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March 29, 2013

Four Themes Paving the Path Ahead for Banks

Posted by Mohit Joshi (View Profile | View All Posts) at 9:41 AM

Industrialization of banking  is driving the business to become simpler, more efficient and yet more robust. There's also the growing importance of developing a seamless multi-channel strategy, while optimizing banking infrastructure and managing challenges around evolving global compliance. These themes will  fuel and accelerate the growth of tomorrow's banks. Creating paths to new markets and giving birth to new products. It 'll shape thinking about how banks can thrive. And how leaders will look for answers as important as the right questions you ask. More and more of these answers will come from the world of technology. 

March 27, 2013

Remaking Healthcare: A Modern Prescription

Posted by Eric Paternoster (View Profile | View All Posts) at 11:45 AM

Why Healthcare Reform - Overview  [Source:  http://www.youtube.com/watch?v=s2Fdbse0tq0 ]

There's a saying on Wall Street that two emotions drive investors into the market: fear and greed. But there's only one element that keeps investors on the sidelines: uncertainty. Once uncertainty is removed and investors can see signs that the market is headed one direction or another, things heat up.  

For American healthcare, any uncertainty around reform legislation was effectively laid to rest last year.  The Patient Protection and Affordable Care Act (PPACA) will more or less remain intact despite a long history of controversy - including a Supreme Court challenge.

Things are indeed heating up. The industry hasn't been sitting on the sidelines, and with health reform on the way, we can shift our thinking towards activities that will drive common healthcare goals in the areas of affordability, prevention, and patient centricity.  Here are a few ideas on healthcare to move us forward:

Aggressive measures aimed at chronic conditions are the most powerful lever we have in addressing the coupled goals of prevention and affordability. The Centers for Disease Control report that chronic ailments such as heart disease, stroke, cancer, diabetes, and arthritis are among the most common, costly, and preventable of all health problems in America. Treatment of chronic diseases consumes upwards of 70 percent of healthcare expenses. 

A significant change in the national culture needs to happen in order to address obesity and other unhealthy lifestyles. Still, I can remember when smoking was considered fashionable and cool.  Social media, mobility, and gamification can all play an important role in engaging and empowering consumers.  Maintaining progress will require incentives to encourage participation in wellness program and to convince individuals take responsibility for their own health. Doing so will be well worth it: Wellness programs show an ROI of $3 for every $1 spent.

Improving efficiencies in the healthcare delivery chain is an obvious way to cut costs. New business models with incentives tied to efficiencies like Accountable Care Organizations create better collaboration between payers and providers. We're also seeing greater levels of vertical integration between care providers and health insurers. The latter are establishing their own clinics and storefront operations to provide streamlined delivery of healthcare services that are more effective than traditional providers, especially when it comes to treating patients with chronic conditions.

The healthcare industry needs to adopt a more industrialized delivery approach and borrow practices developed in other industries to achieve greater levels of innovation and dramatic cost reductions.  Plenty of opportunities exist to accelerate the adoption of proven efficiency methods from other industries like manufacturing and retail, both of which operate on razor-thin margins.    

We need innovation to drive down costs while providing a better experience for patients. And that includes uncompromised quality. A professor at Dartmouth's Tuck School of Business, Vijay Govindarajan, recently lectured at our Americas Leadership Summit and described how the concept of reverse innovation  takes the best ideas from emerging countries and applies them to the developed world.  The practice has improved the lives of thousands of people and created new growth opportunities for companies. 

Another vital area of concern is the secure exchange of healthcare data. The PPACA provides incentives to address the cost and quality of healthcare across providers and episodes of treatment. A common system for reporting diseases will pave the way for analytical tools to monitor population health and provide early warning of potential new diseases and variations.

Chief executive officers need to identify their priorities in the post-reform world. Investments in game-changing technologies like mobility, cloud computing, and Big Data can drive huge cost efficiencies and provide the foundation for structural change and growth.  Health insurance exchanges and accountable care are examples of reforms that strengthen competitive positioning. Over the longer term, both providers and payers will be forced to evolve their business models or be left behind.

So let's get going on these initiatives and address issues of healthcare affordability, prevention, and patient experience.  The uncertainty of healthcare reform is now behind us. If I were a savvy analyst, I'd rate healthcare a definite Buy.

March 25, 2013

Knowing When Knowledge Knows Best

Posted by Paddy Rao (View Profile | View All Posts) at 10:37 AM

When we moved into NJ from Boston, we  bought a house with a large, unfinished basement. To my wife, who enjoys painting, that space downstairs was a blank canvas. There were all sorts of things she wanted to do with the basement, including, of course, adding  an art studio. As she began to surf the web looking to implement her renovation ideas, she came across a company that allows you to create your own nameplate for the front of your house or mailbox. Her experience with that company is an ideal example of the three important foundations on which effective and innovative organizations operate: mass customization, and maintaining relevant knowledge.

The nameplate company is based in Oregon. The actual plates are manufactured in Australia. And their customer help desk is located in Ireland. My wife can select the size, shape, color, and even the mounting style of the nameplate (as well as what she wants printed on it). That little company essentially thought of everything my wife might have needed or asked of them and wrapped it all up into a tidy, easy-to-use online delivery model. I'll bet that the company also has a sound methodology in place that takes a century of metal-forming and painting know-how and combines it with the latest, state-of-the-art design and manufacturing processes. 

