How will your organization spark creativity and growth in 2020?
Innovation is the holy grail of business. Yet, there’s more than one type of innovation. A company can innovate by changing its business model, by developing a new product, and by transforming the customer experience. Innovation impacts every part of the business lifecycle from sales through support. There’s even potential for innovation in the process of shutting down a product, service, or business unit. The possibilities are endless and it’s a topic that consumes the executive suite.
Over the past decade, many larger companies were initially caught off guard and lost business to startups as they evolved to digitally-enabled companies. Startups focus on fulfilling unmet needs, but they don’t hold a lock on innovation. For many years as an industry analyst, I’ve watched large companies create a portfolio approach to product and business model evolution that includes homegrown innovation, mergers and acquisition and corporate venture capital arms. Around the globe, we also see the rise of technology vendor-sponsored innovation contests. These contests frequently offer prize money to the winners. More importantly, these competitions expose startups to a potential partner or acquirer. Recently, I had the opportunity to participate as a judge in one such innovation contest held by NTT DATA in Boston.
In case you’re not familiar with them, NTT DATA is one of the largest IT companies in the world, with over 100 billion dollars in revenue. While based in Japan, it operates in 53 countries and 214 cities across the globe. Investment in innovation isn’t new to NTT DATA. It spent $3.5 billion on research and development projects last year. Yet, that’s only one part of the company’s innovation strategy.
Last year, NTT DATA ran a global 20-city innovation contest. And in 2020, NTT DATA will expand the competition to more cities around to understand the needs and strengths of startups worldwide. The company saw a business opportunity to build partnerships with the best and brightest minds in the academic and startup community. It’s no surprise that the event was held at Massachusetts Institute for Technology (MIT). NTT DATA and MIT partner on lab for robotics and other areas.
NTT DATA is one of the world’s largest system integrators. Executives from NTT DATA group companies and their clients participate as contest judges in regional contests to help startups maximize their business opportunities. The goal is to help a startup accelerate time to market, integrate with NTT DATA services to broaden the offering and leverage NTT DATA’s channel to reach a broader audience. NTT DATA has already successfully supported the scaling of many startups, with what it calls the triple win relationship.
Of course, the selection criteria to score candidates vary across different companies innovation contests. NTT DATA wants to use technology to enable its clients, to grow its business but also to solve the societal challenges. Increasingly, I’ve seen a movement by large organizations to support “Tech for Good”. For example, Dell worked with startup Ocean Plastics to use recycled plastics in packaging and BaYou with Love to reuse metal from old equipment to create jewelry. We judged the candidates on five criteria that included the overall business plan, synergy with the business, size of the market opportunity, passion, and alignment to United Nations Sustainable Development Goals (SDGs).
There were standout innovations across all of the categories. For example, Z imaging is working on a product that would allow remote surgery. Tulip Interfaces offers an app platform that fills the gap between rigid back-end manufacturing IT systems and the employee’s need for information on the shop floor. Meanwhile, SilverThread Inc. offered a solution that helps companies understand and improve how software is coded and updated.
Key takeaways for startups and larger companies
As noted earlier, innovation is an essential yet lofty pursuit, wrought with opportunity and peril. Even defining the term innovation sparks wild debate. After attending the event, I walked away with the following insights:
- Many startups fail to articulate their business model. While it’s essential to articulate the merits of a technical solution, it’s equally important to describe how much someone is willing to pay you. Yet, a startup’s enthusiasm to explain the technology often leaves minimal time to discuss the viability of the business model. Over many years researching technology trends, I’ve discovered that a startup may have a technology that solves a problem, but that doesn’t guarantee success. Some technical challenges aren’t painful enough for a company to introduce a new vendor into its IT plan. Additionally, the original business model may need significant modification to gain market traction. Smaller vendors and startups should define a portfolio of what-if scenarios and business models that showcase how their company can pivot to meet changing market demands.
- Large companies should look for innovation outside of their primary geographic markets. While Thomas Friedman’s “The World is Flat” concept speaks to broader similarity across the globe, there are still significant differences in technology needs and adoption around the world. Additionally, a globally diverse innovation strategy will find different ways to solve problems. NTT DATA runs its competition globally to address regional needs and spread best-in-class innovation to units around the world.
- Innovation isn’t necessarily a single company pursuit. One key takeaway from the event was that combining technology from two companies should result in an exponentially better product. In many cases, large vendors acquire smaller vendors to gain access to their innovation or talent. Innovation can also mean partnership opportunities to combine the best of two companies into a broader offering.
Innovation contests expose large companies to new ideas and new talent. Contests can be inexpensive to run and often yield fabulous return on investment. Every large company should consider adding innovation contests and hackathons to its growth planning activities in 202o.