Develop new ideas for IT application

Editor's note: Innovation is always a hot topic when it comes to the success of high-performing companies. This is most clearly reflected in the field of information technology as the frontier of innovation. The best companies are always looking to improve their information technology assets, and they are always experimenting with new systems and methods. What matters, however, may not be how trendy the technology is, but how innovative the technology is.

Several retail giants are beginning to incorporate RFID (Radio Frequency Identification) technology into their business systems. For example, Wal-Mart in the United States hopes that all suppliers can use RFID tags by 2006. Other companies are also watching the wind. DHL Global Express (DHL) plans to use RFID technology around the world to track the millions of packages the company ships each year. The quality of the company's customer service will be greatly improved as a result: customers can deliver their packages later and receive them earlier than before.

However, even technologies like RFID are no longer seen as an innovation, at least when people use them "by the way". They are seen as part of operating costs rather than a source of competitive advantage.

Applied Innovation: A Source of Competitive Advantage

Of course, these technologies are important and well worth the investment. But there is only one way to make them a source of competitive advantage—discover new ways to use these technologies creatively. "What else can these technologies allow us to do?" The answer could be to apply the technology at a reasonable cost because the basic technical equipment and knowledge are already in place.

Significant progress in business practice can only be achieved through the innovative use of new information technologies. More importantly, information technology can lead to completely new products, services or business models.

Accenture believes that high-performing companies believe that technological innovation will make the company an industry leader, rather than a mere follower. These companies are able to gain a competitive advantage by being one step ahead of others in adopting and implementing new technologies throughout their business systems.

Take Amazon.com, which was originally an online book seller, but the company is boldly transforming itself from a retailer into a technology company. Behind Amazon's superb web and search capabilities is the power of technology, and by providing that technology to companies that use its site to sell products, Amazon is moving closer to being a "tech company." In addition, Amazon has opened up some basic web services, such as product databases and online shopping carts, to independent programmers. These independent programmers are developing dozens of new apps for use by smaller companies that sell on Amazon or other sites.

The economics of this approach are compelling: some analysts predict that within a few years, more than half of the items sold through Amazon.com will come from other retailers. In this business, Amazon does not spend a cent to process orders or deliver goods, but just sit back and enjoy the easy 15% commission. Amazon's vision for its future is to be the dominant platform in retail -- similar to what Microsoft's Windows was in software, where anyone can buy and sell almost anything.

The most successful companies don't take innovation by chance. Analysts at the market research firm Gartner agree, saying: "Many CEOs and CIOs are committed to establishing a formal mechanism to make the process of introducing and implementing these new technologies smoother." Of course, regardless of With or without careful planning, technology always finds its way in the end—infiltrating the company gradually. Yet companies that take a passive approach—those that have no other choice but to adopt new technologies—are likely to make costly choices that are dictated by the leader’s personality, rather than those related to the company’s overall Tactics that align strategies and goals.

Three Keys to Innovation

How can a company develop a successful innovation program? There is no one-size-fits-all formula for this. To be successful, however, companies must master at least the following three key elements:

1. Form partnerships between laboratories and business units. Those wildly successful new products and services don't simply come into existence: from the R&D lab, to the marketing department, and finally to the eagerly-anticipated consumer. For innovative solutions to be successful, there needs to be an exchange of insights and two-way communication between groups with different perspectives. why?

On the one hand, managers and key employees in business and marketing may adopt a "don't hear anything" attitude -- engrossed in completing sales tasks and other performance goals. As a result, technological advances and the resulting frenzy of competition could catch them off guard. Organizational leaders, managers, and marketers must have a sharper sense of what's on the cutting edge of technology so they can envision the future, anticipate change, and be prepared to use new technologies innovatively.

On the other hand, scientists and engineers often need to check their projects against reality to make sure they are acceptable to the market. Successful products are not always those better technical solutions. These white-coated researchers need to better understand how new products can be turned into market advantages.

Getting these two groups to start and maintain communication is key to two goals: First, to ensure that the R&D program is based on a solid understanding of the company's needs and goals, as well as market realities. Second, ensure that business leaders understand the possibilities presented by emerging technologies and are prepared to support and embrace them.

This exchange of information becomes especially important as an organization grows. Because at this time, chatting in the pantry and other informal exchanges can no longer meet the needs. As they mature, the best organizations create communication models that bridge the technical and business dimensions. They also often bring outside business and tech brains into such communication mechanisms to broaden the horizons of everyone in the organization.

