Disruption is coming. To keep up, small businesses should begin by creating cross-functional innovation teams that look for ways to integrate new ideas and technologies into their business practices.
Co-authored by Lauren Gore, a principal and co-founder of growth and innovation advisory firm LDR, as well as a graduate from the United States Military Academy and Harvard Law School.
A recent Gartner study predicted that blockchain will add more than $1 billion in value to the banking industry by 2020. While many companies and industries are interested in deploying blockchain solutions to augment their internal capabilities, they quickly recognize that the value gain doesn't exceed the technology's implementation and maintenance expenses.
This question of return on investment is one that many companies spend significant time considering. Business leaders are generally willing to create structured processes to understand and invest in technologies; however, far too many underestimate the teams, processes and infrastructure required to integrate these solutions into existing business systems. If the teams implementing disruptive technologies are not fully invested in the outcomes or sufficiently trained to utilize the technology, the advancement is bound for failure.
Without incentives and training for the implementation and maintenance teams, disruptive technologies likely will demonstrate negative ROI and compromise a culture of innovation. If leaders want to guide truly innovative companies, they need to modify the approach. Rather than focus solely on the technology, they should begin by creating cross-functional innovation teams that proactively seek to integrate disruptive technologies into established business practices. With this approach, small and large companies alike won't just survive disruption but will thrive within it.
Where big shifts will come from
How company leadership should prepare for change is more of a pragmatic query than an academic one. Disruption is right around the corner, if not already upon us; the businesses that are not prepared for it now are those that will likely not survive.
It seems that these three major technologies will lcause major upheaval in the next few years:
- Blockchain: Contrary to popular opinion, blockchain is not a speculative or complex theory propped up by too much hype. Rather, blockchain is a distributed, transparent, and highly secure peer-to-peer ledger that can serve as a practical solution to finding, storing, protecting, and authenticating information. That is why, according to a Forbes study, more than 90 percent of European and North American banks are already exploring how blockchain can work for them and where it should be deployed over the next five years.
- Artificial intelligence: Building on massive advances in data, machine learning and drastically increased computing power, the evolution of intelligent machines mirrors that of humans. AI has assumed an ever-expanding range of duties and responsibilities once thought too nuanced for anything but a human. Though AI's abilities are still rudimentary in certain areas, the impact of this technology is only beginning to be realized.
- Imagery: While not a new trend, unmanned aerial vehicles and high-frequency globally positioned satellites are innovative tools are making significant waves across multiple industries. Specifically, drones are transforming from flying cameras to autonomous and highly intelligent data-gathering machines. Soon, they will combine integrated computer-powered vision with neural network technology capable of collecting, analyzing and refining data in nearly real time.
These are only a few of the disruptive trends that we can see coming. There will certainly be new, potentially transcendent innovations that will be much harder to forecast. This is why it is vital for companies to not only prepare for what can be seen, but to prepare for the unforeseeable.
Put change agents in place
Anticipating disruption is difficult, but it can be simplified for leaders who are willing to invest in the right internal structures. These four elements can create a successful infrastructure that will help you future-proof your business and get your team out in front of innovations, rather than playing from behind.
1. Use an eyes-and-ears team to understand what's going on.
The eyes-and-ears team should consist of managers and executives who are unafraid of challenging the status quo and consider innovation as a solution to any problem. It should be a collection of people with diverse perspectives who can help your company identify and evaluate potential innovations from all angles and develop pragmatic approaches.
When an innovative solution is apparent, the E&E team should bring together leaders from different departments to discuss and then execute. The E&E team is all about pushing a company out of its comfort zone and into the mindset of an entrepreneur-owner. It is how companies like Amazon can succeed in several product verticals, due in large part to their willingness to see what's forthcoming and incorporate it intelligently, cost-effectively and rapidly.
2. Build an innovation lab.
Whereas the E&E team is optimized for business leaders, innovation labs are built for researchers, technologists and builders. There, collaboration leads not only to the exploration of new solutions, but also to the translation of those solutions into real and actionable innovations. The innovation lab's focus is on researching, designing and building innovative solutions.
Similar to the E&E team, an innovation lab must be a collection of people with diverse voices and experiences. This variety helps avoid the creation of a monoculture, which can impede innovation, if not cannibalize it.
When the E&E team identifies a particular challenge or pain point and moves to evaluate a series of recommended solutions, the innovation lab goes into action. Have this lab team contextualize the E&E team's recommendations, using them to create unique and useful minimum viable products to validate solutions. Industry experts should freely and frequently collaborate with the innovation lab so that the lab's research, design and build efforts occur within the context of the market.
3. Establish a venture capital arm to buy solutions.
When you've identified innovative solutions and opportunities, the first decision is whether to buy or build. This is where a venture capital arm can play a critical role. Every venture arm needs the requisite funds if a business truly wants to capitalize on new and often time-sensitive innovations.
The ultimate goal of a VC arm should be to further the innovative capabilities of a business while seeking a return on capital over some designated period. For VC funding to be successful within the innovative structure of an organization, the E&E team must identify the most valuable entrepreneurial opportunities, then team with the VC arm and innovation lab to execute along the appropriate courses of action.
4. Leverage an innovation accelerator.
The innovation accelerator's primary role is to ensure a smooth and speedy path for all innovative endeavors. The accelerator team should consist of people well versed in various business operations who can efficiently process, analyze and then utilize data to act quickly, often in the face of significant ambiguity.
When building the accelerator team, focus on identifying experts from various departments across the company. Use their diverse experiences and skill sets to foster an environment where people can make informed and intelligent decisions to drive innovation and accelerate growth, without being limited by the perilous notion of "how we have always done it."
To be successful, a business, large or small, should not simply focus on the latest technology, but rather should work proactively to establish an environment of constant evolution and relative comfort around change. By establishing the aforementioned innovation infrastructure – including mutually supportive teams representing eyes and ears, innovation labs, venture capital, and acceleration – leaders can build companies that will not just survive disruption, but drive disruption.