hitech whitepaper innovation 06 2011

8/4/2019 HiTech Whitepaper Innovation 06 2011

1/13

Innovation: Driving andImplementing Change

A popular notion regarding innovation is that the onusis on the designers of a product or the provider of aservice. Often overlooked is the fact that it is just asimportant that innovation is incorporated into thepersonal responsibility of every associate and everysegment within the organization, this includestraditional production & operations as well as back-office administration functions.

This paper discusses the challenges and problems thatmany companies experience in deploying constructiveand notable innovation processes within theirorganizations. It explores the perceptions and

prejudices that pose a hindrance to the progress of suchinitiatives despite everyones desire to succeed in thisarea. This whitepaper also proposes an approach toaddress these challenges and recommends varioustechniques and the roadmap towards achieving theinnovative organization.

Intended AudienceGiven that innovation is usually required to be fostered

and facilitated by the executive management of anorganisation, the audience for this paper is as follows:

CxO-Level PersonnelDepartmental HeadsSenior Delivery ManagersSenior Account and Sales Managers

For the purpose of this paper, innovation is defined asfollows:

A change in the activities of an organisation producing analtered perspective which results in a non-linear benefit-

n

n

n

n

White Paper


2/13

2

About the Author

Ged Roberts

Ged Roberts is the Global Head for HiTech ISU Operations and

Process Excellence in TCS. In this role, he is responsible for

ensuring effective operational delivery and process excellence

across the unit. Ged joined TCS in May 2007 and formed part of

the European Delivery Management Team responsible for delivery

assurance across Belgium, Netherlands and Luxembourg. Prior to

joining TCS, Ged had worked for a number of internationallyfocused companies managing and delivering software services

across Europe, America and Asia Pacific. His experience

encompasses both service providers and clients. Ged is an

honours graduate in Computer Science with more than 25 years

of IT experience and is based out of the Amsterdam office in

Netherlands.


3/13

3

Table of Contents

1. Executive Summary 4

2. Problem Statement 5

Commitment to Change 5

False Dawn 6

Lack of Motivation 7

Costs 7

3. Solution 8

Overall Approach 8

Innovation Maturity Model 8

Getting Started 9

Level 1 - Improvement 9

Level 2 Ideation 10

Level 3 Innovation 10

Multi-Stakeholder Management 11

4. Benefits 11

5. Results 12

6. Conclusions 12


4/13

Executive Summary

Problem

Most organizations face challenges when they attempt to introduce innovation within the organization.

The following areas are identified as the major impediments to inculcating a culture of innovation:

Commitment to Change Innovation, as described earlier in the document, requires significant

changes in the natural order, behaviour, and response mechanisms of an organization. A commitment

to change and the desire to innovate are usually examined in the light of whether all the stakeholders,

who will be required to implement the change, benefit directly from the change itself.False Dawns What has been the perceived success of previous major transformations e.g. CRM, EAI

and so on. If the track record of significant investments in other areas has not delivered the expected

benefits, what is the appetite for new initiatives in the organisation?

Lack of Motivation If ideas are proposed, yet are not implemented, then contribution will fall.

Therefore, the question arises how do you create the visibility of recognition of submitted ideas and

subsequently the visibility of implementation of selected ideas.

Costs Lack of clarity on who assumes financial funding for the problems being addressed will

seriously hamper innovation programs. In addition, how contributors are recognized, despite receiving

little or no benefits have to be identified in order to facilitate effective change.

SolutionAn organization must adopt a three-pronged structured approach to achieve the transformation that can

culminate in a culture of innovation.

Improvement The result of deploying structured improvement techniques within the organization,

such as Six-Sigma methodologies. Deploying improvement goals and rewards for contributors further

solidify this phase within the organisation.

Ideation The result of deploying structured management techniques to harness and deploy the

knowledge within the organization, where contributors to idea generation and idea implementation

are recognized and rewarded.

Innovation A dedicated and sufficiently funded autonomous group that is responsible for all aspects

of cross-unit innovation, such as soliciting ideas, deploying ideas, and rewarding contributors. The

group will need to be assigned a high level of fluidity in order to maintain dynamism and freshness of

perspective.

Benefits

The solution suggested in the course of the paper provides a structured approach that allows

organizations to set expectations, drive towards a culture of change, and maximize the measurable value

from the innovation budget. Setting clear goals and methods enables maximum commitment andcontribution from all stakeholders, who are fundamental to achieving success in innovation.

