Innovation: Check your comfort zone at the door

There was a genuine buzz in the air last week in San Francisco at EY’s annual innovation retreat, where we convened 120 of the chief innovation and technology leaders from many of the top companies out there today. With the topic of disruption and digital convergence high on the agenda, it was only right that we were taken out of our comfort zones.

When some of the biggest names in music convened to sing “We are the World” over thirty years ago, the motto of the evening was “Check your ego at the door.” I think there’s a similar message for businesses today: Check your comfort zones at the door.

The fact is the world is changing around us. Changing fast. And whether you embrace it, watch from the sidelines or are in denial, disruption is moving – and will move – relentlessly forward.

Did you know?

3D printed heart valves and blood vessels are available now.
Mining companies in remote locations are using 3D printers to make spare parts.
IoT has reduced cycle times to replace parts on oil & gas rigs from 9 days to just 25 hours.

Asking better questions

Industries are being transformed before us and innovation and technology leaders are all asking important questions. For me, two of the key ones right now are:

1. What percentage of your revenues in the next three years will come from services and products that don’t exist today? As the cost and speed of disruptive technologies improves, we are seeing exciting developments. The bottom line is that there are no more non-technology companies. Every company is now “tech”. And yet opportunities and challenges differ across traditional and emerging sectors. The pace of change is rippling like dominoes across industries as convergence accelerates. All businesses need to make innovation work, because the source of future revenues is far from certain. Better to disrupt yourself than be disrupted by competitors or disruptors who can rewrite the economics of doing business – or fundamentally break the ‘old’ value chain in your sector.
2. Can true disruption come from established players? The answer is most decidedly yes. It may be harder for big companies to innovate. They may face cultural, shareholder and regulatory constraints that don’t hamper startups. However, venture capitalist Michael Moritz was keen to stress that any company can innovate and be a disruptor. What’s needed is strong leadership and commitment. He also emphasized the difference between value and worth – which varies by industry – so sector knowledge is crucial. The biggest mistake a business can make about disruption is not a lack of knowledge. It’s a lack of curiosity.

We all read about disruption, we see industries and companies being impacted by it but we don’t often think about what does it mean to me? We know all the stories about companies that entered the market with no assets disrupting some of the biggest, multinational businesses out there. For me some of the trends that really demonstrate the pace and impact of disruption include:

Evolution of blockchain into digital asset tracker

What started out as the technology underpinning bitcoin has evolved into a system for conducting and verifying digital transactions and assets in its own right.

Blockchain allows multiple parties to interact and trust data even if they don’t trust the other parties they’re interacting with. A better term might be distributed infrastructure (DI) – and the implications are vast.

DI could eliminate the middleman. If banks could transfer value directly to each other rather than via clearing houses and exchanges, infrastructure costs could be reduced by US$15-20b a year by 2022. The World Economic Forum estimates that 10% of global GDP will be stored on blockchain technology by 2027!

The potential of connected healthcare

Wearable devices that remind you to take your medicine, remote health monitoring, ingestible sensors, cancer treatment based on your DNA – the possibilities are endless.

In April, surgeon Shafi Ahmed performed a surgery that was broadcast to the viewers around the world. Ahmed hopes to use virtual reality technology in the future to share close-up views of surgeries that can be used to help train doctors working in remote locations. It’s encouraging to see that technology has the potential to democratize access and create more just societies.

Platforms that bring together the Internet of things, key data and players

Over 50bn smart devices will be connected to the internet by 2020, nearly seven times the world population. Connected devices and sensors are the enablers, but the new platforms that bring together key data and players in an ecosystem are of strategic importance.

Agriculture, for example, is in the middle of a rapid transformation. Technology advances, drones and sensors are exponentially increasing the amount and quality of data available – opening the way for revolutionary precision agriculture.

The biggest mistake a business can make about disruption is not a lack of knowledge. It’s a lack of curiosity.

The biggest danger is inaction

Businesses need to experiment. To fail. To learn from those failures. The biggest danger is inaction.

There are a multitude of innovation models. Whether you set up an ‘incubator’ unit to act as a standalone, an advisory board to bring in new ideas, invest in other companies or work on embedding innovation, diversity and reflection more deeply into your culture through training programs, the most important message is to act. Take the plunge.

What I hear from people – both colleagues at EY and executives on the sharp end – is a combination of excitement and fear. Fear is okay, but don’t let it paralyze you. Follow your curiosity. Experiment. (You know the rest.)

Harnessing the power of data and customers

As my colleague Janet Balis wrote in her blog about the conference: “By integrating better insights, and then separating “noise from the signals,” we can gain deeper intelligence around what we need to do to change the impact, not simply admire the problem after the fact.”

A time of disruption and reinvention

Conversations I had at the Innovation Realized retreat brought to mind an article I read about Anne Mulcahy, the former Chair and CEO of Xerox. "Companies disappear because they can't reinvent themselves," she said. In light of all the disruption facing businesses today, there has never been a greater need for reinvention and innovation.

She also said, "Do not defend yourself against the inevitable." Wise words. While the temptation may be to sit this one out and see what happens, the reality is you’ll get left further and further behind.

Being a leader takes courage. And with this scale of disruption, survival requires courage.

Businesses need to square up to realities of disruption – and join the fray. Learn. Experiment. Fail. Repeat.