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‘When it comes to agility, don’t let company size blind you to what you really need to look at’
DISRUPTIVE
INNOVATION In the first article in Business & Leadership and Irish Director’s new ‘Future Business’ series, Sorcha Corcoran explores the concept of business agility in reacting to changing customer needs
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he expression ‘if you snooze, you lose’ has to be resonating more and more with the business community as the world hurtles through a period of unprecedented change and consumers become ever more demanding. The past 10 years have brought us pervasive internet connectivity, cloud-based applications, mobile devices that connect everywhere, remote working and digital innovations that create newly empowered customers. And with rapid technological advancement and high consumer expectations has come an increased level of disruption. “A disrupter is a person or firm that really changes the way business functions. It is not just about an incremental innovation or a novel idea. The most common way to be a disrupter is to change customer expectations – for example, it shouldn’t take 30 seconds for a bank card to clear or a minute for a computer to warm up. Once consumers have tried the innovation, they don’t want to go back to the previous way of doing things,” explains US-based business strategy consultant Dr Trish Gorman. Probably the most high-profile example of a company to fall foul of disruption in recent years is Kodak, which went bankrupt in 2012 because it missed the boat when digital cameras came on stream, despite the fact that one of its engineers actually invented the technology in 1975. Kodak management’s inability to see digital photography as a disruptive technology led to the company’s downfall.
Irish Director Autumn 2014
Every industry is subject to disruption. Think of Ryanair introducing the low cost fare model to aviation, DVDs replacing videos and Apple’s various product launches from the iPhone to its recent announcement that it would move into mobile payments. The phrase ‘the greatest thing since sliced bread’ came from the disruption in 1928 involving a loaf of bread being pre-sliced with a machine and packaged for convenience. In order to respond to disruption and a rapidly evolving market environment businesses have to be agile. US-based technology and market research company Forrester recently defined business agility as “the quality that allows an enterprise to embrace market and operational changes as a matter of routine”. Gorman, who was a speaker at the InterTradeIreland 2014 AllIsland Innovation Conference in University College Dublin on 1 October, breaks business agility down into four parts under the headings ‘strategic’, ‘resource’, ‘operational’ and ‘personal’ – which are in decreasing order of disruption. “Strategic agility refers to the ability to see a new opportunity and go after it – say you’re operating a Disney theme park and you spot an opportunity in cruise ships. Resource agility is about attaching talent and money to an idea. It isn’t hard to put money against a good idea, what really separates agile businesses is the ability to take resources away from something that is no longer a good opportunity and move them elsewhere. Resources tend to be sticky once they’re invested,” she says. “The operational element assumes you’re not going to change
Autumn 2014 Irish Director
Future business in association with Vodafone
37 your business model, but within that you make the right decisions to become more efficient and effective. This could be about cross training your people, for example, the staff in hotel reception being trained to work in the back office or vice versa. “Personal agility is concerned with the individual and being the right kind of leader for the right moment in your business’s story.” As Gorman points out, modern day business leaders sometimes have to tell their employees to break all the rules and forget everything they ever knew so the company can move in a new direction, while other times they have to steer the organisation to hold its course. “It used to be we had this idea that there had to be different people doing different things within an organisation – the ‘boring’ accounting types looked after the finances while the entrepreneurial types whipped everyone up into a frenzy with new ideas. Increasingly, talented managers are being asked to do both, in other words be personally agile. One day they could be talking to investors, the next focused on sticking to a budget.” Personally agile CEOs do exist – in Gorman’s view Paul Polman at Unilever and Paul Bulcke of Nestlé are good examples – but in most cases top managers focus on building an agile team rather
than being completely agile themselves. This means recognising where their weaknesses lie and making sure there is someone on the team to carry the slack. While research might show that larger organisations tend to be less agile, Gorman believes this doesn’t always hold true. “How close the decision-makers are to the problem is the real measure of a company’s agility. Multinational retailer Walmart is one example of a large organisation that can be fairly agile. Meanwhile, in some mid-sized companies, founders try to take too much control and there is not enough decentralisation. “When it comes to agility, don’t let company size blind you to what you really need to look at. For instance, people tend to look at innovation as this ‘other thing’, but within companies you need to keep it going in order to be agile and stay dynamic.” Co-founder of Irish training and consultancy organisation ThousandSeeds Mary Cronin adds to this view of Gorman’s: “Simply setting up a team dedicated to innovation is not being innovative – this is just another team where everybody thinks the same. When looking at building new companies as well as examining existing business models, we need to be careful going forward about how we actually innovate. There tends to be too much of a focus on products
Case study: Keenan healthier cattle and improved farming incomes. “We wanted to find a way of ensuring that the perfect mix that we had specified would be delivered, no matter what difficulties a farmer might be experiencing on the ground,” explains Keenan’s group marketing manager Michael Keogh. After initial tests were successfully conducted with farmers in Scotland, an exclusive agreement was signed between Keenan and Vodafone for the supply of the M2M SIMs carrying Pace technology. Vodafone M2M allows multiple devices to share information without the need for human intervention, using its mobile telecommunications network. The connectivity is now facilitating unprecedented levels of data analysis and control of the performance of dairy and beef herds for Keenan customers, enabling precise fine tuning of feed mixes, drawing on the contents of the largest feed efficiency database in the world. Verified results from more than 1,000 herds in the UK and France showed that the Keenan system increased feed efficiency by 10pc, while milk yields increased by 1.74kg per Co Carlow-based livestock feeding business Keenan introduced machine to machine (M2M) SIMs into its worldwide fleet of feeding
Overall, almost 10,000 farmers in 25 countries are producing
machines recently and this has made a significant difference to its
more and better quality milk or beef from the same or less feed and
farming customers in Europe and North America.
