Chief Innovation Officer, Issue 9

THE

LEADING

VOICE

OF

INNOVATION

CHIEF INNOVATION OFFICER APR 2016 | #9

WHEN HUMANS TAKE A ROBOT’S JOB As Mercedes returns skilled humans to its factory floor, is the future for automated industry one of collaboration rather than replacement? | 18

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Who Innovates, And How?

When people think of innovation, the tendency is to think of the groundbreaking Silicon Valley startup. We take a look at the more everyday innovators finding solutions for larger companies | 6

Can We Please Stop Talking About Disruptive Innovation?

Inspired by some high profile disruptors, ’disruptive innovation’ has gripped the world of business, but is it a misleading explanation of change? | 20

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ISSUE 9

EDITOR’S LETTER Welcome to the 9th Edition of the Chief Innovation Officer Magazine Welcome to the ninth edition of Chief Innovation Officer.

In a world that is changing at a pace more blistering than ever before, a company’s ability to innovate is paramount. Being on top of new trends and developments in everything from AI to innovation labs is now more important than ever, and could be the difference between your company thriving or being left behind.

When setting out your own innovation strategy, knowing how others operate can be a good place to start. The image of the Silicon Valley bedroom startup is problematic in that it gives a warped perception of how innovation occurs. In this edition, Harriet Connolly looks at who is innovating, and in what type of environment they work. Many will be part of ‘innovation labs’, an often misunderstood - but incredibly popular - concept, and Dean Marshall explains exactly what they are and why you may benefit from creating one.

Innovation is not limited to in-house developments or eureka moments

from teams of dedicated solutionfinders, though; wider changes to industries can be more organic.

Rebecca Thomson takes a look at strategies in play to get more women into tech positions, with both re-entry programs and education playing important roles.

In this edition we also look at developments in areas such as AI in healthcare and the production line. Machine learning is becoming commonplace in the healthcare industry, yet Mercedes has returned skilled humans to its formerly automated factory floor. The future for man and machine in industry is still very much unclear, and I take a look at what it means for both manufacturing and collaboration between intelligent machine and man more generally.

Disruptive innovation has been a buzzword in business for some time now, with companies either looking for ways to undercut established industry leaders, or fearing being undercut themselves. Harriet Connolly debunks the notion that disruption is a common business practice, instead

looking at the more day-to-day ways in which companies innovate, find solutions and implement change.

And, finally, Matthew Griffin sits down with Mike McMinn, CIO of Marston’s.

The 200-year-old pub chain has reclassified itself from a hospitality company to a leisure company, and we take a look at the positives of such a change and the ways in which building a new vision for your company can promote growth in both your natural market and also new ones.

As always, if you have any comment on the magazine or if you want to have a product reviewed or submit an article, please contact me at csammonds@theiegroup.com.

Charlie Sammonds managing editor

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contents 6 | WHO INNOVATES, AND HOW?

14 | WILL AI IN HEALTHCARE WORK?

23 | A SIT DOWN WITH MIKE MCMINN, CIO OF MARSTON’S

When people think of innovation, the tendency is to think of the groundbreaking Silicon Valley startup. We take a look at the more everyday innovators finding solutions for larger companies.

The NHS are working alongside Google to implement technology that streamlines hospital procedure. Progress will take time, but developments like AI could one day aid this vital institution.

Marston’s own over 2,000 pubs in the UK, but has not stopped looking for ways to improve its business.

Matthew Griffin chats with the company’s Chief Innovation Officer.

18 | WHEN HUMANS TAKE A ROBOT’S JOB

WRITE FOR US

9 | WHAT IS AN INNOVATION LAB?

Innovation labs are hugely popular, but are also often misunderstood. Just what exactly are they, and why could your company benefit from having one?

12 | GETTING MORE WOMEN IN TECH

Despite making up 58.7% of the US labor force, women hold just 30% of all tech positions. What can be done within the industry to shift the damaging gender imbalance?

As Mercedes returns skilled humans to its factory floor, is the future for automated industry one of collaboration rather than replacement?

20 | CAN WE PLEASE STOP TALKING ABOUT DISRUPTIVE INNOVATION?

Inspired by some high profile disruptors, the phrase ’disruptive innovation’ has gripped the world of business, but is it a misleading explanation of change?

Do you want to contribute to our next issue?