Today, savvy, nimble organizations are asking themselves what their core competencies are and entrusting these to the best-suited person within the company. He might not be known as a chief learning officer or knowledge officer, but that's what he's doing - making sure everyone stays on point.  Ideally, this person also holds the purse strings. A chief knowledge officer who has spent time figuring out which programs are relevant is best equipped to allocate the funds required to take it to the next level. Money, time, and effort need to be closely linked.

Changing consumer behavior is accelerating change in organizations and we need to readjust continuously. But are we really challenging the status quo to explore new capabilities or simply going through the motions and responding to external pressures by just repackaging the old stuff with new looks? Who knows, may be the new generation needs a square wheel! Legacy processes sometimes are simply not relevant to the times. Have you heard the funny story of "holding horses" in armed forces?  The British army were using horse drawn cannon carriages used during WW I and soldiers held the horses away to prevent them from bucking under noise. Although horses were phased out with mechanized cavalry, soldiers continued to step back from tanks and hold their arms aside! So a chief learning officer should be combining knowledge from other sources, internal and external, and determining what's relevant and necessary to move the organization forward. He validates the relevance of the company's trove of knowledge. And weeds out workflows that are no longer relevant.

And before you tell me about all that relevant knowledge available from social media, let me stop you mid-Tweet. I realize that everyone is sharing everything with everybody. But data is not necessarily insight. No doubt about it: People are dumping a lot of data out there. However, like the old proverb goes, you should know how to separate the wheat from the chaff.  Be cautious.  Social media may hold valuable insights but it has the potential to dilute or drown out  actual knowledge.

So do you have a way to assess your relevant competencies to take on the future and document your learning?  What do you do with skill sets that you no longer need? And how can you sustain a pipeline to all the emerging knowledge you'll need  in the days ahead? Questions worth pondering.

March 22, 2013

As Insurers Prepare for Healthcare Reform, Are Private Exchanges in Their Blind Spots?

Posted by Eric Paternoster (View Profile | View All Posts) at 10:36 AM

 The Patient Protection and Affordable Care Act Explained  [Source:http://www.youtube.com/watch?v=AM4sM297Jl8]

The Patient Protection and Affordable Care Act (PPACA) is going to have a profound effect on all aspects of life, particularly for the nearly 50 million Americans who will now be part of the healthcare system. 

The plan aims to make comprehensive healthcare more accessible and affordable to all Americans. The more that both individuals and companies know about how this transformation will effect them, the better they'll be able to position themselves to take advantage of all its intended benefits. Indeed, fully implementing such a sweeping policy change is going to be the biggest challenge.

A recent item that caught my eye was the decision by two large, U.S.-based companies - Sears and Darden Restaurants - to change the way their employees receive their health insurance. Both firms are giving their workers money to purchase a healthcare plan from a private, online exchange. 

What occurred to me was that this scenario is similar to the change in how companies arranged for their employees' retirement benefits. About a generation ago, in a large chunk of corporate America, defined-benefit pension plans gave way to defined-contribution 401(k) plans. 

The early movers during this financial services transition were innovative investors like John Bogle of Vanguard and Peter Lynch of Fidelity. Their mutual funds gave individuals a large array of investment options for their 401(k) plans. In the old days, pension fund managers elected what kinds of investments to make on behalf of all their company's employees.

That same kind of transformation is happening in the healthcare industry. My prediction is that health insurers that get out in front and form their own private exchanges - instead of allowing third party exchanges to set the pace for them - will have a tremendous advantage in this new world. That's why Aon, the company that offers a multi-carrier exchange to Sears and Darden Restaurants, is a fascinating example.

As with any other big transformations, health plans are going to have to assess just how they form their own exchanges. A big challenge is how to implement a private exchange all while preparing to participate in public exchanges in the states, given the promise of enrolling new consumer and small business members. It's a good bet that most plans will need solutions to keep pace with public and private exchanges as they come to fruition. Think about the enormity of added work involved in getting the right private exchange up and running simultaneously.

From one standpoint, health plans should be (at least in theory) the strongest and best-positioned players in the burgeoning private exchange realm. But I often wonder how many of them realize the pressing need to act quickly - and in parallel with the development of public exchanges. Like the mutual fund giants who led the development of the 401(k) era, the most successful firms that develop private exchanges will be doing more than simply throwing up flashy Web sites with lots of perceived options.

The uncertainties around healthcare reform itself are behind us. By now health plans should be thinking about first mover advantages - especially in a space that will evolve rapidly and be extremely competitive. To that end, have they considered whether it's better to build or to buy their way in?  And whichever route they choose, do they have scalable sourcing that will allow them to provide the optimal customer outreach and service?
Just as important is having the right kind of partners who know both public and private exchange issues, and understand that this is not just a technology challenge but involves deeply intertwined process and organizational change. Nothing in this new healthcare world will be black and white, so companies need to be nimble and respond to how healthcare reform develops during the coming years. 

Smart companies of all sizes will embrace this change and make the new world of health care work for them and their employees.  Are health plans ahead of the game and prepared to play offense to attract new members while simultaneously playing defense to protect their large employer base? Be prepared: Changes are already underway.

