Leveraging A Startup Playbook For Digital Transformation.
by Linda Montgomery
Photo Caption: Blanc Labs applying startup mindset to innovation for a Canadian Bank.
Innovation is becoming a hot topic for Corporate Canada in the office towers overlooking the Toronto Waterfront. New digital technologies will disrupt these companies – today, a Fortune 500 company has a lifespan of just 15 years; it was 50 a decade ago. A shocking 57% of S&P 500 firms will be replaced by new firms during the next decade says Yale University professor Richard Foster.
This upheaval is partially a result of companies not being ready for the new digital economy. According to IDC, less than 5% of them are – they’re just getting started as `digital explorers` or `digital players` in a transition worth 20 trillion dollars or 20% of global GDP.
Canadian companies are lagging behind their global peers in planning and executing digital transformation. IDC says only 38% of our companies are executing digital strategies this year (it was only 16% last year) while 50% are in still in the strategy planning/building stage. Their conclusion: too many Canadian business leaders are overly optimistic about their company’s current capabilities to compete in the digital age.
…adopting a digital strategy to innovate is often a strategic endeavor that can reshape a company…
Early adopter companies are looking at innovating their business models, customer experience and operational processes. Business model disruption is at the heart of digital transformation, as anyone who’s used Uber or AirBnB has experienced firsthand. Digitally enabled technologies such as mobile, social media, smart embedded devices, cloud technologies, analytics and a host of others are putting more power in the hands of customers and their preferences.
Companies are expanding touchpoints and improving buying experiences. Expediential growth in customer data and increasingly sophisticated analytics to use data enable companies to better understand us and predict our needs to win more of our business.
Adopting a digital strategy to innovate is often a strategic endeavor that can reshape a company – revamping talent, systems, processes and culture. Some are doing it in-house, others look to strategy consultants, but it is often the grassroots of a company that are the early innovators. Enterprising intrapreneurs are targeting digital solutions against customer or process pain such as quick and easy mobile access to customer account information that previously lived in an internal legacy system only available to customer service representatives.
Nirvana is Having Innovation as a Core Value
Digital transformation is creating new positions; Chief Innovation Officer (CINO), Chief Digital Officer (CDO) and even Chief Analytics Officer (CAO) as innovation becomes ubiquitous across organizations. Ted Kaiser, VP of Innovation & Technology at Toronto-based national charity Kids Help Phone views Nirvana as having innovation as a core value engrained in the organization. He is working with the entire team to implement internal planning software and systems to enable an innovation pipeline of new products and processes for constant incubation as a regular part of business.
Nimble digital competitors are creating an undeniable imperative for large companies to innovate and they are also providing inspiration. We are seeing more `design thinking`, a methodology used to re-engineer business by using designer’s sensibilities to think differently and find fresh solutions for client or process pain. Companies are also borrowing from the startup playbook by employing lean methodologies, rapid prototyping, testing and iterative agile development techniques for fast new product turnaround. This is replacing traditional IT development with more ridged waterfall style requirements gathering followed by long development cycles.
…some of Toronto’s successful startup companies are pivoting to inject their entrepreneurial mindset into Corporate Canada’s innovation challenges…
Corporate Canada is penetrating the startup ecosystem as they adopt open innovation. Accelerators and technology hubs like Toronto’s MaRS and Communitech in Waterloo are home to innovation centers for CIBC, Canadian Tire, Manulife, GM, Thomson Reuters, 3M and others. Earlier this year a group of Montreal startup event organizers launched ResolveTO, bringing both startup and corporate innovators together for a two-day Toronto conference with their own education tracks. This level of corporate presence in the startup tech community was rare even just five years ago.
Companies are striking partnerships or making investments in disruptive upstarts for new innovation models or new products. CIBC recently partnered with local new Fintech company Borrowell to offer one click, faster and friendly borrowing, a first for a Canadian bank. We are seeing major companies opening their own digital labs for new product innovation such as Scotia Bank’s Digital Factory. Some of Toronto’s successful startup companies are pivoting to inject their entrepreneurial mindset into Corporate Canada’s innovation challenges. One example is Blanc Labs, a company providing innovation consulting, design and development as an outsourced lab to jumpstart and accelerate enterprise innovation efforts.
The fourth industrial revolution was recently popularized by Professor Klaus Schwab, head of the World Economic Forum. If advances in technology led to today’s third revolution of Internet and digital, then the fourth industrial revolution will bring the physical, digital and biological worlds together. For example, the Internet of Things (connection of everyday objects to the internet, sending and receiving data) and Internet of Systems, is giving way to the business as a `smart factory` with data to analyze and visualize entire production chains and make decisions independently. Imagine the connected car tied to a traffic safety system that immediately picks out a dangerous intersection and changes traffic light timing. Or your personal fitness wearable connected to a health information system able to detect an imminent heart attack; it automatically sends an ambulance and alerts your doctor.
It is important that our Corporate Canada decision makers do not get caught in traditional thinking or become too absorbed by immediate concerns to miss the forces of disruption and innovation shaping the future. It is time to question everything and embrace new technologies, new business models and new thinking regarding innovation.
Linda Montgomery is Business Editor of Toronto Waterfront Magazine, a technology industry marketing executive and a Toronto Waterfront resident. @lindamont3