CONTACT:

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For advertising opportunities contact: ggb@theiegroup.com for details managing editor charlie sammonds

| assistant editor james ovenden

creative director oliver godwin-brown contributors emma taylor,

dean marshall, rebecca thomson, shivanee pattni, harriet connolly, matthew griffin

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The image of the (exclusively male) bedroom startup is prominent, but these examples are very much special cases

Who Innovates, And How? Emma Taylor Senior Analyst

2010’s ‘The Social Network’ opens with a scene showing Mark Zuckerberg not yet inspired to create Facebook. Our young, white, male protagonist then stumbles across what would go on to become Forbes’ 10th most valuable brand, drops out of college and gets to work building an empire.

When we think of innovation, this template comes to mind - Bill Gates and Steve Jobs also dropped out.

The image of the (exclusively male) bedroom startup is prominent, but these examples are very much special cases. Their notoriety is largely thanks to the ubiquity of their product, their age at the time of the company’s conception, the effect of their product on the average citizen’s life and the subsequent folklore surrounding them.

According to a report from ITIF,

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though, the stereotype is wildly wide of the mark. ITIF’s survey drew workable responses from over 900 of the US’ most important innovators. And the pool is not necessarily made up of revolutionaries and game changers; innovation in this case is defined as those ‘who have made meaningful, marketable contributions to technology-intensive industries

7 as award-winning innovators and international patent applicants.’ In fewer words, it is made up of those on the front-line, innovating effectively with perhaps fewer eureka moments.

The numbers offset the image of the tech-savvy young American. In fact, 46% of the innovators polled in the US are immigrants, with the majority of these immigrants coming from Europe (35.4%) and Asia (close to 50%). US-born minorities are fell less well represented, though, with Asian Americans, African Americans, Hispanics, Native Americans and other ethnicities making up a paltry 8% of those polled. ITIF, as one of their four primary conclusions drawn from the data, urge the improvement of STEM education and empowerment for students of all backgrounds.

In fact, 46% of the innovators polled in the US are immigrants, with the majority of these immigrants coming from Europe

Also, contrary to the stereotype of the enlightened college dropout creating the next big thing, quite the opposite is true. A huge 55.7% of US innovators hold a Ph.D, with 21.8% holding masters or other graduate degrees. The Steve Jobs and Mark Zuckerbergs of this world - those without college degrees at the time of innovation - make up just 2.9%, with the number particularly low in STEM fields. The strength of their products made dropping out viable, but their situation is incredibly rare; in the world of dayto-day innovation, the vast majority of those making changes are both experienced and highly educated.

The need for experience, perhaps contrary to expectations, is great.

The median age for an innovator is 47, and almost all are between the ages of 26 and 65; the tech-savvy youngsters (16-25) make up less than 4% of innovators. These things take time, and seniority gained through experience is often integral in seeing ideas put into practice.

more generally, where women still make up less than 25% of the workforce. A similar report in the early 2000s found the number of female innovators to be closer to 5%; involvement is growing, but far more could be done. Both numbers are, also, far smaller than the share of STEM degrees going to women.

A filter-in time is natural, given the rise in women taking STEM degrees.

But, clearly, there is still plenty of work to be done demographically; there is almost certainly no disparity in talent, and the active widening of the talent pool by the opening of STEM positions to both women and US minorities could only create value.

The other interesting data point to come out of the survey regarded the size of the companies innovating.

While the stereotype of small startups as hotbeds of innovation may hold some water, generally the groundbreaking innovation happens at big firms - those with over 500 employees. Of the respondents, 57% worked for these larger companies, with smaller companies - those with 25 employees or fewer - contributing 16%. Resources are part of the problem; of these smaller companies, 60% receive public grants for innovations, something that ITIF believes should be extended across the country, with it currently concentrated in California.

58% of respondents picked a lack of funding as one of the key inhibitors of commmercialization of ideas.

The government’s role in the furthering of innovation is key. And, with initiatives springing up to get more women into STEM and for greater involvement of US-born minorities, the personnel behind innovation in the US could undergo serious change in the coming years, and only those opposed to positive change will forego the benefits.

Worryingly, though, only 12% of US innovators are women - a number reflective of STEM fields

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What Is An Innovation Lab? Dean Marshall Innovation Commentator

The digital age has brought with it many good things, but has also created many challenges, particularly for those large corporations that have operated in their industries for years and have long established processes and ways of working.

These entrenched companies have proven themselves particularly susceptible to technological disruption, with 52% of the firms that made up the Fortune 500 in the year 2000 now gone because they failed to make the digital shift. Technological advances are constantly disrupting all industries, ripping apart traditional power structures and rendering old ways of working obsolete.

