Map the Gaps
Innovation is fundamental to a company such as Alcatel. In Australia it partners with universities on research and development, and this year opened a multimillion dollar communication solution centre in Sydney, which allows customers to trial new applications in a live but quarantined environment.
"You can't sell on slideware any more. There has been a bit of healthy cynicism, not just in the enterprises but also in the carriers. They all want to see it working before they sign up," says the company's chief executive, Ross Fowler.
Fowler delivered the Zunz Lecture at the University of Technology earlier this year tackling the issue of innovation. According to Fowler, when it comes to Alcatel's enterprise customers the reality today is that "no enterprise can afford to be working on the bleeding edge of technology". Rather, Fowler believes Alcatel's carrier customers should "explore at the bleeding edge with friendly customers". There are benefits to both parties, he says. Problems will be ironed out early, the trialling customer may get a competitive edge for little outlay, and once the technology is ready to be more widely marketed the carrier has existing reference sites.
"It is very hard to do business with customers without references. As a rule, customers are generally more cautious, and it's a case of ROI or goodbye. You can't get in the door without a good value proposition." That, Fowler says, often leads to companies doing incremental projects where the risk to the business is quite small. He suggests companies should consider projects "not from the perspective of what technology can do, but instead map the gaps in the current value proposition".
Once again the innovation conundrum raises its ugly head. Fowler's suggestion makes for an easier sell to the board, but as Tizi warns, puts the organisation at risk of yet more point solutions.
McKinsey's Nicli proposes a more radical approach to innovation. He says many organisations are already in a situation where they have too much technology and unmanageable processes and need to redesign the business itself. "This is new; three of the five projects I'm doing now would have been anathema in the 90s. Now we take a clean sheet, without systems, and are taking out huge investments."
He offers an example. "Say you have an integrated supply chain like HP and you want to go to a Dell model, then you have to neutron bomb their entire infrastructure. You have to take the legacy systems - and most of them are legacy - and 'ring fence' that [infrastructure] and only have new systems in front of it."
It's neither easy to sell nor easy to do. Even for a genius consultant.
"The only way forward is prototyping the whole thing. Despite all the genius of a consultant, when you actually do it there is a huge delta," he says. Add to the mix the sheer scale of some of these prototypes; Nicli, for example, is currently working on a prototype of a new plant management system for one company. "There are 40 plants managed on one server and 40,000 people affected by the prototype," he says.
And the challenge will get larger, he says, as enterprises grow internationally. "Technology is getting better and better but the world is getting more complex. One of my clients, their IT department has 250 MBAs, and they have 850,000 people in the world. It makes sense for them to have their books closed on the one day.
"It's easy to say but how is it done? The complexity is increased," Nicli says.
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