideal location for an innovation lab, consider which ecosystem characteristics (such as those highlighted in the adjacent visual) best support the objectives defined in the charter.

For example, former ADP CTO Keith Fulton (now CIO of Bank Systems with Fiserv) has described how ADP’s innovation lab is focused on creating “best-in-class user experiences.” Accordingly, ADP opened its second lab in Midtown Manhattan, since the proximity to top visual design and creative firms provide high concentrations of the right skill sets.

7. Develop a strategy for successfully integrating innovation

There is one final challenge, even for innovation labs that successfully deliver results in accordance with their charter: integrating the innovation with the core organization. From Kodak’s invention of the digital camera to Xerox pioneering the GUI, there is no shortage of companies that failed to capitalize on their innovations.

To be sure, innovation integration is the culmination of an innovation lab successfully delivering on its charter, so the way in which the company captures the value of the innovation very much depends on decisions that were made along the way. We recommend that executive sponsors and innovation leaders discuss early and often what successful innovation integration looks like. Here are a few key questions to consider:

While there is no set template for innovation integration, a definable, well-articulated vision of what the desired success will look like should be a primary priority, not an afterthought.

More than ever before, established companies are struggling to keep up with both the deployment of new technology by their competitors and consumers’ rapidly changing expectations. Careful consideration of these seven factors can empower companies to build an innovation lab that fosters energetic challenges to preconceived notions, creative experimentation with new technologies and business models, and thorough exploration of potential products and services that will enable it to survive—and thrive—amidst the accelerating forces of disruption.

5/29/18

By Peter High. Published on Forbes

The Pittsburgh renaissance has been covered in many places, including in this column. (See my interview with Pittsburgh Mayor Bill Peduto and my interview with Carnegie Mellon University’s Dean of the Computer Science department Andrew Moore.) One area of the tech boom in Pittsburgh that I had not covered is the investor community.

Pittsburgh-based Innovation Works is one of the country’s top seed investors, and CB Insights ranks it as America’s most active investor in robotics. The company’s mission is “to introduce, connect, support and expand the startup & entrepreneurial ecosystem within Southwestern Pennsylvania, making our region a center for innovative startups and tech investors from around the country.” Innovation Works’ portfolio includes companies in the robotics, artificial intelligence, medical devices, retail technologies, and enterprise software fields, among others.

I recently caught up with the Chief Executive Officer of Innovation Works Rich Lunak to discuss the current state of technology in Pittsburgh, his firm’s focus on robotics, trends that excite him, and other topics.

Peter High: Please describe Innovation Works’ purview.

Rich Lunak: Innovation Works is the most active seed-stage investor in the Southwestern Pennsylvania region, and one of the most active in the country. We are dedicated to serving high-growth tech entrepreneurs throughout the Pittsburgh region in order to create jobs and wealth, and to help our startup community thrive.

To read the full interview, please visit Forbes

4/16/18

By Peter High, published on Forbes

Vince Campisi joined United Technologies (UTC) as the Senior Vice President of Digital and Chief Information Officer in mid 2016 after most of two decades with General Electric. He spent the last year as the Chief Operating Officer of GE Digital, so he was quite familiar with the ideas behind digital transformation of a large, multi-operating company industrial business.

At United Technologies, he found an environment ripe for change. Digital transformation had begun in pockets in the four operating companies: Pratt & Whitney Aircraft Engines, Otis Elevators, Climate Controls & Security [CCS], and UTC Aerospace Systems. That change had not been coordinated globally in a way that Campisi was used to. He embarked on a journey to foster more collaboration across the operating companies and one of the keys to this has been the development of the United Technologies Digital Accelerator in Brooklyn. The Accelerator is less than a year old, but UTC and Campisi have found a great group of digital leaders to drive change. The vision is for this to have multiple hundreds of people in the office in the DUMBO section of Brooklyn in the next year. Campisi describes the work of this team, the digital transformation more generally, and the need for digital leaders to play offense, defense, and special teams in order to win in the marketplace.

Peter High: You are the Chief Information Officer and Senior Vice President of Digital at United Technologies. Can you talk about your purview as it relates to those two aspects of your role?

Vince Campisi: There is a lot of discussion around digital. Sometimes, that conversation happens concurrently with IT. For us, we wanted to make a conscious decision that those two things work hand in glove and not two different facets of the organization. Instead, they need to be driven in a way that takes advantage of what classic IT offers a company like us, as well as the aspirations of digital as it relates to how people think about it in the market today.

We see it on two dimensions. One is reinventing IT. For us, that is about how you would streamline critical business processes, improve sales processes, and improve manufacturing processes to improve inventory. It is also about infrastructure services, and how you enable computing at scale and make sure the employees have the resources they need to be productive. The second part is when we think about reinventing IT more effectively around cybersecurity. I would classify those as defensive capabilities. How do you protect the bottom line, drive productivity, and efficiency?