In order to overcome this, firms need to be on top of the new technologies that could have an impact on their industries, and which one will offer them an edge over their competitors.

The best will be ahead of the curve, innovating with entirely new ideas that improve every facet of their operations. One of the best ways of achieving this is through the creation of innovation labs, a place in the company to spearhead new ideas and new product development.

Large companies build innovation labs fundamentally to recreate the atmosphere of a startup. They create an atmosphere in which risk taking is encouraged, and everything

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10 is geared towards spurring creativity and nurturing new ideas, helping to develop technologies and business strategies, and recruiting tech talent.

A recent study by Capgemini Consulting, entitled the Innovation Game, found that 38% of the world’s top 200 companies have set up innovation centers. They are particularly strong in the manufacturing and telecom sectors.

The most popular locations are Silicon Valley (53), London (10), Paris (9) and Singapore (7).

Firms need to be on top of the new technologies that could have an impact on their industries, and which one will offer them an edge over their competitors

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While innovation labs are traditionally associated with tech companies, they are being embraced by companies across all industries, basing themselves particularly around San Francisco in particular, in an effort to pick up some of the startup spirit that has been the driver behind the latest technology boom.

Retailers such as Target Corp, Walgreens and real-estate giant Westfield, for example, are among dozens of large corporations to have built labs in the San Francisco Bay Area in recent years.

The Walmart Labs operation is particularly notable. Its lab builds and tests online and mobile technologies. The retail giant has acquired 14 startups in the past 3 years, employing a similar attitude to Google that seems to say if there’s someone who can do something better than you, don’t flounder around trying to compete, simply buy them. Their success has been tremendous, with the internal search engine that was developed by Walmart Labs said to have driven a 20% increase in online sales conversions for Walmart.

Google’s Google[x] Lab is also an excellent example of an innovation lab. It is world renowned for being one of the driving forces behind Google’s attempt to stay at the cutting edge of innovation. Google hires in engineers and scientists specially to take charge of their ‘moonshot’ efforts - creative and experimental projects that do not necessarily aim to lead to commercial products, but will certainly move the company forward through innovation. The company’s infamous self-driving car and Google Glass are just two of the ideas to have been born of the lab.

Some question whether there are better options. Hayagreeva Rao, a professor at Stanford University’s Graduate School of Business, for one, has asked whether these ‘innovation labs, most of which are just a few years old, will come to represent substantial changes in the way sprawling corporate giants launch new products’. He suggests in its place a startup accelerator, where executives take six weeks off from business as usual to work on a single project, recreating the energy and pace of a startup and carrying it forward into other projects. The success of innovation labs is hard to argue with though, and it likely that they will be around for some time to come.

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Getting More Women In Tech

Rebecca Thomson International Events Director, The Innovation Enterprise

Today, women hold around 30% of tech positions. The group that make up 58.7% of the US labor force - close to two-thirds - take almost one-third of the STEM jobs. We can all agree that that’s a disappointing number, but it’s made all the more unacceptable when you consider that the figure is actually down from 36% in 1991. After countless initiatives, a perceived shift in societal attitude, and trials of various quota systems, it seems that we have gone backwards, and something is still limiting the involvement of women in tech.

It’s not a small company issue, either. Women fill just 10% of technical positions at Twitter, 16.6% at Microsoft, and 17% at Google.

The issue is so multifaceted, so ingrained, that no one initiative or governmental policy will see girls itching to take tech subjects or women flooding into tech roles. That said, they are undeniably necessary, and dealing with both the symptoms and the causes of a culture that turns women away from tech is the only way we can bring balance to a wildly one-sided industry.

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In 2015, Intel invested $300 million in a ‘diversity fund’, which ‘serves tech startups led by women and underrepresented minorities’ helpful for the limited pool of female leaders but perhaps less so for the female graduate. The Californian multinational, along with six other companies - IBM, General Motors, Cummins, Caterpillar, Johnson Controls and Booz Allen Hamilton - are rolling out paid re-entry programs to supplement the existing initiatives. The paid internships are designed to allow women who have

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The issue is so multifaceted, so ingrained, that no one initiative or governmental policy will see girls itching to take tech subjects or women flooding into tech roles

taken a two-or-more-year career break a path back into the industry.

Pioneered by iRelaunch, which was founded in 2014 and is responsible for re-hiring at some high profile companies, the programs aim to remove any lasting stigma attached to those with extended gaps in their CVs and improve the job market with a second influx of former professionals.

quotas are unnecessary. Having female senior managers can change the culture of the industry, in part by providing senior role models to offset the damaging image of the ‘brogrammer’. Quotas are perhaps an uncomfortably forced way into seniority for women but, as a remedy for a symptom rather than the cause, the evidence suggests that they are effective.

