2007
Forming an ‘inside-out’ company is the secret to innovation in business
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26 April 2007
Senior executives say they are now more a ‘lightning conductor’ for innovation, rather than the primary generator of ideas
Organisations that see their customers and their staff as sources of untapped potential and ideas are starting to use Information and Communication Technology (ICT) to engage people in shaping strategy and services - through blogs, collaboration tools, online markets, virtual worlds, and other means. However, the potential for businesses in this approach is still untapped and unlocking this pool of innovative talent will require collaborative management and not traditional command-and-control-style management.
This is according to new research by Dr Carsten Sørensen of the London School of Economics (LSE) and PA Consulting Group (PA). The research found that IT is the enabler for innovation across the whole business. What we are starting to see is the forming of the ‘inside-out’ company, where interactions and relationships with stakeholders actually shape strategy rather than are subject to it.
The research concludes that we are approaching a tipping point, where technology will be cheap enough and intuitive enough to make collaboration as valuable a source of innovation to the business as computation has been a source of efficiency. Technology is changing the way we interact and customers (business and consumer) are demanding a richness of dialogue.
The research is based on a series of 22 interviews with senior executives from 20 world-leading organisations* (including Cadbury Schweppes, BP and Deutsche Bank) by Dr Carsten Sørensen of the LSE and PA.
Interviewees were asked a number of questions relating to innovation and technology within their business, comprising areas such as responsibility and ownership, drivers and inhibitors. Findings show that senior executives are taking a more facilitative than directorial role, acting as a catalyst or ‘lightning conductor’ for innovation wherever it may evolve.
“People expect that if the organisation has something to say then they want to see, hear and question it when they want. The whole communication strategy is changing. People are not going to be in a push-model for communication but almost in a dialogue,” said Andrew Barnes, Group IS Strategy and Assurance Director at United Utilities, a contributor to the research.
In fact, this new outlook on innovation and technology has changed traditional management models towards a new ‘collaborate and control’ model.
“We have isolated two key survival strategies in business – improvement versus innovation – and businesses are struggling to achieve the right balance between the two,” said Patrick Kelly, Head of IT Consulting at PA Consulting Group. “Control must be exercised, for example to achieve compliance and to carry out ‘housekeeping’ activities but this must run in parallel with innovation, rather than sequentially. Innovation and improvement must go hand in hand. It is also interesting that we are seeing such a strong reflection of consumer life in business.”
David Elton, Head of IT Strategy Service, PA Consulting Group added. “The trend towards networks and away from hierachies and the user empowerment that this entails is changing the way we interact. Executives are seeing a similar phenomenon in business, with users across the organisation demanding that businesses are more reactive to their needs and being willing to take responsibility for improving their working environment.”
The lead researcher on the project, Dr Carsten Sørensen, London School of Economics, emphasises that: “In order to identify the strategic value of IT it is necessary to employ the technology in developing relationships, listening to customers, and engaging them actively in the production of innovative services. This, however, will challenge all levels of the traditional organisation and will both be risky and rewarding.”
*Interviews undertaken across 2006 and 2007
ENDS
For more information, please contact:
Shani Willson
PA Consulting Group
123 Buckingham Palace Road
London
SW1W 9SR
Tel: + 44 207 798 2654
E-mail: shani.willson@paconsulting.com
www.paconsulting.com
For more information, please contact: shani.willson@paconsulting.com
Notes to editors
1. Press copies
Press copies of the report are available from 26 April 2007. Please contact: shani.willson@paconsulting.com
2. About the research – methodology
This joint research by PA Consulting Group and the London School of Economics trawled the hearts and minds of 22 leading global c-level executives. The interviews took the form of in-depth discussions based on a pre-defined set of topics. These were then highly customised during the interviews to fully explore the specific circumstances and opinions of each senior executive. The interviews were recorded, totalling more than 25 hours of discussions. The recordings were selectively transcribed and analysed for subsequent synthesis with relevant theoretical frameworks.
Participants include:
1. Paul Brindley, IT Director - Global Functions, Cadbury Schweppes
2. David Key, Managing Director, Steljes Markets Ltd
3. Nick Butler, Group Vice President, Head of Strategy, BP
4. Matt Fahy, Group IT director, Aviva plc
5. Stephen Parker, Director and Operations Manager, Impaq
6. Paul Myerscough, Head of European IS, Honda Motor Europe
7. Chris Dines, CEO, Ovum
8. Andrew Barnes, Group IS Strategy and Assurance Director, United Utilities
9. Murray Bain, IT Director, NHS Direct
10. John Connolly, IT Strategy Director, Thames Water
11. Paul Coby, CIO, British Airways
12. Martin Sadler, Director Trusted Systems Laboratory, HP Labs Bristol
13. Daniel Kasmir, Director Corporate Affairs and Human Resources, Manpower
14. Jeff Roberts, IT Director, Norton Rose
15. Jonathan Smart, Innovation Director, Deutsche Bank
16. Andy Frith, Marketing Innovations Manager, British American Tobacco (BAT)
17. Bira Lima, Head Strategic Business System Group, British American Tobacco (BAT)
18. Mushtaque Ahmed, Head of Operations, JJ Food Service Limited
19. Ben Wishart, Group IT Director, Whitbread plc
20. John Murphy, Head of Business Solutions and Programmes, Marks & Spencer
21. Alan French, Head of Strategy and Architecture, Marks & Spencer
22. Stephen Warrington, Managing Director, Diamond Management and Technology Consultants
Comprehensive - This research represents our most comprehensive and in-depth research programme so far in the crucial area of IT Innovation. By interviewing some 20 senior executives from major global companies we believe we have built the most complete view to date.