March 20, 2013

Platformization of Software for Us. Business Results for Enterprise

Posted by Dr. Srinivas Padmanabhuni (View Profile | View All Posts) at 5:04 AM

(From left) The Hon Greg Combet, Minister for Innovation and Industry; The Hon Bill Shorten, Minister for Employment and Work Relations; Mr. N.R. Narayana Murthy, Founder and Chairman Emeritus of Infosys; The Hon Julia Gillard, Prime Minister of Australia; Mr. Neville Stevens AO, Chairman of NICTA and Dr. Terence Percival, NICTA Director Broadband and the Digital Economy.  [Photo courtesy: NICTA]

N.R. Narayana Murthy, our founder and chairman emeritus, visited Australia, recently, to announce a partnership with the country's premier information & communications technology organization, NICTA. The Infosys-NICTA program is a multi-faceted partnership which includes joint research, Ph.D. student internships, professional exchange programs, and commercialization of intellectual property over the next five years.

I am going to take the lid off on one of the main focus areas of the collaborative research - Platformization of Software. Although an unglamorous phrase, Platformization of Software is redefining the rules of software engineering. The term broadly refers to the engineering techniques and methods needed to enable traditional standalone software applications to be offered on the Cloud.

Ground-up, bespoke coding for disparate modules for every set of business requirements is already a thing of the past. Our research on platformization of software will include the development of new techniques to harvest software architectures, functions and processes from existing large code bases. This will enable strategic reuse of code and speed up the development of new systems, especially for Cloud-based platforms.

Platformization will significantly slash development effort, cost, and time. While it will disencumber Micro, Small and Medium Enterprises (MSMEs) with respect to cost and time, it will usher in speed and agility for large corporations.

Organizations, however, should avoid partial or superficial Cloud enablement. By this, I mean confining Cloud enablement to mere replacement of traditional infrastructure (storage or hardware) with that offered by a Cloud provider. Or, putting a Cloud interface over traditional software. The full potential of Cloud can be realized only when all the models of Cloud, right from IaaS (Infrastructure as a Service), PaaS (Platform as a Service) to SaaS (Enterprise Business Software as a Service) are leveraged.

For successful Cloud enablement, there are several areas that must be thoroughly researched from a software engineering perspective. Three significant ones are:
1. The architectural aspect of Cloud that enables hosting of multiple tenants without each interfering with the other. This can lower costs, specifically for MSMEs who can avail of infrastructure, hardware, software and business services in a pay-per-use model. To handle these needs for different layers - right from the UI to the Database and the Business Logic - a thorough model-based approach is vital.
2. Scalability is straightforward for a standalone application. But now, with multiple tenants, we need to address the availability and scalability needs of all the tenants together. Alongside the availability and scalability concerns, security is important in a multi-tenant environment, including foolproof isolation.
3. Automating the harvesting of architecture from legacy systems will require the underlying legacy application software to be significantly refactored. This is to ensure that shared components are reused, and the tenant's specific logic is extracted as focused services for specific customer tenants.
Infosys and NICTA will be working together to address these challenges and more. We certainly have a lot of ground to cover in the next five years.

March 18, 2013

Balancing Compliance and Conversation

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 8:04 AM


Here's a mashup of findings from two separate studies on the social media behavior of banks. According to the first, which looked at the Twitter performance of over 300 U.S. retail banks, almost 22% of the accounts were either dormant or deactivated. About 50% tweeted less than once every 3 days and 1 in 10 managed fewer than 20 tweets over 12 months. The second, a study of 50 leading private banks found that one-third did not even have an active Facebook profile and only half of the remaining two-thirds responded to a test request. 

It is generally true that banks haven't quite warmed up to social media like, say, retail or Consumer Packaged Goods industries. Even those that have, do not seem to have progressed beyond tokenism or a passive presence. Regulatory stipulations and the complications involved in enforcing compliance across social platforms have added to the inertia. There's an expertly constructed hypothesis that argues that if snail mail were a new channel today it wouldn't get past any bank's compliance team. So it can hardly be expected of social media to pass muster.

Yet, there are banks, which while conforming to regulatory processes, are constantly breaking new ground in the social space. Look at Alior Bank in Poland. Established in 2008, the bank had acquired over a million customers by the end of 2011. In 2012, the bank launched a new service - Alior Sync - the world's first virtual banking service with online access for staff through videoconferencing including sharing of desktops and documents, along with image transfer from cameras. Alior Sync allows customers to transfer money to friends using Facebook photos or by email. Also, look at Germany's Fidor Bank that allows customers to shape the interest of FidorPay. The rule is simple: The more Facebook Likes, the higher the interest rate. The minimum interest rate of a FidorPay account is 0.5% pa. By the 25th of each month, if the bank achieves a certain number of Likes, then a higher interest is paid. All their services and banking products are Internet-based and designed to be executed through a single e-wallet: the FidorPay-Account. Interaction between users is supported via Fidor Bank´s own community. Currently, more than 55.000 registered community members independently chat about daily financial topics and answer money-related questions. Fidor Bank follows the principles of crowd sourcing for peer to peer advice and rewards activities. Users earn money by asking questions within the community. And for answering questions. 