GM’s 12-week re-entry program, for example, is hoped will give those who have taken long breaks the opportunity to catch up with the ever-hastening changes in technology since their last jobs, which range from four- to 21-year breaks. GM’s 10 interns are all women and Silva Karlsson, SWE liaison for GM, said: ‘Our hope is to hire them all.’ IBM are similarly looking to bring in six interns, all of which are women with five- to eightyear breaks in their careers; men are included, but typically far fewer have taken the time out of work.

Above all else, they are about getting women back in at a level of seniority appropriate to their experience. More gender-diverse boardrooms have been shown to be more financially successful and, according to TechCrunch, companies that neglect to promote women are failing their shareholders - a message that could be forcefully used to push the issue.

As useful as these policies and schemes can be, the root issue is one of education; the perception of tech, or STEM more generally, as a ‘male industry’ needs to change. The attitude pervades society, from the perception that tools are somehow ‘boys toys’ to the notion that women favor ‘more caring careers’ than tech - which, incidentally, is nonsensical given the good that tech can do for families and societies. And education in the classroom, though vital, can only go so far; attitudes at home must change, too. Organizations like #techmums hope to ‘[give] mothers the chance to take part in the digital revolution’ through hands-on tech workshops. Part of the drive to get young girls involved in tech is to educate mothers, assuage any concerns they may have about their children being online, and open them up to the benefits of grappling with tech from an early age. It’s unlikely that the next generation of mothers will be at all inexperienced with tech given its ubiquity but, at present, the organization is useful and mothers have even found work in tech thanks to the program.

Such programs are more organic than the use of quotas, which still invariably divide opinion. Quotas are an unfortunate last resort, but they are a means to an end in which

There is no simple answer to the dearth of women in tech positions.

The changes need to be top down, bottom up, governmental, societal, long-term and short-term. The shrink in the percentage of women in tech roles since 1991 is worrying, but with the gap now common knowledge and an ever-growing list of initiatives in place to address it, the outlook needn’t be quite so bleak.

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Will AI In Healthcare Work?

Shivanee Pattni Innovation Expert

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As in almost every industry imaginable, artificial intelligence (AI) is set to make a considerable mark. Its introduction is almost certain, but the degree to which machine learning will be accepted remains unclear. Automation is seeping its way into the public consciousness but, despite an almost guaranteed level of public acceptance, healthcare is a sensitive area. And Google, champions of AI, is attempting to roll out its automated technology into the UK’s top hospitals.

Working alongside the NHS, Google plan to utilize an app designed to alert staff to patients at serious risk of complications due to kidney failure - Stream. Co-designed by Google’s DeepMind, Royal Free Hospital London and engineers at digital product studio ustwo, the app is being used to ‘present timely information that helps nurses and doctors detect cases of acute kidney injury.’ The app almost instantly alerts medical staff to the results of routine blood tests which can reveal kidney problems, a contributor of

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Automation is seeping its way into the public consciousness but, despite an almost guaranteed level of public acceptance, healthcare is a sensitive area up to 20% of emergency hospital admissions. Of these cases, 25% are preventable, and Streams aims to give staff the tools to do so.

The app is not a standalone tool, though, and this is key to the integration of automation into hospital work. Google DeepMind recently bought Hark - a task management app intended to move paper-based or pager-reliant hospital work onto mobile, developed by a team at Imperial College London over four years. Pushed by top surgeons Ara Darzi and Dominic King, the app is in early pilot stage at St Mary’s Hospital London, where they found that clinicians were able to respond 37% faster than with traditional methods.

Generally, the priority is the treatment of kidney injuries, and Streams can be integrated with Hark to achieve that ends. Hark does not yet utilize artificial intelligence or machine learning to predict which patients are the most ‘likely’ to become seriously ill and require immediate treatment, but DeepMind claimed ‘that may change in the future.’ Some are sceptical. After all, the NHS has a history of failed software investments, but the coming together of communication systems and automated diagnoses has the potential to effectively

streamline hospital practices. And this is precisely how the technology will have to be introduced; to supplement already existing and functional systems, rather than to overhaul procedures. For AI in healthcare to be utilized safely, it must begin life as a useful add-on rather than a central pillar.

Demis Hassabis, head of DeepMind, has been lauded for his project to build software capable of rivalling the human brain for intelligence.

