Subscribe To Newsletter Other Insights A Pathway to Addressing the Innovation Challenge Over the past 20 years, enterprises in most major economies have grown their markets and revenues through innovation, using increasingly available (and increasingly low-cost) technologies to add digitally enabled services to their product lines. However, most businesses (with a few digital-native exceptions) find it hard to innovate in this way; they were organized to produce and sell products and services with high levels of operational excellence. And in an execution-focused organization, especially one that’s functioning well, and in which processes have been optimized, it can be difficult to change and innovate at a speed and scale that keeps pace with emerging technologies and an ever-changing business environment. That failure carries a cost. The 2018 Global Innovation 1000 study found that high-leverage innovators outperform competitors over a sustained period on most performance metrics. Clearly, scaling and sustaining technology-enabled innovation has become a business imperative. Today, competition can arise suddenly, and from unexpected quarters. These new competitors, largely software-driven operations, are disrupting business after business. Airbnb turned the hospitality industry topsy-turvy; Uber transformed transportation. And both did so within a relatively small time frame — essentially by becoming digital platforms within their sectors. It is now clear that every business today is first and foremost a technology/software business. Consequently, businesses that fail to develop future-ready, digitally enabled products, services, platforms and customer experiences expose themselves to a cascade of business risks. But many organizations do not understand innovation. Two common misconceptions are as follows: It’s not about the money Simply having an innovation team, and putting money into the effort, is no guarantee of success. There is no correlation between investment in innovation and “overall financial performance,” according to the Global Innovation study. What matters is “how companies use that money … to create products and services that connect with their customers.” It’s not about one bright idea. As Peter Drucker once stated, “An innovation program based on the hopes of producing some bright ideas is the riskiest.” Less than one in 100 such ideas ever cover the costs of their development. A related mistake is not recognizing the importance of scale. Even the top quartile of innovation leaders have difficulty innovating at scale, with only 39% of the leaders saying they do so well, according to McKinsey & Company. Innovation must be a systematic discipline with a repeatable process that can be scaled. This is where Infosys’ Living Labs come in. A pathway to help clients address the innovation challenge Infosys’ Living Labs — a systematic and scalable “Innovation as a Service” offering — works with businesses to accelerate and de-risk the innovation process, strategically and sustainably, by bringing together emerging technologies and design capabilities and focusing on business context. Living Labs creates real and virtual spaces where clients can ideate using design thinking based on emerging technologies and experiments (iterating innovations rapidly, failing fast and learning from those failures via input from end users). Living Labs engagements create real experiences with technology-led innovation in situ and not merely on paper. This helps clients reduce technology and business uncertainty and, perhaps most importantly, plant the seed for a new organizational culture of innovation. Three businesses getting on the innovation pathway Accelerating innovation based on business needs The Living Labs process begins by understanding the goals of the client’s business strategy and transformation plan for the next one to three years. This is followed by a framing exercise that deconstructs the high-level strategy, thereby identifying actionable areas — a critical stage often missed by innovation programs. Each of these areas then form the focus for the ideation and incubation activities. The next step is to incubate differentiating ideas for these problems or opportunities. In this process, we help our clients focus not just on the urgent (its immediate tactical needs) but also on the important (relevance for the future-readiness). For instance, a national postal carrier in Europe wanted to reimagine its postal warehouse for the future in a highly competitive European market. We collaborated with the company to find technologies to create a solution that would greatly reduce human error in the manual sorting process, helping improve the on-time delivery of hundreds of packages every day. This engagement quickly accelerated to a pilot — Sorting Operator Guidance — that uses context-based visual information through low-cost digital projectors to guide warehouse operators in placing parcels more accurately during the final stages of sorting. In this way, a nebulous idea (reimagining the warehouse of the future) became a pilot program in a Living Lab by identifying reduction of human error as a key focus area and then employing the emerging technologies best suited to the job and iterating solutions rapidly in response to a pressing business challenge and need. The Living Labs concept is to help clients not only reimagine their role in the business, but also to reimagine the business itself. Incubating ideas Today, sports fans are hungry for experiences beyond the game. In September 2018, Infosys was onboarded as the digital innovation partner for the Australian Open (one of the four major championships in tennis). Right at the beginning, both organizations aligned on the fact that tennis as a sport, with millions of data points, was in an ideal position to leverage data science and digital to enrich the fan experience. This was in line with Australian Open’s strategic vision to transform