So, really the real elephant in the room isn't compliance but rather the fear of negative evaluations, and a deep-rooted anxiety about social media's power to vilify virally. Hardly surprising, when banks have borne its brunt at every isolated service lapse or attempted fee hike. Clearly, looking the other way won't make it go away. Banks no longer control what customers are saying about them, and the conversations will continue to flow regardless of their participation. However, it's not all gloom and doom. Because where there is brutal word of mouth, there is also powerful advocacy.

Advocacy is one of the key metrics of successful social engagement. Experts say that word-of-mouth influences between 20% and 50% of decisions in general, and significantly more in some sectors. A 2010 study of 7,000 retail banking customers concluded that 50% of those who were considered advocates were willing to try out new products; also, advocates were loyal and more engaged with the bank.

Against this backdrop, the findings of another study by a leading social software and solutions firm, stands out in dark relief. In his blog post, the Vice President of Technology says that typically, a financial services company has less than a tenth of the number of advocates of a telecom firm, and about one-fiftieth that of a media organization. It's a similar story with engagement. Clearly, financial firms are losing out on an important opportunity. After the last crisis, customers have grown even more anxious about financial issues. Banks need to engage them in meaningful discussion - answering queries, resolving issues, allaying concerns - as a first step towards converting them into advocates.

One model for achieving that suggests that organizations start by listening closely to what customers want from social engagement; develop an appropriate strategy for content; identify and reach out to potential influencers; and encourage them to turn into advocates through incentive and empowerment.

Here, we take a closer look at the last bit. 

Although few financial service firms have managed to garner consumer advocacy, one can still draw some lessons from their experience. For instance, USAA has a transparent rating system enabling customers to rate their products. The results are put up on their website for all to see. There are buttons to enable members syndicate content and freely spread the word in social media, and a member to member service to allow advocates address other customers' negative feedback. Only members may write reviews, which are moderated in accordance with clear, transparent guidelines.

Let's distil this into a framework that other banks may apply to use one social media tool, namely ratings, to build engagement and advocacy. 

•  Find suitable technology; there's plenty to choose from, and much of it is available on the cloud.
•  Although many solutions offer moderation services, it is better that your bank drafts its own review-related policies and processes.
•  Establish immediacy by asking for ratings as soon as a customer makes a purchase or experiences a service. You might like to encourage this with a small incentive.
•  Publish the reviews for the public to see, ideally once there's a reasonable number. Similarly, put up your moderation policy in clear, unambiguous terms.
•  Don't respond to negative feedback in public; instead do it offline. There's no way that your bank will look good in a public argument, even if in the right. The best way is to let other customers respond.
•  Thank customers for their opinion, and show them that you are listening.
•  Employ the overall rating results in promotions.

And watch your customers work for you!

March 15, 2013

When Global Outsourcing Includes Your Home Market

Posted by Sanjay Jalona (View Profile | View All Posts) at 5:18 AM


The assembly line in action at the Rouge Plant ,1934 [Source: http://www.autolife.umd.umich.edu/Labor/L_Overview/Rouge_Plant2.htm]

At the beginning of the 20th century, the world was fixated for a few months on a tiny farming community outside Dearborn, Michigan. It was in the hamlet of River Rouge that Henry Ford had decided to build a factory the likes of which had never been seen. It was a grand manufacturing experiment - un-forged metal and other raw resources would go in one end and a shiny new car would come out the other.

River Rouge was a soup-to-nuts operation that defined most of 20th century manufacturing practices - as well as the philosophy around it. That is, if you wanted something done right, you did it yourself. But in recent decades, most global enterprises have shown it's not exactly the best approach to micromanage your business. They have broken down their processes smartly and identified right partners for each stage of value chain. And these partners are often located thousands of miles away. As many as 45 big companies are involved in building the main components of Boeing's Dreamliner.

Yet it seems what was old is new again. There was an interesting report in the Wall Street Journal couple weeks ago about how another venerable American company, General Electric, is deciding that many of its operations would be cheaper and more efficient if it controlled them itself. GE makes everything from light bulbs to jet engines. Of its many subsidiaries, GE's jet engine business is one of its largest. GE decided it would acquire American companies and use their talent to make many of its jet engine components that it was buying from suppliers. For instance, GE bought a Cincinnati-based company, Morris Technologies that makes additives. According to the Journal report, GE plans to use 3-D printing machines at Morris to fashion a fuel nozzle that it uses on its jet engines. As it stands now, a supplier manufactures the nozzles. It must meld the part GE needs out of 21 tiny pieces. Technology advances like these are helping many western companies move manufacturing closer to their headquarters.

Also, American companies are realizing the benefits of cheaper, more reliable and abundant energy sources in their own country. Today, any company that relies heavily on energy would consider basing significant manufacturing operations in the United States. After all, the U.S. can be part of any global delivery model!

Then there's talent. The human equation. I watched President Obama's recent State of the Union address with interest because he mentioned how important it is for people who have studied for advanced degrees in the United States to be able to remain in the U.S.  should they wish. Isn't a country whose universities provide a first-rate education to a graduate student better off if it's able to retain him or her after graduation? 