The technology is of course still some way away, but exciting developments have been made. For example, DeepMind has recently been displaying its capabilities by mastering video games. Unlike most game-playing bots, DeepMind had no access to the internal code of the games, rather it observed and acted ‘as a human would’. Most recently, it learnt to traverse 3D, randomly generated mazes in a game called Labyrinth, learning a ‘reasonable strategy for exploring random 3D mazes using only a visual input’, according to its creators.

No such machine learning has been deployed within the NHS, but as the technology is developed new opportunities for the integration of automation will present themselves.

Mustafa Suleyman, co-founder of DeepMind, said: ‘it’s super early.

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16 But if we get it right, we can help doctors and nurses spend more time providing care, and less time juggling to-do lists’. Changes are likely to be just as that, more administrative than clinical, at least for now - automated treatment is still some way off. Changes in the near future are unlikely to be revolutions, but additions, such as Hark’s ability to pick up relevant information from the electronic patient record, give the staff a more complete picture of the condition and medical history of the patient as they respond.

The involvement of tech giants in healthcare - particularly one that regularly harvests data for commercial gain - will bring with it a host of ethical concerns. Suleyman is adamant that the company are taking adequate precautions in the protection of patient data, though, insisting that ‘the hospital will always own and control that data...the data will never leave the UK and it will never be linked or associated to Google accounts, products or services.’ Such assurances will be

For AI in healthcare to be utilized safely, it must begin life as a useful add-on rather than a central pillar

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vital if public opinion is to warm to Google and DeepMind’s involvement in the healthcare system.

There is no AI or machine learning currently deployed in the NHS. But, with incremental steps both inside and outside of the hospital, there is no reason AI cannot be introduced to supplement, rather than replace, existing practices and help streamline an at times disorganized but always brilliant - public system.

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when humans take a robots job Charlie Sammonds Managing Editor

Researchers from Oxford University have estimated that, within the next two decades, 47% of US jobs could be automated. Such a figure needs only to come to partial fruition to have an incredible effect on the workforce of the world’s third-most populated country - grim reading for the 40% of young people worried automation will render them jobless within a decade.

According to the International Federation of Robotics, 1.5 million industrial robots were online in 2014, with 1.3 million more expected to be put into operation within the next two years. Author and entrepreneur Martin Ford, in his ‘Rise of the Robots: Technology and the Threat of a Jobless Future’, takes a dim view of a potential world in which AI and robotics have overhauled the economy. A world in which Google now hold a patent to create working robots with personalities, and, according to Wired, ‘a manufacturing device from Universal Robots doesn’t just solder, paint, screw, glue, and grasp - it builds chief innovation officer

new parts for itself on the fly when they wear out.’ Regardless of your opinion of automated work, the advancements are impressive and the advantages of precise, costeffective machine workers are clear.

But Mercedes has been forced to buck the trend, removing robots from their production lines in Sindelfingen and replacing them with skilled humans. The luxury auto manufacturer, which holds 1.9% of the US market share, boasts a host of customization options on its S-Class sedan - produced at the Sindelfingen factory - ranging from heated or cooled cup holders to four

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percentage of automated jobs in the next two decates in america

Mercedes has been forced to buck the trend, removing robots from their production lines in Sindelfingen and replacing them with skilled humans automated jobs

types of caps for the tyre valves.

Such variation in production is, as explained by head of production Mark Schaefer, too much for the current machines to handle.

‘Robots can’t deal with the degree of individualization and the many variants that we have today. We’re saving money and safeguarding our future by employing more people.’

Humans can change a production line over a weekend, where it takes time - often weeks - to reprogram and realign the robots that have been in use for over 40 years. Over 40,000 vehicles a year are produced at the south Germany factory and, with a range of new models in the pipeline, the issue of customization is only set to worsen.

Humans can change a production line over a weekend, where it takes time - often weeks - to reprogram and realign the robots that have been in use for over 40 years

However, before we laud the death of automation and the indomitable adaptability of the human worker, it should be noted that this does not mark the complete removal of automation from the production line.

Rather, it means that humans will be paired with smaller, more flexible machines - a process known as ‘robot farming’, intended to speed processes along and aid versatility.

The robots being introduced have improved safety features that negate the necessity for safety space between them and their human

counterparts, a feature that is hoped will lead to improved collaboration and clear the way for manufacturing innovation.

