Insight Spring 2020

Spring 2020 | 8 Spring 2020 | 9 Technology Series Abel Cruz, MBA, CISSP, PMP, Vice President, Cloud Computing Innovation – Keys to Long- Lasting Customer Delight If you regularly read Insight , you are probably aware that at Smith Technologies we have a proud heritage of entrepreneurship and innovation. From the beginning, our founders embraced the value of innovation to support our guiding principles. But as we enter the third decade of the 21st century, it is clear our approach to innovation must continue to evolve if we are to remain competitive and continue to delight our customers. It was the promise of an innovative culture that persuaded me to leave tech giants like Microsoft ® and Amazon Web Services (AWS). I believe in the relentless pursuit of strategic innovation to sustain one’s future and that of our customers. To that end, and to provide directional insight into our innovation efforts, starting with this article and over the next few issues, I’ll be sharing my personal thoughts about our innovation culture, how we think about it, and some of the benefits we envision for our customers. The idea behind this collection of articles came frommy work in sharing innovation concepts with our internal teams and customers, developing strategy, and implementing new technology. By sharing these ideas and concepts, we want our constituents at every level to get a glimpse into our innovation thought process, so everyone can share in our enthusiasm for the bright future we see ahead. What is Innovation? In general, innovation refers to a new product, service, or process viable and practical enough to be introduced in the market. Within the context of innovation, it is not the new product, service, or process that is of importance. Instead, is the method of implementation used to achieve an improved state that matters. In terms of how business is conducted, innovation is classified into four categories: Product Innovation , Process Innovation , Supply Chain Innovation and from the last of the marketing 4 Ps, Promotion . There are additional useful categories of innovation to consider, including Incremental Innovation – applied science that searches for incremental improvements to existing products. Breakthrough Innovation – new discoveries that earn a return on investment through patents and intellectual property. Disruptive Innovation – a technology, process, or product whose application significantly affects or disrupts the way a market operates. And it is this type of innovation we have decided to focus on. An example of a modern disruptive innovation is the internet, which significantly altered the way companies do business and negatively impacted companies that were unwilling to adopt it. Why Innovate? For over a decade, there has been a fundamental transformation in the business world. Forged by digitization, ubiquitous connectivity, and globalization, this transformation has altered and will continue to alter how we conduct business, create value, and delight customers. No industry is immune to this. It impacts traditional industries like education and footwear, as well as newer industries like gaming and social networking. Coming to terms with the implications of this change has been critical, as our company fine-tunes its long-term vision and strategy. In today’s rapidly transforming business world, it seems the only constant is change. Companies that can’t keep up with the pace and adapt to disruptive innovation often find themselves floundering. There are several examples of famous market- leading companies that have had to declare bankruptcy as a result of not reading their markets right and not keeping up with innovation – Eastman Kodak Company, Blockbuster, and Borders Group to name a few. While some of these may have been somewhat mismanaged along the way, not keeping up with market changes was certainly a major factor that led to their demise. Why Successful Companies Fail So why do some companies fail to heed certain warning signs and continue with the status quo? Vijay Govindarajan, professor at Dartmouth’s Tuck Business School, provides some insight. For one, he believes companies that have invested heavily in their systems or equipment do not want to invest again in newer technologies. Then there is the psychological aspect in which companies tend to focus on what made them successful and don’t take notice when something new comes about. A 2012 report from Harvard Business School concludes that America has lost its ability to properly compete. The report explains that “…through globalization, it became possible and attractive for firms to do business in, to, and from far more countries. Changes in corporate governance and compensation caused U.S. managers to adopt an approach to management that focused attention on the [ company’s ] stock price and short-term performance.” This approach tends to sacrifice critical innovation investments and exchanges long-term profitability for short-term gains. The Need to Innovate The Best Way to Innovate Most organizations adopt a strategy of incremental change to improve their product or service to please their existing customers. Such improvements, however, are easily copied, and the organization loses its unique ownership of the improvement. Disruptive innovation works differently and is the reason why we have devoted resources to innovate with an unassailable ability to delight our customers. We recognize this approach is required for long-term competitive advantage. And although it is not always easy to know where and how to innovate, it is imperative for us. We also know innovation is not relegated to technology as processes and management must also innovate. It is a wholistic approach. As we look to innovate, we look for areas where our long-term approach to market and industry innovation can flourish. Over the next few issues, I will share some behind-the-scenes insights of our technology innovation journey. I encourage you to follow along as we uncover what customer focus, innovation, creativity, and persistence holds for our collective futures. Resources: www.jmsmithcorp.com/ Christensen, Clayton M. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, Mass.: Harvard Business School, 1997. Print. Management of Innovation and Change Ser. Govindarajan, V. Strategy, innovation, globalization, execution. www.tuck.dartmouth.edu/people/vg/ . Accessed 2/4/2020. Porter M, Rivkin J, Kanter RM. Can the U.S. compete? A discussion with Harvard Business School faculty members. harvardmagazine.com/2012/09/can-america- compete . Updated 2012. Accessed 2/4/2020.