The ideal situation is to bring together such people who are proficient in industry knowledge, have strong technical ability, and understand emerging information technology, so that they can imagine, think, and Make a plan.

2. Choose the right direction of innovation. The best companies are constantly looking at their organization and industry, looking for obstacles or opportunities. What issues, once resolved, will have the greatest impact on the company's bottom line? Which strategic area of the company is most likely to yield a major breakthrough in performance?

Well-performing companies have also been on the lookout for promising emerging technologies. As new technologies become more commercially valuable, companies use formal methods to track them and rate them according to their likely impact on the company's bottom line.

The review of new technologies is also important. Certain areas have greater technical potential and thus deserve the most time and the most serious research. Accenture, for example, sees today's most exciting opportunities as the convergence of technologies that gather information in new forms -- RFID tags, sensors, tiny cameras, microphones, GPS, biometric devices. Once these technologies are combined with wireless devices, the Internet, and enormous computing power, it will be possible to use this data to provide closely related services.

The trucking industry is a good example. Thanks to the use of RFID tags and sensors, both the goods and the means of transportation are intelligent and interactive. The computer, GPS and biometrics in the van verifies the fingerprint and iris (the iris is a disc-shaped vascular membrane that sits between the cornea and the lens of the eye; iris recognition is an important method of biometric identification), and the result is People can track and verify all relevant information -- the truck, the goods being delivered, all the people who come into contact with the truck. By building such a system, it is possible to make each truck run in the most fuel-efficient way, but also to ensure that chemicals and other dangerous goods are not inadvertently mixed or mishandled when transporting them.

This multi-technology fusion has the potential to bring enormous commercial value. Today, however, although some technologies have reached a tipping point, their market applications are almost blank in almost every industry.

3. Choose the wise way to go to market. Once the best innovators have a valuable idea and are ready to bring it to market, they do so in a careful, orderly manner; they always focus on technical feasibility without forgetting business reality.

Researchers put these ideas through rigorous testing to verify the technology's viability -- to determine whether the technology has been tried before, and whether it has flaws, often by setting up pilot projects and making samples. At the same time, the researchers are also in touch with business leaders, keeping them informed of the progress of the test and listening to their concerns and recommendations. This is because a successful innovation should be ahead of its time, but not so far ahead that it is out of touch with reality. To be successful, an idea must pass both technical and real-world tests.

First of all, it must have enough selling points to attract people's desire to buy. These selling points can be breakthroughs in product price or functionality, or even abstractions—such as major improvements in product imagery, all of which make people willing to put up with the temporary inconvenience of change. These advantages must be prominent, obvious, and understandable. It's hard to imagine, for example, that the introduction of a new portable CD player would spark huge consumer enthusiasm, but Apple Computer's iPod player broke this routine—it took the market by storm as soon as it came out. .

At the same time, innovation should not create barriers of its own, but should fit as closely as possible with existing infrastructure, skills, values and work practices. For example, electric cars cannot be sold because they do not fit into the current operating system; on the other hand, hybrid cars can be sold because they can use gasoline -- and much less oil than ordinary cars.

The electronic pen developed by Accenture Technology Labs is one such technology that has passed the double-check. This electronic pen combines the familiar functions of paper and pen with the computer's ability to capture and store data. HBOS Bank has field-tested the application of the electronic pen. On the one hand, the electronic pen enables the salesperson to focus on the customer (rather than the computer screen) when selling; Data is entered into the computer. This time-consuming homework is inevitable if the salesperson is using a regular pen. And to do all of this, all it takes is a minimal investment in equipment and personnel training.

Once the technology has been tested for feasibility, researchers and business managers work together to create a business case that answers a series of difficult questions: Does the technology offer significant new ways to conduct business? Is it building on existing facilities to capture significant new value? Is it within the reach of the company—that is, the technology requires considerable effort from the company to achieve, but is not unattainable? Is the company capable of researching and implementing the technology on its own, or does it need to bring in a partner? How fast will this opportunity develop? Are there schemes designed to induce market acceptance of new products, such as incentives such as "try first, buy later"?