Both BMW and Audi are also testing robots that have the sensory equipment necessary to work alongside humans in a collaborative environment, while Toyota, world leaders in industrial robotics, have begun similar replacement. It is a relatively rare situation in which consumer demand - in this case for customizaton of luxury cars - has surpassed technological capability, forcing innovation and potentially creating jobs. The steps taken by Tesla and other technology-driven car manufacturers have brought innovation further into the center of an industry in which no manufacturer is safe from being left behind.

Some will view Mercedes’ decision as a small victory in the otherwise one-sided conflict between robot and factory floor worker. Others will see the change as part of a wider trend toward collaboration rather than overhaul. Either way you look at it, the complexion of the factory floor in the near future remains a mystery.

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Can We Please Stop Talking About Disruptive Innovation?

Harriet Connolly Head of Innovation, The Innovation Enterprise

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First coined by Clayton M. Christensen in his 1995 paper ‘Disruptive Technologies: Catching the Wave’, the eponymous concept has since gripped the world of business and become a more general explanation for how change happens. The Economist went as far as to call it ‘one of the most influential modern business ideas’, but the rife misuse and eulogy surrounding it are not only confused, but dangerous.

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The iPhone is a good example here, not of disruption in the mobile phone market or even the emerging smartphone market, but in the laptop market

In essence, the term describes a business model in which a new competitor creates cheaper, less technologically complex products in order to make affordable products, as an alternative to the big players look to upgrading their products for higher-paying customers and end up ‘over-serving’. These new products are initially ‘valued only in emerging markets remote from, and unimportant to, the mainstream,’ according to Christensen, before developing their product to appeal to a wider demographic. The theory goes that before the incumbent has noticed the growing disruptor, the disruptor has already begun to take over the market.

The iPhone is a good example here, not of disruption in the mobile phone market or even the emerging smartphone market, but in the laptop market. It’s initial popularity can be explained by the superiority of the product, but its subsequent growth can be better explained by disruption; the iPhone grew to become an alternative means of accessing the internet and, as we can see from mobile usage figures, an eventually more popular means. But the term ‘disruptive innovation’ has become so ubiquitous that mislabelling is commonplace. Essentially, it has become a synonym for innovation, or specifically anything that shakes

up existing industries and wrests a market share from established, successful incumbents.

In an interview with the Editorin-chief of the Harvard Business Review, Christensen himself admitted that he ‘never thought… that the word disruption has so many connotations in the English language, that people would then flexibly take an idea, twist it, and use it to justify whatever they wanted to do in the first place.’

Indeed, refinements in the theory have overshadowed its initial popularity, core concepts have been misunderstood and of the host of companies claiming to be innovating disruptively, very few actually fit the bill. But perhaps they shouldn’t have to; Christensen’s model is so deeply flawed that it should not be as wide a basis for business strategies as it is, and true disruptive innovation is rare. In fact, a study by Andrew A. King and Baljir Baatartogotkh found that only nine of out 77 cases that Christensen used for examples of disruptive innovation actually fit the four criteria of his own theory.

Uber is a good example of a misplaced application of the term.

Almost always described as a disruptive model, Uber’s industrychanging growth - according to the factors laid out by Christensen - falls short of being a truly ‘disruptive’

business. Firstly and crucially, Uber’s genesis can be found not in low-end or new-market footholds. That is to say, Uber muscled their way into the mainstream with a superior product the reduced prices came at no cost to service - before appealing to the outskirts. It created no new market, simply harnessed technology and found innovative improvements to an age-old industry. Secondly, truly disruptive innovations are described, initially at least, as inferior to the incumbent. Uber was without such limitations upon its launch; many would describe the service as superior to that of existing companies. Uber may be innovative, but it isn’t disruptive.

Such mislabelling stems from Christensen’s own less-than-perfect application of his theory. He posited that local slaughterhouses were being ‘disrupted’ by butchers, who used advancements in refrigeration and rail to become the dominant providers of meat in local areas.

But, as pointed out by King and Baatartogotkh, local butchers weren’t ‘on a path of innovation.

To the contrary, they relied on tools and artisanal practices that hadn’t changed for decades.’ The pair found that broader changes contributed far more to the story, namely ’the Union Army’s demand for beef during the American Civil War, the expansion of the railroad, chief innovation officer

22 the scale economies provided by the use of a ‘disassembly line,’ and opposition by local communities that wished to noxious slaughter operations closed.’ Sustaining innovation, as suggested by the theory, was not the key factor in the closing of local slaughter operations.

Meatpacking is just one industry to which disruptive innovation has been retrospectively, and wrongly, applied.