Between 2008 and 2011, TCS had achieved benefits in excess of USD 300 million owing to efforts in theinnovation space. Although, TCS journey towards complete maturity in this respect is far from complete,

the results achieved so far provide a testimony to the effectiveness of the approach.

n

n

n

n

n

n

n

4


5/13

Problem Statement

TCS conducts a yearly Lifeline survey in which the views of C-Level and Senior Executives are solicited on

various aspects of the performance of IT SPs. The survey spans several industries and service types and

focuses on multiple areas of service delivery, including innovation.

An analysis of these surveys reveals that the majority of clients rate the ability of IT SPs to Deliver

Innovation as average to poor. Furthermore, those SPs that achieve an above average rating during one

particular year regularly fail to sustain this rating over the next year.

Further inspection of underlying circumstances that lead to such a feedback reveals that that most

relationships between customers and service providers are based on strict deliverables or services against

fixed deadlines and Service Level Agreements (SLAs). The goal of the SLAs and associated contractual

obligations is to drive consistent, measurable results focusing on effectiveness and reliability of service

delivery. In the context of innovation the contractual deadlines and SLAs drive efficiency rather than

creativity. This is of course consistent with the pressure that business users place on internal IT

organisations. The drive for efficiency and reliability is merely a cascaded pressure from other end users

or customers.

Breaking out of this pass-through cycle of efficiency, efficiency, efficiency is the challenge that

organisations face when attempting to introduce innovative ways of working.

Innovation is generally accepted by all the stakeholders involved to be highly desirable. In agreements

with SPs, innovation demands are made, yet from the feedback we see that these goals are rarely met.

When exploring further into the analysis of why innovation doesnt happen, it can be observed that the

root cause of this problem lies in the first part of our definition of innovation, namely, A change in the

activities of an organisation producing an altered perspective. The vital but difficult components of

innovation are change and altered perspective.

The notion that it is extremely challenging to drive change is universally apparent and recognized across

organizations. Most organisations are conservative in nature, and radical change leading to altered

perspectives requires multiple levels of buy-in, stakeholder commitment and a willingness to embracefundamental changes to the way of work. Eventually, in spite of the potential benefits, it is this resistance

to change that prevents organisations from embracing and encouraging innovation.

Described in the sections below are some of the major impediments to innovation and the measures to

mitigate them.

Commitment to Change

Innovation, based on its definition, can be considered as being inseparable from change. The smallest

instance of innovation can have multiple implications for a variety of stakeholders. For innovation to be

successful, each stakeholder must agree to the change as well as the efforts involved in implementing thechange. Although this implies that the risks associated with the change are shared among stakeholders, it

actually creates resistance in the organisation due to the risk-averse nature of many departments or units.

Furthermore, as change spreads across the organization, the assessment of the benefits of the innovation

5


6/13

is also distributed. There may be situations where one stakeholder achieves significant benefits from the

innovation, whereas other stakeholders receive little or no benefit even though they have to commit to

substantial changes in their unit to realize said innovation.

False Dawn

Many instances of innovation culminate in the inception and delivery of enabling technology, products or

services. An example of interest is the iPhone. The launch of the iPhone enabled, for the first time,

multiple functionalities such as voice calls, Internet access, and downloading of applications within a fully

integrated, consistent end-to-end eco system. In June 2011, there existed more than 450,000 applicationsthat continue to significantly enhance the capabilities and usability of the device. Consequently, the

iPhone can be considered as a very successful innovation.

However, other technologies have been launched amidst much hype, and yet they have either not been

as successful or the benefits realised have not been as instantaneous.

Assurances of enabling better information management, reduced time-to-market, information sharing

and exchange, performance optimization, and significant commercial upsides are never usually achieved

in the first wave of the innovation. The Gartner hype cycle demonstrates this effect.

6

Figure 1 - Exponential risk curve managing multiple stakeholders

Risk

tosuccess

# of stakeholders required to chnage

Figure 2 - Gartner Hype Cycle

VISIBILITY

TIME

Peak of Inflated Expectations

Plateau of Productivity

Slope of Enlightenment

Trough of Disillusionment

Technology Trigger


7/13

7

Listed below are a few examples of False Dawns witnessed by the IT Industry:

Replacing COBOL by code generators, popular in the 1980s. At the time of the millennium, it was

estimated that there were approximately $76 billion of COBOL applications still in full healthy

operation.

Artificial Intelligence since the work of Alan Turing in 1940s and the advent of computers in the

1950s this goal has been continuously chased.

Object Orientation this technique was intended to reduce time-to-market and improve reliability,

and still companies complain of a lack of both items.

Data Warehousing the promise of instant access to all data. Everyone was going to be able to makefast, incisive business changing decisions. It is only in recent years have we seen the transition to true

business analytics and properly internalised decision engines.