The second dimension which often gets classified as digital is how do you accelerate business growth? That is where Internet of Things for industry comes up, which goes hand in glove with data and analytics, and how you use those insights and software applications to grow value with your customers and help customers achieve new levels of value. That is the offensive dimension of how we use IT and digital to differentiate the company.

High: United Technologies is itself a diverse business. Could you talk about how IT is organized across the various companies of the organization and ultimately, how it reports up to you?

Campisi: We have four iconic franchises: Pratt & Whitney Aircraft Engines, Otis Elevators, our Climate Controls & Security [CCS] business, and our UTC aerospace systems business, which recently announced a partnership with Rockwell Collins. Those are the four major business units. Within them, they have a variety of P&L’s and other facets because they are Fortune 200 companies in and of themselves. The way we think about it is they need to be in a position to differentiate and compete in their respective markets.

They each have a digital and an IT strategy that enables them to connect with their customers in a new way and differentiate themselves in the market. We then look for places where there is horizontal scale and horizontal leverage. From a technology architecture perspective, this could mean cloud computing. When we think about talent and the breadth of what the company has to offer, it creates a lot of opportunities for people to find new challenges and new ways of working across industries without having to change pay or benefits.

The third part is things like cybersecurity. The business units might decide on the appropriate platform for them or how they are going to develop a smart factory. We will have a reference architecture, but they will select the MES system that is best for what they need to do. There are places where we might have a stronger point of view for horizontal leverage around network, or email, or security tools. That is the balance between what we do centrally versus de-centrally.

To read the full article, please visit Forbes

09/11/17

By Peter High, published on Forbes

When Cynthia Stoddard joined Adobe as chief information officer in June of 2016, she admits she joined an information technology division that was running reasonably well. She is a good judge of such things, having been a CIO multiple times over, most recently at NetApp for over four years. At Adobe, she joined a company in the throes of transforming itself into a cloud company, and an IT department that operated as “customer zero” for the company’s products. She took the game plan that was in place and added her own aspects to the plan.

She indicates in my interview with her that the first step of the IT transformation was making back-office systems real-time, responsive and highly available. Next, she facilitated a customer-experience-centric strategy for IT. A major component of that was leveraging the seven characteristics of the cloud. She explains all of the above while reflecting on her own career in IT, and the steps she has taken to encourage other women to walk in her footsteps, among other topics covered.

Peter High: You have been the CIO for about a year at Adobe, an organization that has been transforming itself into a cloud business. Please provide a brief overview of this journey and the role IT plays.

Cynthia Stoddard: Adobe began the transition to software as a service, away from box software, a number of years ago. It has been a successful transformation and we continue to be leaders in the market. We have three clouds: Document Cloud, Creative Cloud, and Experience Cloud. I am proud to be a part of the organization and to have a great IT team that enables the business, the organization’s journey, and the tremendous amount of growth Adobe has achieved. Since IT was solid when I joined the organization, I have been able to focus my strategy on the future.

Adobe did a fantastic job when they moved from box software to software as a service. When you enter the real-time online software as a service world, all of the back-office systems that were previously hidden, are exposed to the world.

High: How did the Adobe IT team manage that?

To read the full article, please visit Forbes

9/05/2017

By Peter High, published on Forbes

The marriage between chief information officers and venture capital firms is a logical one, as CIOs are often the consumers of the enterprise portfolios of the venture community. There is a small but growing list of CIOs who are getting more involved in venture, including venture arms within their enterprises.

Eash Sundaram is one of those CIOs. In addition to being the Chief Digital and Technology Officer at JetBlue, he is also the Chair of JetBlue Technology Ventures. With this combination of roles, Sundaram is at the center of a tremendous amount of innovation through creative use of information and technology and through the digital transformation he has helped usher in. He also leads an innovation lab. In this interview, he describes his various areas of responsibility, the interplay between these functions, and reasons why he believes more CIOs will take on a wider array of responsibilities, as he has, among other topics.

Peter High: Please describe your purview as the Chief Digital and Technology Officer at JetBlue and the Chair of JetBlue Technology Ventures.

Eash Sundaram: I have three distinct functions. First, I oversee Digital, which encompasses all of e-commerce. Second, the core technology functions report to me. Lastly, I have oversight of JetBlue Technology Ventures, which is a wholly owned subsidiary of JetBlue that was founded in early 2016. JetBlue Technology Ventures invests in travel, hospitality, and transportation verticals that will enable, through technology, the next chapter of JetBlue’s innovation.

High: From our past conversations, I know that you are working on the next generation of the customer experience. What are some of the things you are developing?