So, if you ever get to see the enormous River Rouge plant that Henry Ford built in 1915, take a minute to think about how his soup-to-nuts manufacturing philosophy was not only innovative back then - in a new form it's gaining traction once again.

March 13, 2013

Navigating the Innovation Economy

Posted by Simon Towers (View Profile | View All Posts) at 11:03 AM

Part of the pleasure of reading a good book is being able to share it with friends and colleagues. And because Infosys provides me with this space to blog about topics like innovation and creating smarter organizations, I can supply you with a digest of some of my reading that's relevant to these areas.

In that spirit, I highly recommend Doing Capitalism in the Innovation Economy by William H. Janeway. The author is a venture capital veteran who provides a fascinating glimpse into a rarified niche of the financial world, especially as to how VC firms funded the first modern technology start-ups of the 1970s and '80s.

For more than 250 years, innovation and technology have depended on a combination of three important elements, according to Janeway: the state, the market economy, and financial capitalism. "Through the centuries, the state and the market economy have variously collaborated and competed in the allocation of resources and the distribution of income and wealth," writes Janeway. "And financial capitalism has emerged to exploit discontinuities in the evolution market and political processes, while it depends on those same processes for its prosperity and even at times for its survival." He gives the reader interesting examples of the great booms and busts that the quest for innovation has prompted, beginning with the tulip bubble in 1630s Amsterdam. But it's in the mid-20th century where the worlds of finance and technological innovation became most interesting. "In no sector of the world economy did advances in computing have a more revolutionary effect than in finance," writes Janeway. "Here was a world peopled by smart, rich, and intensely competitive players who were swimming in oceans of data."

Trading desks have long been equipped with computers to record trades and keep records. But Janeway notes that the IT revolution created a whole new world of finance: Computers could analyze data in ways that gave investors new opportunities and new trading instruments. The world of finance we know today was created by the IT revolution of the 1970s. The IT revolution is so complete that I wonder if the world could ever have another dot-com or telecom bubble. That's because high-speed trading enabled by computers and the terrific software that power them have made it fairly easy for just about anyone to seek out and squeeze out market inefficiencies. Long gone are those huge arbitrage opportunities.

But in some ways, that's why we're at the dawn of another technology era. The market is so saturated with high-speed computers aimed at investors, there's a demand for even faster tools that can highlight the talents of even savvier investors. If there's one thing the last couple centuries of boom, bust, and speculation have proven, smart enterprises are already working on solving this problem and meeting this potential demand. For instance, think about the promise of the Cloud over the course of the coming decade. In the old days, venture capital was a lot more predictable in that "the next big thing" was likely a start-up company that could innovate like the established firms - but could be more nimble and do things more cheaply. With the Cloud, identifying potential winners becomes even more of a challenge because more start-ups have access to more computing power.

The fact that the Cloud has evened the playing field is a far cry from even a decade or two ago. Janeway recalls investing in a systems technology firm that they thought could one day be a rival of a giant like IBM. Why? Because, writes Janeway, by the 1990s, IBM's product lines were so profitable that it could not afford to undercut them by pursuing growth opportunities that "carried the much lower margins of computers leveraging open interfaces and open standards."

One of the most interesting chapters on financial history in Janeway's book details the tremendous amount of capital it took to fund the building of the railroads in America. After the Civil War, so much track had been laid on speculation that nobody was sure if they would ever see a return on their investments. One of the side businesses that boomed, however, is something the author describes as the "killer app" of its day: the mail order catalogue of Sears Roebuck. Sears offered small town citizens the opportunity to buy big city goods at rock-bottom prices because of the overbuilding of the railroads. Think about how the Amazons and eBays and Googles turned the dot-com bubble and bust to their advantage in much the same way, says Janeway. The infrastructure existed; someone might as well make a smart business out of it. 

That captures the essence of innovation: the ability to see a vibrant, new opportunity in a scenario in which most other people see tapped out. To the innovators, it's the beginning of something big.

March 11, 2013

How Your Community Can Help Your Business Succeed

Posted by Ashiss K Dash (View Profile | View All Posts) at 5:04 AM

I'm in the power business. It's my job to make sure energy companies around the world transform themselves into modern organizations.

From my office in Los Angeles, I work with utilities around the world that are in various stages of development. In India, for example, they're dealing with a population boom where a sizeable chunk of the country is entering the middle class. That crowd wants electricity to power air conditioners, computers, and kitchen appliances. India's challenge is to build power plants fast enough to keep up with demand. In the United States, it's a different story. Mass expansion of the electric network happened more than 100 years ago. The challenge for American Utilities is to update much of that aging infrastructure.

What India and America have in common - as do most other countries I've traveled to - is that power providers are learning the importance of effective consumer collaboration. And this can be a tough nut to crack sometimes; especially in the case of some century-old utilities that have a reactive gene in their DNA when it comes to dealing with the public.  Of course, I don't imply that the person off the street must be called upon to run enormous generators. What I mean is that all utilities, wherever they are, are becoming partners with their communities to develop and distribute cleaner and more sustainable sources of energy. I like to say that, at the macroeconomic level, utilities should be well positioned to transform their role from commodity suppliers to energy solution providers.