Customer Relationship Management the promise was that this technology was going to provide the

ability to target one-to-one relationships with our customers, understand their needs and desires,

provide competitive edge through world class customer care. To date, CRM platforms are

inconsistently deployed and have incurred disproportional investments and results. A continued

complaint from customers is the constant need to re-explain the same problems when passed from

department to department.

Enterprise Application Integration these tools promised a future in which new or replaced

components would be seamlessly integrated almost on a plug and play basis, promoting high levels

on collaboration. EAI has also generated the service oriented architecture concepts.

Cloud Computing is a highly popular current (2011) area of interest?

As can be seen from experience, in line with the Gartner hype curve, all of these initiatives have gone

through the peak and hit the trough, and finally they are on the road to realistic and understandable

productivity levels.

As a result, organizations are extremely cautious when investing in enabling technologies and areas.

Instead, organizations focus their efforts on changes that will lead to cost savings and efficiency gains.

This further solidifies the idea that SLAs pertaining to reliability, repeatability, and speed are the sole

management technique.

Lack of Motivation

Many organizations run ideation workshops, operate suggestion boxes, and award prizes for the best

idea. However, the vast majority of these ideas are never implemented and the entire initiative ends up as

nothing more than an academic exercise for the unit.

With out any visible, evidence of action or results, the motivation for an employee to continue to

contribute ideas effectively evaporates within the organization.

CostsFinancial management is a crucial element that leads to the success or failure of innovation. Questions

such as, who will bear the cost, who will receive the benefits, what benefits will they receive, and how the

benefits are measured need to be addressed at the planning stage.

n

n

n

n

n

n

n


8/13

8

The organisation faces even greater challenges when it wishes to deliver a pure enabling innovation. In

these cases, associates and management have to believe that the result will generate benefits. In certain

organizations with limited resources, service providers (SPs) are expected to bear this cost, whereas SPs

expect organizations to commit to the results and become a part of the stakeholder group. The result

directly influences all the points discussed above.

Given the interrelated nature of all of these considerations, most organizations find it difficult to further

their innovation initiatives.

Overall Approach

It is important to understand that the introduction of a culture of innovation is a process that will take

time. The barriers described above are potentially significant and expectations with all stakeholders need

to be managed on a continuous basis.

In order to help manage this process and understand progress TCS has developed the innovation

maturity model. The purpose of the model is that it provides a framework for common understanding of

objectives and a platform for management to gauge success and next steps. Using the model,

organisations can embark on the changes required.

Innovation Maturity Model

The following maturity model can be used to assess an organizations capability and readiness for

innovation.

Solution

Figure 3 - TCS Innovation Maturity Model Definitions

Level # 0

Adhoc

Improvements

Low

repeatablility

Level # 3

Innovation

group

Dedicated

innovationbudget

Reward

mechanisms

for innovators

and

contributors

Cross

organizational

units

Level # 1

Structured

Improvement

Process

Formal

methods

Clear

Organizational

Goals

Rewards

Level # 2

Formalized

Ideation

Process

Automated

information

capture

End-2-end

generation &

execution

Full feedback

loops

Innovation Maturity Levels


9/13

9

Each of the levels is described below.

Level 0 Ad hoc: Any innovation is achieved through inspiration and good fortune. The process by which

innovation is achieved is usually not documented and relies completely on being in the right place at the

right time. The results are unpredictable and non-repeatable.

Level 1 Improvement: Individual projects within an organization are empowered to implement changes

in day-to-day operations and processes. Structured methods are used, such as Six Sigma and Lean Six

Sigma. Associates are motivated to develop specific skills and obtain certifications such as green belt and

black belt. Corporate focus and measures are used to help drive behaviour in the organization. Individual

rewards for employees who participate are a component of their yearly appraisal.

Level 2 Ideation: An organization leverages structured methods and platforms to capture and share

ideas and improvements. The focus is on collection and crowd sourcing of ideas, which can be generated

by multiple units in the group including third parties. Organizational units are measured based on how

many of these ideas are effectively managed from response through to completion, with specific

attention and rewards focusing on cross-unit activities. A budget is allocated to these activities.

Level 3 Innovation: Cross-organizational platforms and dedicated functional units are established to

plan, solicit, generate, and implement new ideas. Yearly budgets are allocated for groups and projects.

Cross-organizational commitment to deployment is managed and arranged. The success and rewards are

determined by the deployment of innovation, not by the individual effect of the change within the (sub)

unit. Therefore, all parties involved in the initiative share the success or failure. Structural rotation within

the innovation group is implemented to maintain freshness of perspective.

