The business world is being disrupted by the combined effects of growing emerging economies, shifts in global demographics, ubiquity of technology and accountability regulation. Infosys believes that to compete in the flat world, businesses must shift their operational priorities.

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March 14, 2008

Born in the Flat World: Bringing new products to life in a hyperconnected world

Or: If you build it, will they come?

As I've written earlier, in the lexicon of modern-day business, innovation and isolation are firm opposites. The most successful companies have embraced unplugged approaches to innovation, which seek to allow the judicious flow of information, ideas and insights across what would conventionally be watertight walls.
Unplugged approaches epitomize how innovation happens on our ever-flattening and increasingly hyperconnected planet. Innovative new companies such as Innocentive have  even built a business model around helping such unplugged innovation thrive.

But let us pause to dwell upon the fate of the new products being birthed thus.
Across industries, the mortality of new products has traditionally been high (as high as 60%, or even higher depending on which source you consult). Clearly, new product innovation is fraught with risk.  Can unplugged approaches to innovation help ameliorate this risk?

I believe they can – particularly those that emphasize blurring barriers with customers, such as Co-creation and User-centric innovation.  These approaches to innovation posit that you should begin working with customers long before the new product is complete. They obviate the conventional need to have a complete product before coming to market, instead allowing the product to evolve in the direction of a more organic fit with customer needs.
In other words, rather than assume if you build it they will come, these approaches take the more pragmatic route of saying, if you invite them (customers) to help create the product, maybe they’ll use it!

Any new product innovated thus - whether it represents a minor incremental innovation or a truly disruptive one - stands a much greater chance of customer acceptance. To validate this hypothesis, let's look at some of the most ‘heralded’ new product failures of recent years*, and examine if these products may have benefited from greater customer involvement at the pre-launch development stage.
Boo.com, a fashion retailing website which became iconic of dot-com disasters, failed because it was just difficult to use. It was poorly designed, with a heavy home page consisting of several hundred kilobytes – a big boo-boo at a time when most users only had slow dial-up internet access.

Iridium, a system for satellite telephony that had stratospheric ambitions, was a technological marvel. Indeed, it had world-flattening potential that was sky high. Sadly, it never really took off - in large part because the handsets were bulky, unwieldy and difficult to use. They also needed line-of-sight access to the open sky. Understandably, few customers relished having to go outdoors to make a telephone call.
New Coke, introduced with much fanfare in 1985 with the ambitious plan of replacing the company's flagship Coke drink, was summarily rejected by consumers. The company was surprised, as all consumer research had shown that consumers would welcome New Coke.

WAP (Wireless Application Protocol) sputtered primarily because most WAP service providers forgot usability issues (most users only had cellphones with tiny monochrome screens at the time), and did not work hard enough to ensure that the customer would have sufficient reasons - i.e., content - to access WAP sites.
In each case above, the product was impressive and had indubitable merits. In each case the product failed primarily because either the customer was not involved in the process of bringing the product to market, or was involved too late - almost as an afterthought. Whether in the case of Boo.com, WAP or Iridium, it is amply clear that working more closely with customers right thru the development stage would have saved the promoters much headaches, and some late surprises. It would have allowed them either to come to market with a product that met customer need more closely, or would have given them sufficient insights to abandon the new product early, avoiding the cost - and mortification - of post-launch failure.

Co-creation for Coke creation?

The case of New Coke is particularly instructive. Here the new launch faltered on two counts. One was that only "sip" tests were conducted. In actual use, consumers do not just sip the drink, they drink it. More thorough home tests could have revealed greater insights into what consumers would prefer to drink. However, the second mistake was far more egregious. They underestimated the deep emotional attachment that people had for the traditional Coke drink ("The Real Thing"), and did not anticipate the sense of betrayal it's stoppage would trigger in a sizable consumer segment. Clearly, both mistakes could have been avoided in substantial measure, by engaging much more closely with customers long before launch.
While the above analysis is admittedly not high on scientific rigor (hey, this is only a blog, not a scholarly research paper!), it provides sufficient evidence that approaches such as Co-Creation and User-centric innovation can go a long way towards saving new products from the graveyard (or wherever failed products go). And for products that belong in the graveyard, these approaches are likely to help consign them there speedily.