increasing profits by wasting less.
Established in 1978, Keenan showed a determination from an early
US-based business strategy consultant Dr Trish Gorman
cow per day.
Keogh notes that the M2M means Keenan’s customers don’t need
stage to be more than simply a supplier of farm machinery. It re-
to make a big investment in additional technology and it also takes
cognised that it was the accuracy and quality of the physical feed mix
away the possibility of misunderstandings created by language or
within the wagons that produced improved milk and beef production,
differences in terminology when working with farmers around the world.
Irish Director Autumn 2014
Autumn 2014 Irish Director
Future business in association with Vodafone
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‘Simply setting up a team dedicated to innovation is not being innovative – this is just another team where everybody thinks the same’
in relation to reinvention or diversification,” she says. “We need to get people to think about really being customer centric as opposed to being organisation centric – to ask themselves ‘what are the unmet needs of our customers?’ and develop products based on that rather than selling products from the organisation out. “When a company isn’t customer centric, products are developed with lots of features in them that customers never wanted, which is why so many fail.” Cronin maintains that the key to being truly customer centric is knowledge transfer through observation and immersion. “Customers don’t know what they don’t know. The companies that are going to survive are the ones which have the whole
customer process set up around how they talk to them. It means when interviewing customers, they have to observe what they’re doing as opposed to what they tell them.” To illustrate this point, she notes that when Henry Ford interviewed people about what they would like in terms of transport, they answered ‘faster horses of course’. “In fact he created the motor car. He analysed what the driver wanted as opposed to designing the faster horse. Words were translated into insights through combining his knowledge and the customers’ knowledge. Companies that don’t constantly question themselves on how they create value for their customers will have a difficulty in surviving over the long term.”
end of 2010. Further to meeting the supplier, agreeing the technical specification and raising the necessary finance, we had the first one on the ground within 18 months.” One of the added features introduced at the time of launch that has proved popular was the creation of a virtual UK address, which allows customers in Ireland to avail of cheaper UK shipping prices. There are now 8,000 Parcel Motel lockers at 100 locations around Ireland. Tuohy says 110,000 people are registered to use the service and this is growing at a rate of 1,000 new registrations every week. “We were the first to market with this concept, so even if somebody does introduce something similar it will be compared to Parcel Motel,” says Tuohy. “Business agility really has to be at the core of what we do at Nightline. Our main competitors are overseas postal operators with very deep pockets, so to maintain our Having co-founded parcel delivery service Nightline in 1992, managing
market position we have to be resourceful. Our next move will be to ex-
director John Tuohy observed four years ago that consumers ordering
pand Parcel Motel into other markets – we have received expressions
online needed more options for purchasing and returning items to
of interest in the idea from Europe, Asia and North America.”
retailers. “A lot of our retail clients that ship parcels were also asking us to look at more sustainable and cost effective ways of delivering, while at the same time enhancing the customer experience,” he recalls. “I saw the locker we now use at a trade show in Copenhagen at the
Irish Director Autumn 2014
VIEW There is an inextricable link between investment in ICT and company agility and innovativeness
“I
Case study: Parcel Motel
John Tuohy, managing director, Nightline
THE VODAFONE
Now employing 700 people, including 100 in Northern Ireland, Nightline delivers one million parcels every month. “We continued to experience growth even during the recession. Our workforce has increased by 50pc since 2008 and our turnover should reach around €50m in 2014, 10pc up on 2013,” notes Tuohy.