Timely - This research has been conducted and published during an evolutionary phase in which IT innovation is increasingly playing a crucial role in customer relationship management, yet also at a time where the strategic and sustainable advantage of Information Technology and Communication (ICT) are increasingly questioned.
Provocative - We believe the resulting findings and interpretations are robust, provocative and highly relevant to today’s C-level executives in any business interested in Innovation. In short, we believe this report is essential reading.
The survey was carried out in 2006-2007. All survey respondents were qualified by the researchers as to appropriate positions and responsibilities.
3. About the author
Dr Carsten Sørensen is a Senior Lecturer in Information Systems and Innovation within Department of Management at The London School of Economics and Political Science, United Kingdom. He holds a BSc. in mathematics, an MSc in computer science and a Ph.D. in computer science with information systems from Aalborg University, Denmark.
Carsten is researching how ICT shapes and is shaped by emerging working practices and organisational forms and have most recently explored the role of organisational information services for organisational innovation and efficiency. In 2001 he initiated the mobility@lse research network in mobile interaction (mobility.lse.ac.uk), which aims at drawing together academics and practitioners.
Carsten has extensive EU research project experience from 1992 and international project experience from 1990. He has since 1997 been Research Director of Laboratorium for Interaction Technology at University West, Sweden. He is Associate Editor of Journal of Information Systems, on the editorial board for Information and Organisation, and The e-Service Journal, and a member of the Advisory Board for Scandinavian Journal of Information Systems. He is an Academic Advisor for The Institute for Innovation & Information Productivity (www.iii-p.org), and was a member of the Advisory Board for the iSociety project at The Work Foundation.
Carsten has also been actively engaged with executive education and has consulted for a range of organisations, for example, Microsoft, Orange, Computer Associates, EDS, Siemens, The Danish Ministry of Science, Carphone Warehouse, The National School of Government UK, Caja Madrid, and The European Union Office for Harmonization in the Internal Market (OAMI). He can be reached at c.sorensen@lse.ac.uk
www.carstensorensen.com
4. About PA Consulting Group
At PA Consulting Group we transform the performance of organisations.
We put together teams from many disciplines and backgrounds to tackle the most complex problems facing our clients, working with leaders and their staff to turn around organisations in the private and public sectors. Clients call on us when they want:
an innovative solution: counter-intuitive thinking and groundbreaking solutions
a highly responsive approach: we listen, and then we act decisively and quickly
delivery of hard results: we get the job done, often trouble-shooting where previous initiatives have failed.
We are an independent, employee-owned, global firm of 3,000 talented individuals, operating from offices across the world, in Europe, North America, Latin America, Asia, and Oceania. We have won numerous awards for delivering complex and highly innovative assignments, run one of the most successful venture programmes in our industry, have technology development capability that few firms can match, deep expertise across key industries and government, and a unique breadth of skills from strategy to IT to HR to applied technology.
• defence • energy • financial services • government and public services • international development • life sciences and healthcare • manufacturing • postal services • retail • telecommunications • transportation
• strategic management • innovation and technology • IT • operational improvement • human resources • complex programme delivery
Delivering business transformation
5. About London School of Economics (LSE)
The research was undertaken by Enterprise LSE, the commercial company of LSE that manages over 100 projects a year for companies, governments, NGOs, academic bodies and international institutions around the world wishing to engage the expertise of LSE through research, consulting and executive education.
Dr Carsten Sørensen is a Senior Lecturer in Information Systems in the Department of Management of the London School of Economics and Political Science (LSE).
LSE is a world class centre for its concentration of teaching and research across the full range of the social, political and economic sciences. There are around 7,800 full-time students and over 800 part-time students at LSE. They come from 140 countries around the world. LSE has over 1,460 full-time and 1,320 part-time members of staff – 97 per cent of the academic staff are actively engaged in research, and 45 per cent are from countries other than the UK, almost half of these from European Union states, the rest from other nations around the world.
The School has around 80,000 registered alumni. Around 30 past or present heads of state have studied at LSE, and 28 members of the House of Commons and 42 members of the House of Lords have either studied or taught at LSE. Thirteen Nobel Prize winners in economics, literature and peace have been either LSE staff or alumni.
www.lse.ac.uk
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