The next step is to make a choice: to continue, or to give up? Or put it aside for now until conditions are more favorable, such as when the technology becomes more mature and reaches a new height or tipping point? In the case of choosing to continue to innovate, those companies that perform well actually have the momentum to continue to grow, because the partnerships in the technology and business areas have already begun to instill a good vision and new vitality throughout the organization.

The specific application of the innovation model

How to apply such a general model? In the case of BP, the company's researchers actively seek out new ideas. They spend a lot of time researching the birthplaces of innovation—both emerging tech companies and big names such as Microsoft. In addition, the company annually invites 50 top business leaders to a two-day event. The focus of the event is on emerging technologies or process innovations that have the potential to have a huge impact. The forums also feature guest speakers from other industries who are using the technology, and also include brainstorming and breakout sessions with world-class experts and academics.

Participating BP employees brought promising ideas back to the company for further development. Throughout the development process, senior managers provided strong support—they encouraged business units to identify and begin pilot projects. Many companies that focus on innovation, even those with huge R&D programs themselves, will go out of their way to seek help from the outside world. This is especially true when these companies are still in the early stages of finding a promising technology, or in the early stages of building a vision based on a working model.

IDEO is a California-based design and development company. A team of designers from the company appeared on a US news show called "Nightline," where they were challenged to rethink and redesign the standard supermarket shopping cart. The designers completed the design in just four days, and the company became famous. The company helps clients imagine innovative possibilities by first looking at their current product or service from the user's point of view. As IDEO puts it: "Innovation starts with the eyes." The next thing to do is brainstorming sessions and iterative rapid sample development.

Officials from The Irish Revenue Commissioners saw a model for knowledge integration at a workshop. This template can be applied to their work to help them collect taxes fairly and efficiently. With the help of this template, users can investigate multiple databases and conduct inquiries in conjunction with the Internet at the same time, and all the investigation results are finally integrated on a complete web page. It can also reveal unexpected connections between information. Auditors' investigations will be faster and better, and some special cases will be better understood. Following the success of the pilot project, the programme is being rolled out.

Accenture calls its vision of the future "Reality Online." This vision builds on the company's track record of a range of technologies over the years. These technologies can benefit organizations by improving their ability to acquire and more effectively utilize new types of information.

Sound Technology Investment Decisions

High-performing companies invest in technology innovation with both long-term success and short-term cost efficiencies in mind. And, since the innovation process is always closely linked to business needs, the investment is also strongly supported by management.

It's hard to know exactly how much the best companies are investing in technological innovation. The research provides a range of data that depends largely on the company's definition of innovation and technology. However, according to Accenture, the companies that perform best in innovation follow the general principle of reinvesting around 40% of their discretionary IT dollars: on the one hand to upgrade existing technology, on the other hand for building new systems and technical capabilities. These best-in-class companies are also very creative when it comes to co-investing with partners and suppliers, believing that doing so will benefit all parties involved.

The number of investments is important, but more important is the perspective of the company's investments. When managing some aspects of IT investment, companies focus on cost control; for managing IT innovation, the focus is on creating real business value. Companies recognize that investing in technological innovation is not for technological innovation itself, but for business innovation.

These companies also view innovation from the perspective of the portfolios that venture capital firms take. They never place high expectations on any technical idea or plan, knowing that they are managing not one, but a large number of ideas. The process of developing ideas is like a funnel, with a flood of new ideas pouring in, but as research progresses, they are eliminated layer by layer, leaving fewer and fewer ideas left.

The best leaders realize that even a few ideas that pay off, and even a single idea that leads to a business breakthrough, are all worth the investment. Some leaders even take a portfolio approach, setting high goals when predicting ROI. Such a goal cannot be achieved by any idea alone in the short term. The reason is that with any idea, there are only two possible outcomes: either it succeeds, or it loses its money. However, in terms of the overall ROI of all ideas, this goal is feasible and serves as a benchmark.

These companies make steady investments year after year. In fact, maintaining a stable investment in technological innovation is much more important than the actual investment amount, and stable investment is also more constructive than the ups and downs of investment.

Stable financial support is also critical in attracting and retaining the best researchers, who would otherwise seek higher jobs and more stable positions. Steady investment ensures that ideas continue to flow and develop rapidly once they have commercial value.

This original article first appeared in the May 2004 special issue of Accenture's Outlook magazine: Breaking Way. Accenture registered copyright 2004. Translated by Hu Jiong.