f the recession has taught us anything it is that businesses must have the ability to be nimble and to change when competitors and the marketplace are changing,” says Anne Sheehan, enterprise director, Vodafone Ireland. Information and communications technology (ICT) has become a key part of company strategy, both in terms of investment in the right infrastructure in order to have the ability to react to change as well as actually dictating how businesses reach their customers. Sheehan continues: “This requires having the right foundations in place in terms of ICT infrastructure – in other words, an infrastructure that is agile and flexible.” Those companies that have invested in ICT tend to be the most agile and innovative. Large corporates are leading the way in this regard as they can make big investments to make sure they are adopting technologies to keep ahead of the market. “European research by Vodafone has also shown that while SMEs in Ireland are holding their own in terms of agility, they are ahead in social networking, mobile voice and data and websites, while they tend to lag behind in the adoption of cloud and unified communications,” she says. “In our experience, whether SMEs adopt new technologies has a lot to do with confidence levels – they need to be reassured that it makes sense and there is a return on investment.” Some Irish businesses are showing themselves at the forefront in terms of agility. Brennans Bread, for example, has transformed a huge part of its business in the past year without making a massive investment. Its core business is making bread and distributing its products to retailers using 260 vans on a daily basis. Previously, drivers filled out delivery dockets manually and either dropped them back or posted them to headquarters (HQ), meaning retailers were not being billed in real time. “We consulted with Brennans Bread on how this process could be made easier and developed a smartphone app in conjunction
with the company which allows the delivery man to tick all the products delivered online, report to HQ and this is then integrated into the back office,” Sheehan explains. “The project has been a game changer for Brennans Bread. It was delivered in a two month period and there is a clear return on investment – it’s about simple technology addressing a real business need.” With the data and online explosion, businesses are changing their work practices in response to the demand from their customers who want solutions quickly, easily and online - at any time of the day. Organisations need to be geared for this, which means employees not being tied to the office and having the ability to use data quickly on their chosen device and being able to make decisions on the spot. Sheehan also cites Dawn Meats as one company which responded to this trend. “Dawn Meats has a number of different plants in the south east and is involved in a fast-paced industry supplying high profile customers. “Employees were travelling between plants and the company was losing a lot of time in terms of getting decisions made. It introduced video conferencing, which took out the need to travel and allowed real-time decision making.” Hand in hand with the desire to make decisions in real time is the massive appetite that exists for analytics. This has led to huge growth in ‘machine to machine’ (M2M), which refers to technologies that allow both wireless and wired systems to communicate with other devices of the same type. Involving putting intelligent SIMs into devices and tracking information, M2M is all around us, from handheld terminals in airline flights, to fridges monitoring temperature to SIMs in cars measuring the amount of petrol being used. “Before long most devices will incorporate intelligent SIMs and more and more companies will be adopting M2M technologies,” Sheehan predicts.
Autumn 2014 Irish Director
Future business in association with Vodafone
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GLOBAL TRENDS AFFECTING
BUSINESS Businesses striving to be agile and dynamic in today’s world need to be aware of key consumer and technology trends
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o-founder of events ticketing company Eventbrite Renaud Visage identified key trends currently affecting businesses and requiring them to be agile at the Digital Ireland Forum held by Silicon Republic in Dublin recently. The first is the rise of a new generation known as the ‘Millennials’. Aged between 18 and 34, these people grew up with the internet and are used to receiving information on their phones and tablets. “They’re connected and like to chat online. Coming to maturity, they’ll become the main audience for many businesses,” he explained. “Millenials have had a critical impact on our business. For this group, experiences are valued beyond anything else. They want to live in the moment, have fun and share experiences with friends and the world. “We realised we had to address this group in a way that made sense to them and give them the tools they needed to fully engage with their peers. We took that behaviour change from the new generation and incorporated it into our branding with the tag line ‘Live more’.” Visage calls the second trend ‘mobile everything’, citing Mary Meeker’s Internet Trends Report, which highlights the unprecedented adoption of mobile phones and tablets, both of which have risen much faster than anything new ever released before. “Mobile is fast becoming the primary screen for people, instead of a desktop. The mobile revolution is here to stay, so businesses have to account for it and build the products people expect to interact with.” When Eventbrite started out in 2006, smartphones weren’t an issue. Visage said that as soon as they went on sale the company examined how it could make them useful to its clients, ie event
organisers. “The first product we launched, a couple of years after the iPhone came out, was a cloud-based, real-time entry management app that organisers could use instead of pen and paper and a manual checklist,” he said. “Once smartphones became more ubiquitous we started to create apps for attendees allowing them, for example, to browse events nearby. We also tasked the engineering team with making every page responsive – in other words pages are designed to present data depending on the size of the device being used.” The third trend Visage discussed at the conference in Dublin’s Digital Hub was ‘social commerce’. “Sharing has become the new norm. Your digital feed is a representation of yourself. Businesses need to give people whatever they need to make it easy for them to share what they want to share. Making things easy to send around creates a social currency for your brand. “It’s a reality, for example, that people are sharing during and after an event such as a concert. An Eventbrite report has shown that those attending an event via a social network are three times more likely to share about it than anyone else. The impact on business of this is that an individual Facebook share brings on average US$2.6 in additional business to organisers. This is the real power of social commerce.” Eventbrite came about when Visage and the other co-founders Julia and Kevin Hartz realised over eight years ago that no acceptable solution existed for small and medium-sized organisers to sell tickets online. “People had to resort to managing lists themselves and mail merging and they couldn’t take payments. Ticket sales were a pain to manage. We started finding a solution in 2006 and have managed the sale of more than 200 million tickets since then,” he noted.
‘Mobile is fast becoming the primary screen for people, instead of a desktop’ Irish Director Autumn 2014
Renaud Visage, co-founder of Eventbrite
Autumn 2014 Irish Director