Tomorrow Forrester will host our Geneva-based clients for a breakfast meeting and discussion on “Powering Innovation Strategies with Insights.” My colleague, Luca Paderni, will kick off the morning with a presentation on digital disruption in the age of the customer, specifically looking at how to take a pragmatic approach to innovation with the “adjacent possible.” Then I will lead a discussion on how to build an action-oriented approach to data and analytics, exploring examples of companies that have successfully turned their data into new business opportunities – into data-derived innovation.
Thanks to Forrester’s Business Technographics, we know that business and technology leaders prioritize initiatives that secure their position in the age of the customer – to improve customer experience, address rising customer expectations, and improve their products and services (kind of all the same thing, or very closely related). It’s all about the customer. But when we ask about these priorities, the one that comes next – right after the customer-focused initiatives – is innovation: “improving our ability to innovate.” They know that the disruptions they face in the age of the customer won’t be addressed with business as usual (BAU as one of my clients referred to it yesterday; I learned a new TLA). Innovation has been elevated to an initiative, which means that executives are focused on it and likely someone is in-charge of it – we’ll come back to that one.
So what does a good analyst do but ask how they plan to innovate. And, the answer for the majority of respondents: “invest in technology to drive innovation.” Yes, they also expect to collaborate with partners perhaps developing a formal business network, to assign employees to innovation, establish new processes, and even launch innovation contests to generate new ideas. But it is technology that takes top billing. Great, but which technologies?
Fortunately we also ask about technology priorities in our Business Technographics survey. The #1 technology priority for business and technology decision-makers is to improve the use of data and analytics technology. Not necessarily surprising at first glance as we hear so much about data these days. Big data this and big data that. Amazon just launched a web-based data and analytics service. Apple just bought two artificial intelligence companies. Everyone wants in the data and analytics game. But let’s take a step back and dissect the priority: Improve our use of data and analytics technologies.
In fact, with all the hype around data technologies many people have been focused on the wrong problem. No one will ever get all data into a single data warehouse, or data lake. As a data scientist from Tesla Motors told us, “All the data we need will never come from one place. There is too much of it.” There’s too much data, and not enough action. The scramble to do something with all the data, led to the hiring of data scientists – and to Harvard Business Review declaring data scientist the sexiest job of the 21st century. But as the Chief Data Scientist at PNC bank assessed his own trade: “Data scientists are great at finding insights, but it’s hard to keep them focused of the outcomes our business needs.” The bottom line is that it’s not about the technology, nor about the data nor even the insights. It’s a way of doing business – it’s about turning those data-derived insights into business-oriented actions.
Let’s take a few examples:
We’re all familiar with how Amazon makes suggestions of what you might like or shows you what others searching for the same product have purchased. But Stitch Fix is going one more step. They are basing their business on what you like, and how well they can predict it. They offer a shopping assistance service that sends you clothes based on your profile, your stated preferences, and what it learns about you over time based on the items you’ve kept. The clothes just show up at your door, you try them on, pick what you want to keep and send back the rest. It’s constant, controlled experimentation. It’s gone from a recommendation engine to a whole new way of doing business.
Another great example – of a new way of doing business and of the “adjacent possible” – is Tesla. While others are researching and testing autonomous vehicles, Tesla actually has something out on the market that is moving in that direction. They are incrementally adding features to their cars that can take data from the environment and adjust driving. They’ve had over-the-air provisioning for years now but just recently Tesla uploaded features like Lane Keep Assist and Speed Assist. Lane Keep Assist uses the front-facing camera and radar sensors to keep your car in the center of the lane, and can follow the curves of the road without drifting. With Speed Assist a camera positioned near the rear-view mirror reads speed limit signs and adjusts speeds. Both are considered safety features and will be standard features. Other data-derived features will be available as technology upgrades – a product improvement to meet customer expectations and improve the customer experience using new data and analytics technology. That’s pretty much a poster child for innovation in the age of the customer.
This is what Forrester calls systems of insight – the business discipline and technology to harness insights and consistently turn data into action. These systems of insights aggregate information from other “systems.” Take the case of Stitch Fix, basic transaction data such as what you’ve bought and returned and your profile information is stored in the systems of record. Systems of engagement allow you to manage your preferences, change sizes, make specific requests, or send a note to your stylist. The business processes managing your scheduled shipments and the real-time inventory as items are shipped or returned are part of the system of automation. And, finally, all of that comes together to create your clothing recommendations and eventually the shipments.
I never got around to talking about the leadership assigned to drive innovation. I’m thinking of the CDO… but that will be a topic for another blog. I’m out of space and steam here.
We are always looking for great examples of companies turning their data into action, and into innovative new business opportunities. Would love to hear from you.