Getting Started

Level 1 - Improvement

To achieve an effective innovation culture, an organization must establish the initial mechanism of

improvement. It is essential to select a departmental-wide methodology to manage and measure

improvements so that it forms the basis for all future activities. TCS selects, as its most common

technique, the Six Sigma and lean Six Sigma techniques. Though there are other methods, which are

equally as good, the focus should be on the proper implementation of the selected method. The benefitof a common technique is that it facilitates consistency and effective comparisons while at the same time

optimizing training and certification efforts.

After the methodology is established, pilot the techniques in a few areas that are completely under the

control of the owner. The purpose is to build up success and experience using the approaches and

methods, as well as identify their shortcomings and their strengths. Recognise all the contributors and

ensure that the benefits are clearly evaluated and documented, especially monetary benefits.

As familiarity is established over a period of time, improvement projects can become more and more

extensive. Focussing on training and rewards for associates further supports and develops theeffectiveness of this step.


10/13

10

It has been observed that many companies quite happily stop at this level, noting significant and

substantial benefits through simple process improvement. For example, one of TCS engagements

delivered an improvement project to an organizations machine configuration, which resulted in a saving

of $12million per year in operational costs.

Level 2 Ideation

Idea Generation

It is important to leverage the power of the entire organization. The key challenges are to provide a

platform to all associates by which they can generate, record, review, and comment on ideas and

thoughts. The second part of this challenge is to operate management functions that promote, select,

respond, and implement the generated ideas.

Currently, social networking technologies provide simple mechanisms to enable this service. With

abilities to publish, recommend, like/dislike and follow, ideas can be promptly collected by the

organization for feedback and suggestion purposes. It is important to publicize the existence of the tools

and their purpose. The complete integration of these capabilities into the normal work environment

ensures a high level of adoption and contribution. The introduction of reward mechanisms for popular

idea generation or idea review participation encourages the behaviour of contributing to the framework.

Idea ImplementationThe greater challenge is managing the implementation of the best ideas. Feedback at an executive

management level on selection or rejection of any idea is a vital aspect in encouraging contribution. Not

all ideas can be accepted, yet the message that the idea has been read and evaluated but not selected

still recognizes the contribution of the individual. Ignoring ideas sounds the death knell of the entire

ideation process.

When an idea is selected, it must be visibly implemented and reported, and the benefits clearly measured

and stated. Rewards and recognition must be awarded not only to the originator of the idea, but to the

implementation team as well. By establishing such a motivational approach, organizational units,

employees, and SPs can be encouraged to contribute and participate.

When initiating this process, it is worth considering giving a slightly restrictive set of parameters. For

example, by limiting the initial set of ideas to be focused on the improvement of a subset of core Key

Performance Indicator (KPI)s, the restriction provides a clear direction and limits the initial volume of

ideas to be managed.

At this stage, ideas will be judged based on the business case and the available budget. The resulting

programs and projects are implemented in tandem with other business programs, vying for both

priorities and resources.

Level 3 Innovation

The final step towards driving innovation and invention within the organization consists of establishing

the innovation team with a fixed specific budget. The innovation team is responsible for the


11/13

11

management, introduction, and implementation of all ideas and concepts across the group. With their

own budget, they are empowered to staff and implement the projects as they see fit. The key goals and

rewards are through measured benefits, as described in Level 1.

Rotation of the Innovation team members is essential to maintain a high-level of energy and a continuous

fresh perspective within the group. A good level of fluidity in the group ensures that all the members of

the organization have the opportunity to contribute towards innovation and obtain innovation based

rewards. The knowledge that this is a short-term commitment, and that no full-time career will be

established in this group, generates a certain drive to be as successful in as short a time as possible. This

effect also encourages creativity and promotes a healthy level of risk taking. Not all innovations aredestined to succeed, yet it is essential to drive the behaviour of associates to challenge themselves with

questions such as why not, instead of why should we.

Multi-Stakeholder Management

As ideas and innovations become more diverse and the scope becomes larger, the impact across the

organization becomes greater. In order to assess the effect across the organization, it is recommended to

adopt a systems thinking based approach. This technique is described in the book, The Fifth Discipline

by Peter Senge. Senge promotes the ideas and techniques to assess, not just internal practices, but also to

analyze the impact from upstream and downstream actors and their influence within the entire end-to-

end process. Organizations and teams that drive innovation must establish a clear understanding of howa third (or even fourth) party is affected by the change. A major risk when conducting this assessment is

that a key contributor to the innovation may actually be a minor beneficiary of the innovation. For

example, in order to innovate within the customer service department, a significant change may be

required in the sales group. This change may require a lot of non-core work for the sales group and could

provide them with little or no direct benefit; subsequently what will be the motivation and priority of this

change within the sales group when compared to their own goals and objectives.