When an executive begins to ask himself/herself what's the future of his/her utility, community participation and insights can be very helpful. True, what works in southern California might not work as well in southern India; demography matters. But often the issues can be very similar. For example, you wouldn't believe the number of times I've heard from otherwise large and successful companies that they don't have a good web site, or that they don't have skill sets in-house to get the community involved with their long-term goals. But then again, there are other utilities that are proactive when it comes to making the community a part of their transformation. Atlanta Gas & Light, for example, has a Twitter following so extensive that it would make some Hollywood celebrities envious. Southern California Edison has an iPhone app with a host of neat features.

A large part of the population doesn't really care about their power utilities - as long as their power is on. But companies are changing that kind of apathy by staging neighborhood campaigns for energy efficiency at which they hand out bumper stickers, refreshments, and generally just get to know their customers. They're using viral marketing campaigns, and even hiring trusted people from their communities to serve as brand ambassadors. If this all sounds fairly straightforward, it is. But it's a different way of doing things from what many utilities have become accustomed to for 100 years.

Sometimes old ways of doing things - that is, being reactive instead of proactive - result in a breakdown of trust between utilities and their customers. Remember what happened in the 1990s in California, when regulators were overcharging for power because of rates fixed by the now-defunct Enron Corp.? Or more recently, when the Long Island Power Authority struggled in its response to vast power outages after Superstorm Sandy on the east coast of the United States last fall? Both episodes eroded consumer confidence. 

If a customer doesn't understand their local utility, their utility won't understand them. I often provide the utilities that I work with a set of questions that they should expect to hear from anxious customers. How long will present energy sources last? Will converting to new energy sources cost more? If so, how much? How can I get involved to help my community and my utility become more sustainable? 

Think about what happened with the nuclear power plant meltdown after the tsunami hit Japan in 2011. Advocates of nuclear power had been working tirelessly for decades to tout its advantages, cleanliness, and efficiency. Now, after one tidal wave, they're back to where they started. The case for nuclear energy becomes even more interesting given that some consumers are becoming more concerned about sustainability than ever before.

Utilities don't necessarily need to run town hall-style forums. But they should at least have some kind of platform for these discussions to take place, whether online or in, say, a local high school gymnasium.

Now I know what some of you might be thinking: What does giving away bumper stickers have to do with the bottom line? The answer is: A lot. Utilities provide power to the masses, and the more that the masses are on board with how they generate and supply the energy, the more efficient and profitable those companies will be over the long haul. It is the collective power of ideas that can transform the power industry.

March 8, 2013

Farming It Out Without Giving Away the Farm

Posted by Sanjay Dalwani (View Profile | View All Posts) at 8:57 AM


"Now don't get me wrong. I like innovation; just not too much of it." That's what I imagine I would hear if I were a fly on the wall of certain corporate headquarters these days. Large companies that once zealously guarded their technological innovations are now opening the floodgates of access to such technology.  Yet, they're grappling with just how wide they should throw open those floodgates. Indeed, it's a delicate balance: If there's too little innovation on the part of your collaborators, you're pretty much out the game. But if they take what you gave them and innovate too much, they stand to take control of the very technology you once called your own.

There's an egalitarian aspect to today's technology that makes a 15-year-old (if, say, he were to design a killer app) to be as potent a force in the marketplace as a 100-year-old corporation with tens of thousands of employees. Those venerable firms are realizing that it pays to play nice with an up-and-coming generation of innovators. But these companies certainly don't want to give away the store, either. 

Last year I read an interesting article in the MIT Technology Review that featured the delicate balancing act that AT&T is currently undergoing. Those of us over a certain age remember that Bell Labs was synonymous with innovation. During the mid-20th century, the subsidiary of Ma Bell was a prestigious place for the best and brightest to innovate and invent. And the fruits of that research were patented and closely guarded by the company that ran those laboratories. How times have changed! The article highlights a push by AT&T to encourage freelance innovators to design applications using its data. That's because the center of the tech universe doesn't lie within the big conglomerates anymore. First came the Internet and, later, mobile. These transformations gave consumers more influence in deciding what they wanted and how they wanted to use it. Smaller companies and even lone programmers are now where a lot of that innovation action lies.

According to the MIT article, there was a certain amount of irony connected to the transformation of AT&T. If you recall, they were the sole provider of Apple's first iPhone. Only six years ago, the assumption was that it benefited the company to be the exclusive provider of telephony. But then AT&T watched Apple open its platform to millions of app designers. They learned a thing or two about the new reality of the tech universe. Developers had written some 600,000 apps for the new iPhone.

No doubt it's a bit of a culture shock for the company that gave birth to Bell Labs to throw open its vault to outsiders. Yet that's just what AT&T is doing by outsourcing some of its product innovation. The goal, according to the MIT article, is that the company will maintain a healthy relationship with the larger ecosystem of technology innovators and collaborators who are an integral part of today's marketplace.

Business isn't the only place that's changing its tune. Even government is getting into the act: New York City's mayor, Michael Bloomberg, is allowing developers to utilize the city's data to come up with innovative new apps that serve the public. It helps, of course, that before he became mayor, Mr. Bloomberg was himself an innovator in the information world. He knows fully well the influence one person can have on an entire industry.

