Perspectives on the best way to foster innovation — from Shell’s global CIO Jay Crotts, DHL Supply Chain head of operations and IT Markus Voss and Columbia Business School professor Rita McGrath.
In an era of rapid digitally driven change, businesses are under constant pressure to be engines of innovation. But finding the most effective innovation model for their organization is a big challenge. What is clear is that they can no longer be ‘one-hit wonders.’
Rita McGrath, strategy and innovation professor at Columbia Business School, highlights how in its early stage innovation usually exists in isolated pockets, with the business relying on one or two ‘champions’ to drive it forward. But this is far from a repeatable or sustainable approach.
The era of competitive advantage that is sustainable has long gone, she argues, to be replaced by a world where developing a flow of transient advantages is now a fundamental competency. And that requires a maturing of the innovation process.
To move innovation from its historical silos she advises putting governance mechanisms in place and ensuring new sets of metrics are adopted that can cope with — indeed, encourage — uncertain outcomes. “You start to see specific funding mechanisms set aside so that innovations are supported,” she says. “And to get to that level as a senior executive, you’ve got to be able to set aside the time and resources to manage the portfolio, and make a real commitment to doing that.”
It’s that kind of commitment from the top of the organization that drives an innovation culture through the business in a genuine way. Markus Voss, CIO and COO at Deutsche Post DHL’s Supply Chain business, has helped develop a robust procedure for looking at upcoming trends and implementing innovative change to the business. He uses a ‘trend radar’ that is designed to identify the degree to which any newly emerging technology or trend may impact the logistics sector.
“We then take a deep dive into those trends, build a proof of concept and then [when appropriate] scale that up very fast into our operations,” Voss says.
The potential of any trend is mapped against the extent to which it will allow DHL to exploit its competitive edge, he explains. The company always looks to fully leverage the skills and opportunities it has over its rivals. “Whenever we investigate innovations and trends, we look at what would be our unfair advantage and try to exploit that. So if we have more assets, more people with a certain expertise or more data than anyone else, then we lever that advantage,” he says.
Internal and external inspirations
At energy giant Shell the focus for IT innovation is increasingly inseparable from business. Global CIO Jay Crotts puts a lot of emphasis on understanding what’s valuable to business units first. And to ensure that, in recent years he has been insourcing key areas of Shell’s IT operations, especially around software development and IoT.
He explains: “At Shell, that need to satisfy the business’s growing digital ambitions has led to an acceleration of insourcing. The closer to the business value that IT people get, the better. At Shell, insourcing our project delivery and that business value delivery have been absolutely essential for our success.”
However, the foundation on which innovation is built must be strong, and this is where Crotts relies on suppliers and partners. “I look to partner with great suppliers across the globe that can do the basics on a daily basis,” he says.
DHL’s Voss, on the other hand, also looks to partners to bring innovation to life. He says the business responds to changing customer demand by “co-creating” new products and services with key suppliers. That can extend to joint ventures with strategic technology partners where they can innovate together. Or, in other cases, it might involve start-ups with great ideas that can draw on DHL’s industry knowledge to create new services.
“Co-creation is the core way we attack any of these new trends,” he says. “There simply isn’t the time for us to hire, say, 100 or 200 PhD students and develop technologies all on our own.”
Despite coming at it from different angles, both Shell and DHL have well-defined approaches to digital innovation. McGrath insists more businesses need to address innovation in a similarly structured way. “There is a caricature of what an innovative company looks like — its people come to work at 2am, dogs wander the corridors, there are foosball tables, and so on. That myth actually gets in the way. Instead, what you want to be thinking about is building innovation as a proficiency — just like quality,” she concludes.