Christensen’s model is so deeply flawed that it should not be as wide a basis for business strategies as it is, and true disruptive innovation is rare

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Disruption theory simply hasn’t the sound historical evidence necessary to support predictions made from a model, as expertly argued by Jill Lepore - a professor of history at Harvard University - in the New Yorker in 2014. ‘Most of the entrant firms celebrated by Christensen as triumphant disrupters… no longer exist, their success having been in some cases brief and in others illusory,’ she argues, after establishing that some of the key incumbents ‘disrupted’ by these firms are still well established

businesses. The arbitrary definition of success laid out by Christensen holds back disruption theory greatly.

He has since made revisions to his theory, it must be said, but far too many take it at face value, particularly when the term is too liberally applied.

The very mantra of ‘disrupt or be disrupted’ is misleading in that disruption does not guarantee a toppled incumbent. Companies should not overreact by dismantling what is a profitable business in fear of being disrupted - in essence, do not try to solve a problem before it is one. As Lepore concludes: ‘Disruptive innovation is a theory about why businesses fail. It’s not more than that. It doesn’t explain change. It’s not a law of nature.

It’s an artifact of history, an idea, forged in time; it’s the manufacture of a moment of upsetting and edgy uncertainty. Transfixed by change, it’s blind to continuity. It makes a very poor prophet.’

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A Sit Down With Mike McMinn, CIO Of Marston’s Matthew Griffin Global Futurist and Industry Disruption Expert

Marston’s, a 200-year-old company, operates over 2,000 pubs in the UK and, while it’d be easy to categorize them as a hospitality company, their CIO Mike McMinn firmly believes that they are, in fact, a leisure company. When you’re building out the vision for your company, or the company you work for, being able to accurately frame the sector you’re serving makes the difference between struggling to grow your revenues incrementally in a mature market place, and dominating not just your natural market but also new ones. chief innovation officer

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While the upsides of re-classifying a business can be substantial, so too can executives’ resistance to change

Framing your company’s objectives, its purpose and its target market correctly is one of the most important undertakings your company will ever carry out, and it’s one that will make all the difference when it comes to new product development, determining who your real competitors are and your go to market strategy. Coincidentally, it can also dramatically increase a company’s addressable market opportunity and the number of new customers they can target. Of course, one of the knock on effects that this can have is demonstrating to shareholders that your stock price has plenty of upside - provided of course you can maintain a pipeline of innovative new product developments and execute with precision.

McMinn’s reclassifying of Marston’s as a leisure company is a master stroke. By re-envisioning Marston’s from a company that serves customers great food and drink, provides them with comfortable spaces to socialise and watch sports on TV, to a company that provides social and hospitality services, suddenly McMinn’s able to open up a whole new raft of market opportunities that would have previously been out of scope.

At the same time, however, the initiative has increased the number of competitors from a core group such as Yates and Greene King and expanded the roster to include companies such as Sky, Marks & Spencer, Tesco, Giraffe, Starbucks and Microsoft - all of which are responsible, in their own way, for taking customers away from Marston’s properties. Consequently, the range of new products and services that the Marston’s needs to design to attract customers away from these competitors also needs to change.

While the upsides of re-classifying a business can be substantial, so

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too can executives’ resistance to change, and having had an uphill battle trying to propagate his ideas to the top, Mike - like so many others CIO’s that I talk to - has found it easier to change the culture of the company from the bottom because, as he describes it, you can’t stop a stampede of elephants. The natural place for Mike to start, of course, was his own ICT organisation, and over the years he’s focused on returning time to his team and has encouraged them to adopt an entrepreneurial mindset.

For years, though, the company didn’t see technology as an enabler.

Despite the fact that almost every new innovation in the world is underpinned by technology, one of Mike’s key challenges has been trying to get the executive teams to change their view - that IT is slow to deliver - to one where they see IT as a function that helps the business to prosper.

After 20 years of pushing, Mike’s initiatives are paying off, and his vision is coming to life. Not only is Marston’s bucking the industry trend and attracting new customers into its properties, but their new B2B platform mymarstons.co.uk, which provides a full portfolio of B2B services from accountancy and auditing to stock management and marketing services, has attracted a whole new range of long-term customers. In fact, the platform’s proven to be so successful that Marston’s competitors Carlsberg and Greenking have built their own versions. But as they build up, Mike and his team keep building out, developing, iterating the next version and looking for ways to extend the platform’s relevance to new markets.

While technology is the ‘How’, when a new service is delivered the question of ‘What’ that new service should be still relies on curious, creative people looking for gaps in the market - entrepreneurs.