March 6, 2013

Harnessing the Power of Paradox

Posted by Sandeep Dadlani (View Profile | View All Posts) at 4:07 AM


Like it or not, we tend to think in extremes: He is incompetent. This job stinks. I am a failure. My boss loves me. This idea is perfect. She is an angel. 

But there's a danger of looking at the world in black and white. I am reminded  of a recent webinar hosted by Hitendra Wadhwa, a professor at Columbia Business School. His fascinating presentation was titled The Power of Paradox: How to Unlock Your Full Potential by Embracing Opposing Ideas. Wadhwa explains how some of the world's most effective business leaders are incredibly adept at seeing issues in shades of gray. "Great achievers through the ages have secretly cultivated a powerful discipline that has allowed them to operate at their highest potential in life and leadership," Wadha says. "Rather than choosing between two opposing thoughts, values, traits, beliefs or emotions, they have stepped up their game by simultaneously embracing opposites."

So, the next time you're faced with a challenge, don't tell yourself that you will succeed no matter what. And, also  don't tell yourself that there's no way you're going to get through what lies ahead. Instead, try combining both mindsets. Yes, it will be tough but with the right focus, you can succeed. 

I know what you're thinking: When it comes to opening yourself up to opposing ideas, it's easier said than done. But there's a lot of potential for this mindset in the area of innovation. When presented with the question as to who would be more likely to succeed as a salesman, more people would choose the extrovert over the introvert. But it turns out that a person who can be both extroverted and introverted has the best chance of succeeding in that or any job. 

I recently asked a colleague Martin Illsley about this very issue - the importance that some behavioral scientists are placing on embracing opposing ideas in order to innovate and lead. Illsley was an innovation practice leader at Accenture before joining Infosys.  "I think that is absolutely correct," he says, adding that you have to connect with both personalities in order to bring people together. He even used a term that's gaining traction in our professional parlance - the "ambivert." You take the introspective researcher, combine him with the traits of an outgoing fund-raiser, and you've got a person who understands all facets of what it takes to innovate. 

New discoveries in the field of human psychology are prompting behavioral specialists to question age-old measurements and assumptions. For example, personality tests such as Myers-Briggs came out of an era of ideological psychology that placed a lot of emphasis on the merits of being extroverted. But today's research into the psychology of the brain is empirical rather than ideological. A person need not be classified as either extroverted or introverted but rather how effectively he behaves in certain circumstances. 

Consider someone who joins the army. A recruit receives very clear, concise messages as to how to be a soldier during basic training. They live their lives according to a stringent schedule and come away with the knowledge that to stray from the very specific codes and guidelines that they're taught in basic training can be dangerous. But when they get into the field of battle, their world is completely different: When an enemy is attacking, nobody knows the exact schedule or timeline. The soldiers need to be quick on their feet and have the ability to innovate to suit their current needs. Maybe it's that combination of mindsets that helps soldiers survive. They're grounded on an unwavering set of guidelines, yet they're free to build upon them, innovate, and alter them to get an advantage over the enemy. 

In the corporate world, great innovators have a tremendous ability to take unpalatable options and converge them to make everything more palatable. Take the longtime chief executive of General Electric, Jack Welch, as well as the former head of Procter & Gamble, A.G. Lafley. A respected publication once asked both men which element was more important to making a large enterprise to succeed: strategy or execution. Both Welch and Lafley pushed back when presented with having to choose between the two. They both responded that it wasn't an "either or" proposition - both elements are critically important to bringing out the best in an organization. More recently, I attended a session led by Bob McDonald, Chairman and CEO of Procter & Gamble (and Lafley's protégé). Bob, when presented with the choice between growth and profitability clearly responded that both were important.

In a world of extremes, where we often have to choose between up and down or right and left, try choosing "neither" and instead forge your own path to innovation and discovery. You'll be glad you did.

March 4, 2013

Power Grids Fueled by Innovation

Posted by Ashiss K Dash (View Profile | View All Posts) at 4:45 AM


I watched a show recently about how India is making efforts to build out its power grid to meet the needs of a rapidly growing population. What drew me in to this spot on the NewsHour television program was the anecdote told by Rajdeep Sardesai, one of the country's prominent news presenters.

He told the NewsHour reporter about what he was doing last year when India suffered another massive blackout: He was lunching with one of the nation's top government officials in charge of energy. When the official received news of the blackout, which affected half of India, the man simply continued enjoying his meal. Sardesai was amazed that the crisis left the official literally unfazed. "That in itself epitomized for me that it wasn't being treated as some kind of a national emergency, but another day in the office," he said.

Indeed, when government officials seem to take in their stride a blackout that affects more than half a billion people, surely the time is ripe for innovation and change. Amidst this backdrop in India, there are undoubtedly a lot of positive changes in the energy sector. And some of it is happening on a very local level. The NewsHour report featured a very interesting phenomenon - the development of village-based micro-grids.

