Wrapping up our annual 24 hour hackathon that we call Innovation Day. We had 8 teams competing across 4 countries on the categories of overall winner, biggest benefit to the customer, most innovative, and audience favorite. It blows me away every year what the teams are able to produce in such a short period of time – and then have the guts to do live demos to the entire company; really cool stuff from creative data visualization, to artificial intelligence, and business process automation. Incredible honor to be working with such talent!

Album: https://www.flickr.com/photos/teletracnavman/albums/72157711240997498 

Background: Recently I completed the CIO Pocket MBA program at Boston University. This was a fantastic experience that I highly recommend to any leader in the I.T space. The insightful and inspiring professors are reputable thought leaders who have spent years researching various aspects of technology, management, business, and financials. Additionally learning from industry peers was equally valuable. During my time there I feverishly took a lot of notes in order to capture and ultimately share the knowledge. Keep in mind – these are raw notes that only scratch the surface from multi-hour/multi-day long sessions. My intent is not to replicate the knowledge as it was presented, but more to quickly disseminate key points that stood out to me. To fully benefit I highly recommend you sign up for the next round of this program (http://bit.ly/1juJEIP).

[su_pullquote]The greatest danger as a leader is believing the past is a prologue to the future. Believing you’ve done it before, and rest on your laurels that you can do it again.[/su_pullquote]

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[box] Background: Recently I completed the CIO Pocket MBA program at Boston University. This was a fantastic experience that I highly recommend to any leader in the I.T space. The insightful and inspiring professors are reputable thought leaders who have spent years researching various aspects of technology, management, business, and financials. Additionally learning from industry peers was equally valuable. During my time there I feverishly took a lot of notes in order to capture and ultimately share the knowledge. Keep in mind – these are raw notes that only scratch the surface from multi-hour/multi-day long sessions. My intent is not to replicate the knowledge as it was presented, but more to quickly disseminate key points that stood out to me. To fully benefit I highly recommend you sign up for the next round of this program (http://bit.ly/1juJEIP).[/box]

Topic: Managing Disruption & Change

I.T sits in the middle as a cost center, profit center, growth center, and investment center. How you spend your time will be between the implementation dimensions (cost & profit) vs. innovation (investment and growth).

Back in the old days, I.T was considered a function of X. X being the CFO, COO, or CMO.

Now – every business is a digital business.

It doesn’t matter if you’re selling donuts or making some new whizz bang social app. But to remain competitive you have to constantly be comparing your competitive advantage (what are you strong at, what value add you have to you offer) vs. the competition – particularly disruptors. And thus all CxO’s have a stake in it.

More importantly, what is your core competency today isn’t necessarily what it needs to be tomorrow.

Companies that focus on viewing IT as cost centers (reducing I.T costs through automation, cloud, etc…) and profit centers (maximizing existing core offerings) create a Core Competency gap between what they’re doing now vs what they should be preparing for (aka innovating) in the future.

Classic poster children of companies that created this gap: Blockbuster, Blackberry, Nokia, Palm, etc… All companies that focused only on core competencies.

Where does value come from?

What you think is now obvious may not have been so obvious back then. When Netscape IPO’d with a billion dollar market cap with an open source/free product, it caused a total rethinking of: where does value come from?

Who would have thought Google with a simple search form page would become $250B mkt cap company?

Disruption is now easier than ever

It’s now easier than ever for a company to come in and completely disrupt the market place.

E.g. the TV industry works by vetting a single pilot on TV and measures the initial response from there. House of Cards wanted an entire season to develop the characters, etc… and NetFlix believed in it, and bet big…. and won. They put the entire first season available in one go (vs. what traditionally networks have done).

People could watch it all in one day, space it apart, etc… their philosophy: people want to watch when they want to watch it, and if at a reasonable price, will pay for it.