from a sports event into an all-encompassing entertainment event. At Living Labs, we realized that live viewing solutions for tennis did not have any visualization modalities that could allow fans to feel the pulse of the game and be immersed in the action. To identify the most desirable, feasible and differentiating solutions for the 2019 tournament, Tennis Australia and Infosys worked with Living Labs to develop solutions that leveraged virtual reality (VR) technology. This encompassed various solutions: a VR gaming platform that would allow fans to “step into” a virtual Rod Laver Arena, a live broadcast platform with 360-degree game views that would give fans an immersive view of the game as it’s being played, and to visit AO’s official merchandise store, creating a unique shopping experience in VR. Creating an innovation ecosystem and culture This year, a Netherland based energy distribution company, invited Infosys to demonstrate the potential of emerging technologies such as VR, Personalized Smart Video (PSV), AR, gamification, digital assistants (such as chatbots) and others to help its customers become more aware of their carbon footprint and allow them reduce it. These technologies could provide customers with personalized recommendations based on their energy consumption patterns. The energy distribution company chose to pursue PSV — making its customers a more active part of its stakeholder ecosystem — and is now expanding the initiative by combining it with a marketing campaign emphasizing the company’s role as a provider of sustainable energy. In this way, a culture of innovation is growing inside the company even as its identity is reshaped as a technology company as well as an energy provider. Now, the energy company is working with Infosys to create an innovative program for boiler maintenance that will be supported by AR, VR and mixed reality technologies. The culture in the company now welcomes innovation. Measuring innovation Peter Drucker once said that you can’t manage what you don’t measure. Companies attempting not just to innovate sustainably but also to do so at scale must measure the number of ideas they generate, their effectiveness and their impact. By themselves, ideas don’t affect businesses. Firms must ask themselves whether those ideas are turning into prototypes and pilots, how fast that is happening and whether the ideas are being scaled? Are they having an impact on customers and stakeholders? And, critically, are they providing value as determined by the total cost of innovation versus the business benefits expected and retrieved? No one should be investing in innovation merely to boast that they are innovative. Living Labs employs multidimensional metrics to assess the success of innovation. This is critical for a systematic, repeatable discipline, not one dependent on the hope of stumbling across a bright idea. Innovation: The hurdles and barriers The Living Labs process helps organizations overcome barriers to innovation. Pressing business needs often make it difficult to take the long view. Time and again, the urgent takes precedence over the important when defining an organization’s priorities. These urgent challenges demand resources that can starve innovation initiatives, especially when they are ad hoc. Developing a process for validating new ideas quickly requires innovation experience and maturity, which many organizations lack. In addition, organizations often have a narrow understanding of what innovation means, limiting it to technology. This prevents them from grasping the holistic business potential of new ideas. Failing to learn from others is a common innovation failing. Innovation patterns are portable across industries. Therefore, organizations should be able to look beyond business-and-sector-specific use cases to identify adoptable strategies. This requires both imagination and curiosity, both too often in short supply, especially in execution-focused enterprises. The unpredictable nature of competitive threats is a new feature of the landscape, making it imperative that businesses benchmark themselves not only against their competition but also against businesses from other domains that one day might become competition. Apple disrupted the music industry even though no one from that industry saw Apple as a competitor. For most companies, this is an unfamiliar concept. Finding the right emerging technologies and the required skills to use them requires time and resources — both often in short supply. Even rarer is the ability to see through the hype to find the technologies that will truly help companies achieve their objectives. Meanwhile, employees skilled in emerging technologies are hard to find and the competition for them is intense. Building a pipeline of ideas that can sustain the innovation agenda in an organization is not an easy task. Organizations need to implement a sustainable innovation program that encourages innovative thinking, facilitates the incubation of fresh ideas and scales the ideas on a continuous basis. Establishing such a program requires experience and a holistic understanding of the technology-led innovation process. Disconnects between innovation units and business sponsors can lead to orphaned projects that are not integrated into the business planning process. Aligning technology-led innovation programs with business units is a critical success factor for any successful innovation program. The innovation future Innovation is not a one-time investment. It must become part of the organization’s culture. The most successful and disruptive businesses today have realized this. Through Living Labs, Infosys offers innovation as a service to its clients. This service consists of an end-to-end innovation partnership for creating, capturing, evaluating, incubating and scaling ideas. This service helps clients create their own innovation cultures, leveraging the new technologies that are changing our world.