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So entrenched were some people’s views about IT’s role within business, that one year Mike was asked to deliver a presentation entitled ‘justifying IT’s existence’ One example of a gap in the market that Mike and his team identified has turned into yet another profitable business for the company who are now a fully fledged ISP, providing over 6,500 landlines to thousands of customers. A result of observation and determination, Mike and his team noticed, unsurprisingly, that not all night clubs have good quality broadband. Not only did this have a direct impact on how much they used the mymarstons platform but, using an entrepreneurial eye they also realized it was a problem they could solve. A number of conversations with BT, one business case that showed how becoming an MVNO would save Marston’s £500,000 for a £70,000 investment, and a number of outsourced third party contracts later and Marston’s became a full ISP piggy backing on top of BT, TalkTalk and Lynx.

The desire to push the boundaries and provide value to the company doesn’t stop there though and, as you’d expect, data and analytics are now playing increasingly important roles in helping create the next generation of business. Dwell times in Marston’s properties are sitting at a healthy one and a half hours, but Mike knows that they can do better by rolling out new services that attract new customers and encourage them to dwell longer and, as Microsoft recently recognised, he’s already well on his way to moving the dial.

Overturning perceptions Over the years, it’s fair to say that Mike has had more than his fair share of conversations with executives defending the position that IT is an essential component of the business. Despite the fact that, as we all know, with the right visionary leader at the helm, technology is an enabler, it still took him years to overturn the executive view that it was simply a cost to be driven down.

So entrenched were some people’s views about IT’s role within business, that one year Mike was asked

to deliver a presentation entitled ‘justifying IT’s existence’. Naturally the best and swiftest response - as any CIO will know when posed with that challenge - is to simply suggest that the company turns everything off and then see how they get on without it. We all know how quickly views would change, but nonetheless it shows how entrenched some people’s views were.

Once you meet Mike, you realise that he’s a seasoned, experienced gentleman and, while for many people this would be praise, people’s perceptions - as Mike found out at a recent PWC Digital event - struck again. You see when I say seasoned, what I really mean to say is that Mike’s age doesn’t exactly put him into the Generation X or Generation Y bucket. And, as we all hear day in day out, if you’re not Generation X or Generation Y then you simply ‘don’t get’ digital. People love their stereotypes, and it’s unfortunately human nature that one of our favourite pastimes is pigeon-holing individuals, groups and even whole societies, and this is one stereotype that Mike seems to love throwing back in people’s faces - the fact that he’s also a pretty mean Forza driver just adds fuel to the fire.

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On suppliers When we discuss the topic of suppliers, it’s a familiar story. Large manufacturers that lack empathy, who switch account managers at will and who only seem to work in broadcast mode and smaller, nimbler manufacturers who come across as more engaging and authentic.

Here, Mike concentrates on a small number of manufacturers so that he can return as much time back to his entrepreneurial team as possible.

Again, it’s a strategy that has not only delivered results but one that’s gotten him and his team recognised at the highest levels in Microsoft, by none other than Satya Nadella himself.

In 2014, Marston’s entrepreneurial team delivered an innovative new use case using Microsoft Dynamics CRM and Social Listening products, using them to analyze and respond to new customer trends faster, earning them Microsoft’s Convergence 2014 Europe Customer Excellence Award for Cloud Transformation, and today they still have a direct line to Microsoft’s Chief of Staff.

To his peers Over the years Mike has earned his stripes and, while every business is different, their goals - to grow and prosper - are always the same. Today there is no doubting technology’s vital and enabling role, and Mike has this advice for his peers: Once you’ve established your credibility use the courage of your convictions to help your

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business thrive Be entrepreneurial Remember that the technology is immaterial Be determined

Conclusion Despite technology’s unstoppable march, despite how it’s changing the world, changing lives and helping companies generate hundreds of billions in profits, there are still people and companies that cling to outmoded views that technology is valueless. History has shown time and time again that companies with leaders who lack vision and determination are often the first to be consigned to the history books and this trend is accelerating.

Marston’s, though, is turning the tide, bucking the trend of pub closures that threaten to leave gaping holes in Britain’s villages and high streets. While the products and services that the company delivers in the future will be different from the ones it delivers today the one thing that you will be ensured of when you step across the Marston’s threshold will be a good time.

If you’re a CIO and would like to take part and be interviewed for our special UK versus US CIO Master series please get in touch with Matthew Griffin.

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Chief Innovation Officer Summit 14 & 15 September, 2016

Sydney

Speakers Include +6 128 011 3033 vhernandez@theiegroup.com www.theinnovationenterprise.com chief innovation officer

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