Kevin Spacey talking about how House of Cards disrupted the market place and how they used data to make an intelligent decision: https://www.youtube.com/watch?v=P0ukYf_xvgc

Give people what they want, when they want it, in the form that they want it in, at a reasonable price and they’ll most likely pay for it rather than steal it. – Kevin Spacey

It’s all about data

It wasn’t a blind bet for Netflix. They have a lot of data to know what their customers like, what their customers behaviors are, what devices they watch on, when they watch, etc… TV Networks have nowhere near this kind of telemetry.

So it’s all about data. Facebook isn’t about users, it’s about the volume of data created by those users and thus monetizing that data. In the day 1,000 person study would be considered a good sample count, and 10K would be landmark. Facebook did a divorce study based on tens of millions of users. They’re currently developing a network of drones to supply free internet, however they get to monitor everything that you do (aka more data).

The explosion of data

Cars are becoming IP enabled (Ford Sync, GM OnStar, Audi Apple), every GE component will send real time data, proximity marketing sensors that know where you are in a store, Google Glass, etc… is all leading to this explosion of big data.

Be a disruptor or defend against disruptive forces

The ability to be a disruptor, or defend against disruptive forces will rely on how well you can leverage and connect data.

When Google Glass first was announced, many people thought it was just a novelty idea.

JPL: When the technicians are working on an jet engine the spaces can be tight so to look at even an iPad is hard. But using Google Glass they can see the schematics overlaid with what they’re looking at.
KFC: Prototyping putting the food prep instructions on Google Glass so that training is easier and to reduce error.

The difficulty lies not so much in developing new ideas as in escaping from old ones.

In Alessandro Di Fiore’s HBR article, “How to Get Past Your Customers’ lies“, he writes about the importance of doing your own market exploration instead of using market research analysts. Or in his own words:

These people have to be smart about business, strategy, and people because they’ve got to be able to spot the really significant behaviors and issues. And the best people to do that are going to be the folks in the top management team… who have the strategic understanding needed to recognize the opportunity and the authority to act quickly on it…

…can’t rely on market researchers and consultants to find the strategic insight for you. Real market research should be a core part of any top executive’s job and they should be going out doing observations and explorative probes of customers…

Steve Jobs has also been quoted as saying that Apple does not conduct market research. Specifically it came from a Fortune article in which he says:

“We do no market research. We don’t hire consultants. The only consultants I’ve ever hired in my 10 years is one firm to analyze Gateway’s retail strategy so I would not make some of the same mistakes they made [when launching Apple’s retail stores]. But we never hire consultants, per se. We just want to make great products.”

However when it comes to market research, it’s also about recognizing your organizations strengths and abilities, and leveraging what you’re good at.

Apple creates markets

For example Apple is strong at creating markets that don’t yet exist, which is often extremely risky and capital intensive, but has a huge pay off if successful. It automatically positions you as a dominating leader in that space and leaves everyone else trying to catch up and copy.

Samsung is the opposite

Try naming one innovative product from Samsung. Not to say they’re not innovators, they’re clearly not known for it.

However they’re the second largest conglomerate by revenue. They wait for others to prove a market exists, and use their strength in being able to copy & refine the idea to produce a high quality product at a low price point causing their competitors to take huge losses when trying to compete with them . Sony-Ericsson took a $317M loss last quarter, Motorola Mobility lost $80M, HTC’s sales have dropped by 41% since Q3 2011. Yet, Samsung’s mobile division sales growth was 300% last year, and aiming to double smartphone sales this year. Yet… they all sell basically the same thing.

Market research is perspective

Market research isn’t truth, it’s just perspective, a piece of information that you can use if you decide to. In Apple’s case, the market research wouldn’t be of much value to them as there’s no market to research – they make markets.

But for Samsung, because of their specific strengths, it’d give them some perspective on what price would people be willing to pay for a device that was similar to the iPhone but didn’t limit them to a particular carrier.

So I agree with Alessandro, in that you have to put on your customers’ shoes and see from your own eyes the opportunities that present themselves. But at the same time I wouldn’t completely discount the perspective that market research can bring, you just need to be cognizant to not let market research potentially blind you from opportunities.