Tuesday, December 13, 2011

The "Enterprise Innovation API"

I've written before about the seemingly unbridgeable gap between the elite class of software "makers" and the enterprise customers who most need their help.

I was reminded of the problem by Fred Wilson's post this morning on "vertical accelerators" -- specifically the FinTech program in New York.

In Fred's words...
"the secret sauce of these programs is the leadership of the CIOs and CTOs of the largest banks and financial services companies...
"When I talked to the teams that went through last year's program, this was the thing that all of them gushed about. Getting regular access to the highest level technology execs in these institutions was a game changer for most of the teams"
I'm already on record as a huge fan of accelerator programs, and the pattern Fred describes is playing out all over the early-stage community (other examples include Weiden + Kennedy's PIE program, Rackspace-sponsored TechStars Cloud, and Microsoft-sponsored TechStars Kinect).

Big companies are desperate for access to digital innovation, and are "leaning in" to the accelerator movement for access and influence.

But "access" and "influence" are weak sauce for huge incumbent firms faced with looming digital threats. How can big companies access technology innovation on *their* agenda, with the kind of urgency and impact they need to avoid being disrupted out of business?

The traditional solution to the problem of enterprise innovation-at-scale is M&A: waiting until a disruptor is operating at a "meaningful" level of revenue or impact, and then paying a huge premium to take those innovations in-house (where they usually die a quiet death for lack of cultural and strategic fit).

The new trend of enterprise-focused accelerators is a tacit acknowledgment that M&A is often too little, too late: disruption is happening too fast, on too many fronts, to wait until its potential is obvious to the entire industry.

I'm delighted to see enterprise players engaged with the early-stage community, but I don't actually believe it's really going to solve the problem of fostering digital innovation within the enterprise.

The enterprise-accelerator trend suggests that corporate buyers are ready for a new approach to this hard-but-important problem, a translation layer that connects corporates seeking innovation with the elites of the digital creative class, with the scale + velocity required to help tech-laggard bigcos survive.

Toward an "Enterprise Innovation API"...

There is no one company or product I'm aware of that's solving this problem today, but I expect a successful pattern here to combine the following elements:

  • Trusted Executive Access

    Delivering impact at enterprise scale requires access and support at the highest levels of the organization, because that's where strategy is formulated and money + power are controlled. Traditional enterprise consulting firms excel at this -- from McKinsey + BCG in strategy; to Accenture and IBM in tech; to WPP, Omnicom,  IPG and Publicis in brand + creative.

    Companies will always reject a truly disruptive innovation effort if this layer of the organization isn't bought in -- gaining + maintaining access is critical.

  • "Outside-In" Approach 

    Traditional enterprise IT projects are black holes (or gold mines, if you're an old-school system integrator), requiring costly and time-consuming coordination of technical and leadership resources across many different departments and budgets.

    Delivering truly disruptive technical innovation at enterprise scale requires extreme tactical agility -- tapping strategic data and organizational resources as needed, but pulling them into lightweight frameworks that (largely) sit outside the tangled web of legacy enterprise systems.


  • Assemble More, Develop Less 

    Another key tactic of old-line enterprise IT consultants is to encourage deep system-level platform development and customization, deploying armies of low-level coders to wrap custom software (and sometimes even bespoke hardware) around enterprise-specific business rules.

    Looking forward, high-impact enterprise innovation will be driven by firms that can convince their enterprise customers to embrace the power + agility of modern tools + platforms (e.g., LAMP, AWS, iOS / Android, Twitter, Facebook, SMS / Push, SaaS, IaaS), instead of trying to channel their technology spend into a proprietary system.

  • A Platform, Not a Pyramid

    Traditional services firms always wind up looking more-or-less the same -- a few seasoned + strategic folks at the top (the "partners"), a bigger tier of smart + hungry lieutenants below that ("team leads" or "engagement managers"), and a high-churn mass of inexperienced kids at the bottom (which is where the margin comes from).

    In a world of high-velocity, software-powered disruption, the pyramid model fails: it's too slow, the needed skills are too diverse, and the quality of "digital creatives" willing to work in the lower tiers of a traditional pyramid structure is too low (for all the same reasons that apply to enterprise recruiting of technical talent).

    A winning approach to enterprise-scale innovation will federate the talents of elite performers at each layer in the stack -- senior strategy consultants, brand and creative professionals, IT infrastructure experts and software creatives conversant with the current (i.e., mobile / social / cloud-based) state of the art. 

No single firm can credibly claim to deliver a best-in-class solution across these functions, and I actually don't expect any single entity to emerge as a leader here. Instead, I see an opportunity for a "virtual industry" of boutique advisory firms, led by "partner-level" refugees from the old pyramids who understand how innovation happens now.

These "innovation boutiques" will call in elite teams of specialists, assembled from the emerging class of high-performance talent marketplaces (think Forrst and Dribble for visual design, GroupTalent and oDesk for software execution, Contently for content creation, etc.), to deliver short-duration, high-impact solutions to their corporate clients.

So the "Enterprise Innovation API" isn't a company at all, it's a loosely-federated web of specialist firms, teams and individual contributors that make themselves available for high-impact strategic engagements on behalf of the biggest and most powerful brands on the planet.

The components of this new enterprise innovation market are already emerging and -- as demonstrated by the corporate accelerator trend -- the customers are eager to buy.