WITH A MORE EFFICIENT APPROACH TO INNOVATION
By Claudia Caldera, Accenture Digital Video
Digital is disrupting the video, advertising and content industry. It’s challenging established industry value chains, rewriting rules of competition and altering traditional success factors.
The wider industry continues to grow, but it’s the digital-born disrupters who are expanding. Traditional businesses … amongst them giant brands and household names … are struggling to respond.
With younger audiences shifting away from linear channels, there’s a justifiable fear that traditional businesses will shrink and disappear along with their aging audiences. They recognize the need for change, but are unable to move fast enough to innovate and disrupt on the back of new technologies.
WITH LIMITED FUNDS AND CONFLICTING AGENDAS, COMPANIES CAN’T DECIDE WHETHER TO INVEST IN CORE BUSINESSES OR NEW ONES.
THEY’RE MANAGING INNOVATION WITH METRICS BETTER SUITED TO OLD-STYLE INVESTMENTS, THUS HAVE A MURKY VIEW OF PERFORMANCE.
UNFIT FOR INNOVATION
TRADITIONAL OPERATING MODELS OFTEN FRONT-LOAD RISK, APPLY WEAK GOVERNANCE AND CAN BE DISCONNECTED FROM BUSINESS OUTCOMES; ALL THREATS TO INNOVATION.
SYSTEMS BUILT FOR FUNCTIONAL OR OPERATIONAL PURPOSES DON’T EASILY … OR ECONOMICALLY …
If traditional media and entertainment companies are to harness disruption for growth, their innovation and delivery models must be more efficient, and outcome based. For established Digital Video players, new capabilities must be viewed as assets. Deploy them to transform the core business, fuel growth and support new digital services.
HERE ARE THE FOUR MOST CRITICAL STEPS
TO GET RIGHT.
Where capital is constrained, it’s about the choices you make to build and fund your capabilities, to both enable your core business and put in place the foundations for the new. From our experience, the business case is usually easier to make for the core business, with capabilities being extended to the newer parts later.
A clear definition of success is essential to controlling and directing change. It should be tied to the value drivers with the strongest influence on strategy execution and value creation. This clarity of purpose guides investment decisions, coupling innovation to business outcomes, via agreed KPIs. A strict feedback loop between technology and business is critical for success. The foundation to enable the positive feedback loop is the ability to collect data and enforce control points on the overall process.
Once established, this model drives organizational purpose across the entire business architecture: Customer Engagement, Business Model, Operating Model, Network and Tech Stack all support a clear and measurable definition of success.
The organizational appetite for risk associated with long term programs that require large upfront investment is hugely diminished. The risk associated with innovation is made worse where new sources of competition can make a product or feature obsolete overnight.
To innovate efficiently, it’s important to ensure that investments that make it into development have the highest chance of delivering a return. The goal here is to establish a delivery model and associated metrics that can enable parallelism, velocity and will reduce the costs of poor quality.
Delivery metrics do a good job of providing both a retrospective and forecast of cost (burn). To drive efficient innovation, we introduce the concept of a Return (earn), where the value of features being developed is measured in terms of defined KPIs. This supports product prioritization and alignment with business outcomes.
From here we can calculate a "Velocity of Value." It’s a measure of innovation’s worth—a key metric, one that is progressive, business-aligned, and addresses the inherent complexities of a multi-speed, multi-vendor innovation pipeline.
Innovation works most efficiently in rapid, continuous increments, reducing upfront risk and continuously validating progress. As a process that mitigates risk, and introduces customer-centric structured innovation, Design Thinking is integral to a process that wants to move at pace.
Removing the physical and organizational barriers between business and technology groups allowing them to focus on validating ideas for fast-paced change, with a cross-functional team considering how each new capability/asset can be applied across the business.
Embedded in this new approach is rapid proof of concept creation, rapid prototyping led by data driven insights and quick market testing of minimal viable products. Failure is OK … valuable, in fact … as long as you fail fast, stay focused and learn.
The test and learn process is best accomplished through small, cross-functional, agile teams embedded in the business unit using data to validate objectives at speed.
A strategy of investing in assets and capabilities which improve existing service delivery, while also establishing the foundations of new operating models, is a no regrets move. It allows for the most efficient allocation of investment. This serves to strengthen the core business while, at the same time, preparing for the future.
If you can isolate current operational and functional applications—OSS, BSS, CRM—with an explicit decoupling layer, this enables innovation outside of your existing application estate. This new technology stack will support an asset-focused operating model, enabling nimble teams, supporting fast innovation with a flexible architecture, and promoting evidence-based decision making.
A large European broadcaster engaged Accenture to apply a rapid prototyping, test and learn approach to its business to improve the company's propositions and customer experience.
Projects are prioritized based on the value, and business impact. Each hypothesis adopts an "earn vs. burn" approach, where each investment is attributed to decisions that drive an important business KPI.
As a rule, a multi-disciplinary team works together in short sprints, proposing and refining hypotheses, proving them with insight and tracking the value delivered. Each hypothesis takes 4-6 weeks, leveraging agile operating methodologies and cloud-based technologies to leapfrog legacy systems.
The value of this approach has been proven, it now being used as a standard practice to address hard to solve problems, including fixing a business-critical customer experience issue with its next generation device. Here the team undertook a comprehensive root-cause analysis—with expert inputs from firmware engineers, customer service, data scientists and BI experts—to fix the underlying software issues ultimately reducing service visits for the device by more than 60 percent.