Sundaram: From its founding days, JetBlue’s mission has been “to bring humanity back to air travel.” Our latest vision of inspiring humanity touches every part of the travel experience. For JetBlue, the core of the customer experience starts with the mission of being personal, helpful, and simple. Our mission is tied to two things JetBlue takes tremendous pride in innovation and a culture of hospitality. For example, we are exploring the use of biometrics for improving the travel experience. Working with Customs and Border Protection and our partners at SITA, we have launched a biometric boarding process for select international flights at Boston Logan International Airport. We have seen some early success. The traditional process at a gate is people come in, scan their boarding pass, and wait in lanes. Biometrics improves the process because now people quickly have their picture taken and walk on through; all of the transactions behind the scenes are automated. Not only is this simpler for customers, but it also lets crewmembers focus on meaningful interactions with their customers, instead of transactions.

High: You are the chairman of JetBlue Technology Ventures, which is headquartered in Silicon Valley. What was your rationale for that location?

To read the full article, please visit Forbes

By Peter High, published on Forbes
5/22/17

Terry Bradwell is not only an executive at AARP, he is a member. He has risen from chief information officer to chief enterprise strategy and innovation officer at the $1.5 billion, Washington, DC based non-profit that advocates for Americans who are over 50. He notes that though he is 54 years old, he is not the same 54 that his father was, and, in turn, in a few years, a 54 year old at that time will have a different makeup than he does. This notion drives his ambition toward continuous innovation.

This orientation toward innovation began when Bradwell was the company’s chief information officer. Having spent time as a consultant in IBM’s Media and Entertainment practice, he developed a strong business acumen that meant that as he joined IT departments, he did not accept that the department should be relegated to a supporting role.

Bradwell established innovation labs for AARP while he was CIO, but through a series of conversations with AARP CEO Jo Ann Jenkins, he realized there was value in carving off his CIO duties, responsibilities that would go to his key deputy, Amy Doherty, the current AARP CIO. This allowed him to focus more on innovation. His time in IT helped foster relationships across the entire enterprise, and a cognizance of the strategic needs of each. His impact on innovation and strategy made is move beyond CIO logical.

Peter High: Terry, you are the Chief Enterprise Strategy and Innovation Officer at AARP, quite an interesting title. Could you unwind that and provide an overview of your purview?

Terry Bradwell: Providing some context will help explain my role. AARP is arguably the leading voice of and advocate for the 50-plus population. Our purpose is to empower this population to live their best lives. AARP started out as an innovative organization almost 60 years ago, and has continued along that path. The 50-plus population has continued to evolve; I am 54 years old now, but I am not the same 54 year old that my father was, and a few years from now a 54 year old will not be the same 54 year old that I am today. This evolution means that AARP has to innovate to stay relevant and to be able to continue to drive our social mission and advocacy. We are a social mission organization, but it takes revenue to power that.

My role as chief enterprise strategy and innovation officer is to address opportunities and risk for the organization. From a strategy perspective, I am responsible for the creation of a multiyear plan that encompasses our opportunities, threats, and risks. It is my responsibility to develop a strategy that is outcome-focused that the organization can rally around, but is also flexible enough to change as the conditions on the ground change. We use innovation as a primary lever to deliver outcomes that ensure that we strengthen our value proposition for the people who we serve. We are a strong organization, and our strategy aims to keep AARP that way by addressing potential long-term relevancy and revenue risks.

When they are doing well and feeling secure, many companies become complacent. We are fortunate to have a dynamic CEO who recognizes that simply being in a successful position creates a risk. At AARP, we double down and push twice as hard when we are comfortable. That is why my function was created. At the highest level, I am responsible for shaping a strategy that ensures the outcome is a strengthened value proposition through innovation.

High: Innovation can be hard to define. Can you define innovation for AARP and how you measure progress?

Bradwell: At AARP, innovation is strategy-driven and focused in areas that we call health, wealth, and self; these are health security, financial resilience, and personal fulfillment. Let me provide a few examples. In the financial resilience zone, we looked at the trends and recognized that work and jobs are a huge concern for the 50-plus population because jobs are being transformed due to disruption and new categories of jobs created by the sharing and gig economies. Gone are the days when you worked 20 or 30 years for a company and had a pension and a retirement package. We are exploring these trends and innovating around financial resilience. With health security, we are innovating around a huge area within caregiving; which includes bringing products, services, content, and information to individuals who have caregiving challenges. We know from our insights and data that caregiving is a growing challenge. Over the next five to 10 years, there will be 117 million people in this country that will need some form of care, but only about 43 million unpaid caregivers available to provide that care. Likewise, there are only about 4 million paid caregivers. We are innovating around these caregiving shortages and other trends.

High: You run AARP’s innovation lab. Please share examples of the motivations behind setting up the lab, how it was developed and set up, and its place within the larger organization.

To read the full article, please visit Forbes