Economy, Strategy & Finance Briefs

Weeks Where Decades Happen: Senior Innovation Leaders Share Their Wisdom

August 20, 2020

The following insights are from the summer Advisory Board meeting of The Conference Board Innovation & Digital Transformation Institute. The Advisory Board comprises senior innovation leaders from Salesforce, LEGO, 3M, Cargill, Accenture, and other leading global companies. Highlights from their candid discussion shine a light on current problems and opportunities in these critical functions.

Our current health and economic crises only accelerate the vital need for more innovation and faster digital transformation. 

Below, members of the Innovation & Digital Transformation Insitute Advisory Board explore the multiple levels of challenges and opportunities face in these unprecdented times.

 

At the strategy level, innovate ambidextrously

 

Innovation Leaders need to become yet more ambidextrous. That means achieving the optimal balance of “perform and transform” to survive through the crisis and to thrive as they emerge from it. The innovation chief needs to guide both short-term profitability behind increased efficiency and transformative innovation by focusing on creating, developing, and commercializing ideas into new revenues in the long run. The default “perform” activities are critical, and the crisis has prompted ample creativity as companies have moved their businesses online (restaurants reinventing themselves as takeout shops) or created new products the market suddenly needed (face shields, sanitizers). 

But this is not enough. The post-crisis world will be very different. Hence, the “transform” side needs to be dialed up to generate new growth opportunities. In particular for those industries facing fork-in-the-road moments—oil and gas, travel, entertainment—this crisis will likely either be a launch pad or a tar pit. How to make it a launch pad? Understand the fundamental forces that will drive the future, project your strategy into that future, and visualize your new reality.  From that vision your next innovation portfolio should flow and your priorities be determined. Do this correctly, and you will not only survive but leave competitors that remain in denial in the dust.

 

At the leadership level, persevere

 

This is a time for patience, resilience, and humanity. A suggested role model for this period in business: Antarctica explorer Ernest Shackleton, who put people first, encouraged collaboration, and, amid a terrible disaster, brought home survivors. And look ahead, not behind you. As Shackleton said, “Optimism is true moral courage.”

 

At the mindset level, grow

 

 Leaders need to instill the confidence that we can do things we thought were impossible. And that fact is obvious now, the primary example being the ascendancy and success of remote workers. Before remote work became a necessity, it was seen by many as too unconnected or impersonal. Yet connecting and collaborating virtually is now a way of life.

 

At the metrics level, adapt

 

Businesses must look carefully at the appropriate metrics for our current way of working and innovating. Conventional result metrics have limited use, are lagging indicators, and can be misleading. There is a need to adopt both operational and performance metrics and to develop agile innovation accounting.

 

At the culture level, humanize

 

Humans must always come first. This is easier said than done, but now, more than ever, it is your people whose talent, fortitude, and engagement will find the answers to your challenges and assumptions. Set the stage by enabling curiosity, inclusion, and learning.

 

At the digital level, proceed with caution

 

“The crisis has done more for digital adoption than all CEOs and CIOs together in the last 10 years,” said one of the innovation leaders at our meeting. Companies are now emphasizing digital connections not only on the customer side—loyalty and engagement—but also in the back office—supply chain and HR systems. 

But there is an exception to this enhanced digital transformation: the disappointing performance of artificial intelligence (AI). AI, a possible solution to many pandemic problems, has fallen flat. Why? Many AI systems were “trained” on data generated by assumptions the pandemic has wiped out. Additionally, AI’s presumed power is failing in key areas. While AI has worked well with chat bots and robotic process automation, it is deficient in such key fields as pattern detection, pricing, optimization of labor, and workflow models. In fact, in some cases companies are returning to simpler spreadsheets to address these issues!

At the same time, some companies are learning to acquire and label data faster and building more resilient systems. Hyper scalers such as Google and Amazon are developing tools to help data scientists. AI Ops and Dev Ops are maturing quickly but are hindered by a shortage of data scientists.

Of course, focus must continue to be given to the ongoing challenges of data security and privacy that are fundamental for leveraging the digital potential while protecting the company and its customers.

 

At the cloud level, keep it real

 

Many functions like R&D can greatly expand their capabilities by using the cloud. But organizations need to ensure this is done strategically. The cloud’s benefits should not be viewed merely as a cost savings, but rather as an investment in stronger innovation output.

The cloud allows non-programmers to program software. Data can be bought and sold on the cloud. Partners can meet and work together, and companies can translate insights into new products. But this requires training the whole company to think like a cloud company, with corresponding speed and an agile mindset. This integration is key to getting good return on digital transformation investments: avoiding the extra work of fixing earlier siloed attempts.

 

On the cultural and behavioral level, know that you are crucial

 

Behavioral scientists have a tremendous responsibility to guide society through the crisis. Do what’s right. Stimulate and observe connections. Watch out for groupthink. Manage diversity and inclusion by leveraging proper data representation and by responsible nudging. The world needs your help.

 

On the talent level, seize the moment

 

The recession may provide a silver lining to companies looking to entice the scarce, high-end tech experts and outstanding students who would otherwise join startups or top tech companies. With venture funding down, everyone has a chance at this talent—provided they are visionary enough to know how to unleash and enable it to drive innovation.