According to an energy expert interviewed on the program, India set in place energy policies more than 30 years ago that it's dealing with to this day. In the 1970s and '80s, for example, the country wanted to provide electricity to farms quickly, so it offered power very cheap, or for free, to many residents of the country's rural areas. Because a lot of the energy was given away for free, there was never much of an effort made to meter it. So, over the decades, it became relatively easy for people to tap into the power grid by themselves. In an enormous country like India, all that free power is adding up. One energy expert told the NewsHour that one-third of the nation's power is illegally lifted off its grid. The government now realizes that it can't give away its electricity on a massive scale, or allow it to be lifted, especially when it needs the funds to build up a modern power infrastructure. Whereas farmers were the concern 30 years ago, India is now facing a booming middle class with increasing per capita consumption as well. 

India's demand for power is going to increase dramatically over the next two decades. One of the reasons the latest blackouts have been so massive is that the grid is already having trouble meeting this growing demand. But faced with this conundrum, entrepreneurial spirit is flourishing in India. One example is of an entrepreneur who launched a firm that takes the byproduct of one of India's largest industries - rice farming - and processes the leftover husks into a liquid fuel that runs electric turbines. The turbines aren't huge. But they're big enough to meet the modest needs of many small villages across India. Keeping shops open even an additional hour or two in the evening stimulates the local economy. And when children can cluster around a lamp to do homework into the night, they get an educational edge. Plus, the power that's produced by these local turbines helps charge up mobile phones, so another industry - telephony - gets a boost as well. Now don't dismiss this story as just another charming, small-town tale. The owner of the rice husk business estimates he will have installed 2,000 micro-grids in the next two years. In a country with the population of India, the sum of the parts is significant. There's no doubt that the nation will catch up with the growing demand and install a modern energy infrastructure. But until that's all completed, local businessmen are taking up the reins of leadership.

The NewsHour clip helped me realize that this particular story is all about the power of innovation: Businesses are popping up to meet a growing demand, agricultural waste is turned into fuel, and it's sustainable to boot. India's ingenuity is a great example, to markets around the world, of the promise of earth-friendly power generation.

March 1, 2013

Unlocking the Value of Innovation and Thought

Posted by Simon Towers (View Profile | View All Posts) at 3:23 AM

Michael Loechle, Vice President, Information Systems, Alstom Thermal Power, describes how Infosys' approach helps Alstom achieve better, more innovative results

The most famous songwriter and celebrity of the 19th century - Stephen Foster - is virtually unknown today. Some old-timers might recall the songs he wrote because they were still very popular in the first part of the 20th century. Tunes like "Camptown Racers," "Beautiful Dreamer," and "Swanee River" defined American popular music for many generations. Yet when he died after collapsing on the street in New York City, Foster was found to have just 38 cents in his pocket. Could you imagine today if the head of a major entertainment label or music publishing company were to die with less than a dollar to his name? We live in an age when the so-called middleman - the person or entity that connects buyers and sellers - is the dominant force in the market. To be more specific, the middleman makes the market in the first place. That's why he tends to dominate it.

Different markets have their own versions of the middleman. The New York Stock Exchange is one of the most enduring examples. (We'll save a discussion of Dark Pools and what they mean for the future of your organization and the financial markets for another post.) But the case of Stephen Foster is what fascinates me here. If he had been able to make a market for his ideas - some of the most enjoyable sings ever written - chances are he wouldn't have met with such a sad ending. Plus, I can't help but think of Foster in light of the Internet. A market for ideas was one of the things that the Internet was supposed to deliver. Anybody off the street whose songs (or healthcare innovations or computer software for that matter) held the promise to transform the world, was on a level playing field when it came to the Internet. Or so it went.

Make no mistake: The Internet certainly enabled organizations to make their own markets. But the market makers tended to be new versions of the old, established players. Instead of getting disk jockeys to play new songs on radio stations (or, later, for MTV to give a marketing push to a music video), music publishers would utilize the Web to get their new products out. When services like iTunes appeared, they were fascinating from the standpoint of delivering on the Internet's egalitarian promise of giving the artist control of his own material. The New York Times recently reported that musicians used to get some 10 cents per download from iTunes. That's a far cry from what they receive now on services like Spotify and Pandora, which deliver micro-pennies per play.

True, the deck is stacked in the large organization's favor. It's nearly impossible for an independent artist to brave the world without a savvy, market-making gallery owner. But even the big entities have their challenges. For example, how does an organization with an arsenal of intellectual talent and property ensure that it receives the right level of compensation for such inventory? First, it must preserve the value of its assets by demonstrating to the market that it can deliver content faster and more efficiently because of what it already has under its own roof. Consider the fact that anyone with a crude Internet cam can produce his own 30-minute news broadcast. But do you really want to watch that segment compared to, say, 30 minutes of India Broadcast News, with its army of experienced reporters and editors?

A prestigious news organization like IBN has the advantage of connecting buyer to seller because it has a longstanding platform and brand name. A start-up must do more than simply have a Web cam and read his version of the news into it. If that person happens to be the most talented newsman of his generation - the Stephen Foster of his world - then chances are he will develop his own following. But, like Foster, it's unlikely that he'll succeed in being compensated fairly for the high-quality product that he delivers to the public. Chances are some other entity is connecting him to the buyers.

That's something for all of those organizations that produce intellectual content to think about: Producing the content is only half the battle. Finding the most efficient delivery model for that organization's intellectual property and ideas is another challenge of an entirely different nature. Without the second half of the equation, value creation makes a would-be innovator nothing less than, as Foster might say, a beautiful dreamer.

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