It’s important not to over-simplify here. The reasons for product failure are myriad, and often embedded deeply in – and inextricable from - the specific organizational and market context. And companies typically put their best resources behind new products. So I’m not suggesting any simple-minded formula for new product success – there isn’t any. But if there can be any such formula, it will certainly include working closer with (and to) customers!
Also, the smartest companies, while learning to thrive in the flattening world, have already internalized this lesson – it may not be a coincidence that the product failure examples above all date to several years ago!

Thus, a high-probability route to product failure lies via splendid isolation. If you want innovation that leads to successful products, unplug it. And get products that can proudly carry the label: “Born in the Flat World”. ____________________________________________________________________________________
* understandably, companies are not overly eager to publicize product failures, and so data on such failures is not easy to come by. The products chosen for this analysis are drawn from various lists of the best-known product failures of recent years. Some have even become part of business folklore.

 

March 11, 2008

Flat World CIOs: Speeding Up In A Slowdown

 

So everybody from Ben Bernanke http://www.guardian.co.uk/feedarticle?id=7357595 to your neighborhood grocer is talking about a potential recession in the US Markets and its potential impact on the rest of the world. Consumer confidence and business confidence in the US have been the lowest in February. However, US export numbers are holding up and the trade deficit is narrowing. There are mixed signals from retailers as well.  CFOs of decently performing companies are exercising caution as they go about planning the year’s budgets. It’s easy in such times to cut down on IT spending and capital investments in technology. Ever wonder in such times, what happens to our visionary dynamic Flat World CIO. With new IT budgets that are either flat for the year or have decreased marginally is it a good time for the CIO to lay low until things change…. or is it time to stand up and be counted?

 

 

As the Infosys Retail, CPG & Logistics vertical is now global, I get the opportunity to meet CIOs not only across the US but also across the UK and Europe on a regular basis. In one of my recent Europe visits I read a very powerful ad punch line “Disruption is inevitable; who gets to be the disrupter is up for grabs”. From my conversations with select CIOs, I can see some of them choosing to be disrupters in uncertain times, choosing to make a difference with flat and lower budgets, choosing to adapt to the Flat World faster, winning in the turns.

Let me provide some examples

A senior IT executive of a large firm in the Benelux region remarked to me last week “I see the slowdown as an opportunity. I have been trying to create the case for automating a lot of our internal data cleansing, data massaging and data management efforts that are manual today. But because of various internal political reasons, I have not been able to do so. Now, the business case is more compelling than ever. We need to use technology to automate these efforts.”

Another global CPG firm is beginning an SAP rollout in the European region. Before they embark on the expensive and risk-prone journey, they have set aside 4-6 weeks to brainstorm with their best creative thinkers (internal and partners) on unique ways to cut costs and crash timelines for this implementation. Partners are tripping over each other to provide the most breathtaking wild ideas to achieve the same. It will take just one idea out of several to make a difference. It’s a unique approach but one that was conceived by the CIO for these difficult times.

Private equity firms recently are trying hard to get the CIOs of their portfolio companies to adopt modern technology and outsourcing trends faster than they would typically do. The CIOs I have seen are eager to embrace these trends especially in these times.

In trying times like this, several companies are looking at international expansion as an important option to grow top-line sales. Again, CIOs are leading the charge as they invest in developing, implementing and rolling out systems that will work in new countries and continents.

It is CIOs like the above that allow companies in tough times to win in the turns. Automation, outsourcing, new business ideas, innovation, etc. are best explored in a slowdown and a recession. That’s when your competitors are sleeping. That’s what we call “winning in the turns” – an important Flat World shift. CIOs, more than anybody else, are in a good position to leverage such shifts and guide their companies through the storm.