Understanding who benefits and by how much enables the Innovation team to solicit the necessary

support. This practice is described in full detail in the TCS whitepaper, Managing by Business Value, by

Ged Roberts. As previously mentioned, rewards for contributors as well as innovators facilitates good

cooperation across the unit.

The benefit of this technique is that an organization has a clear and consistent definition to its approach

to innovation. Consequently, the team that drives the initiative can measure its progress and the value

they provide to all stakeholders.

The approach for managing multiple stakeholders enables organizations to assess the probability and risk

for success. If the organization has defined and agreed on a core set of KPIs, the ability to assess

innovation is greatly simplified and drives the change on areas of the business that are important to thegroup.

Benefits


12/13

12

Creating a culture of change within an organization is possibly the most challenging aspects of the

approach. Leveraging a structured methodology, which is recognized throughout the organization,

providing recognized career opportunities, and appropriate training, will cement the culture into the

foundations of the organization. Thereafter, this effect will cascade through the growth and recruitment

activities of the entire organization.

The path to an innovative enterprise is not an overnight change, yet by adopting the technique above, a

clear and motivated set of goals and milestones will enable organizations to manage their progress

effectively and successfully.

In 2008, TCS reorganised its process improvement framework. In combination with the establishment of

vertical client units, TCS developed a common method for measuring competency and results and set

targets for the entire organisation.

By the end of financial year 2011, TCS had realised in excess of $300 million in recognised measurable

benefits

In 2010 TCS re-launched its IdeaMax Ideation social network platform, since then traffic has increased by

over 250%

At the end of 2011, TCS was converting between 30-40% of selected ideas into implemented ideas. This is

an increase of over 50%.

Each vertical unit has established its own innovation centre leveraging cross unit knowledge and

resulting in a continuous stream of innovations which are deployed in projects across TCS.

Everyone is looking for the next big idea, the killer app, or the game changing approach to achievingresults. Yet as with all problems, significant effort needs to be invested in order to realise these goals. The

choices organisations face is how to harness the intellectual capability within their employees in a

structured and focused manner in order to support the objectives. The understanding of the question

why can this organisation not change is an essential piece of introspection required to be understood as

a precursor to starting this journey. The approach described provides the framework for categorisation of

these issues and a clear method for going forward from improvement to ideation to innovation.

Results

Conclusion

References[1] The Fifth Discipline: The Ar t and Practice of the Learning Organization, author Peter Senge.

[2] Managing by Business Value, TCS white paper, author Ged Roberts

[3] Gartner Hype Cycle - Gartner


13/13

Subscribe to TCS White Papers

TCS.com RSS: http://www.tcs.com/rss_feeds/Pages/feed.aspx?f=w

Feedburner: http://feeds2.feedburner.com/tcswhitepapers

All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is

correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transm itted, posted or distributed in

any form without prior written permission from TCS. Unauthorized use of the content / information appearing he re may violate copyright, trademark and

other applicable laws, and could result in criminal or civil penalties. Copyright 2011 Tata Consultancy Services Limited TCSDesignServices

M0

6

11

I

I

I

IT Services

Business SolutionsOutsourcing

About TCS HiTech Industry Solution Unit

TCS' HiTech industry Solutions Unit provides optimal, customized, and comprehensivesolutions across varied High Tech industry segments: Computer Platform and Services

Companies, Software Firms, Electronics and Semiconductor Companies, and Professional

Services Firms (Legal, HR, Tax & Accounting and Consulting & Advisory/Analyst firms).

Building on its vast experience in engineering, business process transformation, innovation

and IT solutions, TCS offers a comprehensive portfolio of services that maximize growth,

manage risk, and reduce costs. The TCS HiTech Industry Solution Unit partners with High Tech

enterprises to provide end-to-end solutions which help realize operational excellence,

innovation and greater profitability.

For more information, visit us at http://www.tcs.com/industries/high_tech

Contact

For feedback on this article and more information, please contact us at:

[email protected]

About Tata Consultancy Services (TCS)

www.tcs.com

Tata Consultancy Services is an IT services, consulting and business solutions organization thatdelivers real results to global business, ensuring a level of certainty no other firm can match.

TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineeringTM

and assurance services. This is delivered through its unique Global Network Delivery Model ,

recognized as the benchmark of excellence in software development. A part of the Tata Group,

Indias largest industrial conglomerate, TCS has a global footprint and is listed on the National

Stock Exchange and Bombay Stock Exchange in India.

For more information, visit us at

hitech whitepaper innovation 06 2011

Documents