|Issue:||Europe II 2009|
|Topic:||Innovating at the speed of life|
|Organisation:||Group Public and Government Affairs|
Larry Stone is BT’s President of Group Public and Government Affairs; he looks after EU affairs, UK parliamentary and political matters, and public affairs globally with teams in Washington and Singapore. Mr Stone is also responsible for CSR and sustainability in the BT Group. Previously, he served as group company secretary, as a trustee of the BT Pension Scheme and as a member of the Faculty of ifsProshare (financial education charity), the UK Social Investment Fund Advisory Board and the London Stock Exchange Primary Markets Group. Mr Stone also served as BT’s external and media affairs in Asia (based in Tokyo) and for the European Union (based in Brussels). Prior to that, he was at Cellnet (now O2 UK). Mr Stone is on the Board of the Europe-America Business Council (EABC) and on the Advisory Board of the European Policy Council (EPC). He is Honorary Colonel of 81 Signal Squadron (Volunteers) in the Territorial Army and is a Foundation Board Member of Kingston Grammar School. Larry Stone has degrees in Law and in Communications Policy.
The pace of change is accelerating at a rate many times faster than any time in the past. Innovation is not only important to companies; the economies of whole countries depend upon it. One way to stimulate innovation is to collaborate with other organisations and absorb new ideas. The European Commission’s Framework Programmes provides financial support for collaborative research in ICT. This lowers risks so companies can participate in collaborative projects and provides additional skilled resources to address complex challenges.
If you feel the world is spinning faster these days, you certainly are not alone. The pace of change is accelerating all the time. It was at least 50 years in the world’s wealthiest countries before the majority of homes received electricity from a main power line. When broadband came along, similar levels of take up were achieved in some countries in less than a decade. Once innovations have captured the public’s imagination, they spread like wildfire. And innovation is no longer just about new technology products. Indeed, innovating the way firms do business can have a bigger impact on their success than a new technology alone. The room for poor performance is already small, and it is vanishing fast. Firms that have too few of the right ideas will soon find business ebbing away. So too will businesses that are slow to turn their ideas into marketable products and services. On the other hand, if you have a winning idea and can get it to customers quickly enough, the market could well be yours for the taking – even if it is dominated by firms from a completely different industry than your own as various examples such as Apple’s iTunes have demonstrated. The problem, unfortunately, is that any lead might be short lived. New ideas can come from anywhere at any time. Add to that the fact that it is getting easier and easier for firms to clone their competitors’ products, and it is clear that having just one or a few winning ideas is far from good enough. To take and hold the initiative, you need a pipeline that can pour innovations onto the market at what, by yesterday’s standards, would be a blistering pace. You may only have a few weeks’, or perhaps a few days’, head start on your competitors, so there is no chance at all to stand still. The ideal would be to be able to innovate at the speed of life – that is, to be so at one with your customers’ thinking that you consistently deliver the new products and services they are looking for at just the moment they need them, and ensure there never is a gap between what they ask for and what you offer. And what matters is the speed at which customers are able to improve their personal and professional lives, not the speed at which new technologies become available. As far as customers are concerned, genuine innovation happens only when their daily lives actually get better or their firms achieve greater success as a result. This is an ideal, of course – but it is impossible for firms to even get close if they use traditional methods of innovation hampered by secrecy and strict need-to-know policies. To aspire to match the speed of their customers’ lives, firms must innovate at the speed of their lives. Those who get it right will reap big returns. According to Arthur D. Little, “Top innovators have 2.5 times more sales and get more than ten times higher returns from their innovation investments.” How, then, can firms transform their innovation processes to deliver the throughput they will need in the future? The answer varies from industry to industry, and from business to business. Central to the success of many firms to date, however, has been the concept of open innovation. In open innovation, firms invite people from outside their traditional R&D teams to take part in the innovation process. They may be people working in other parts of the company – in sales, marketing, or customer support, for example. They could be university researchers and academics, business partners or suppliers. They could even include the firm’s customers and the public at large. Equally, adopters of open innovation recognize that there are more ways of getting returns on their innovation investment than turning them into products and services or using them to improve their own efficiency. Forward-looking companies that have adopted open innovation have had great results. In addition to achieving advances that have improved customer satisfaction, by stimulating innovation, companies have brought many new products and services to market. Studies of scientists and engineers, for instance, have shown that those with access to the widest variety of information are the most creative. It stands to reason: if innovation is a chain reaction, the more ideas someone is exposed to, the more he or she is likely to generate. Looking back, it is clear how easy it is for firms to lose the initiative and sink without trace. Of the companies included in the Fortune 100 when it was first published in 1917, 61 no longer exist. Of those that remain, only 18 make the list today – and only two of those have performed better than the average over the past 90 years. And it is a similar story on the other side of the Atlantic. Only 24 of the companies listed when the FTSE 100 Index was established in 1984 remain in the list today. Innovation in Europe In Europe, an important aspect of many organisations’ Open Innovation Strategy is the participation in European-funded collaborative programmes. The European Commission has provided funding to support collaborative research in ICT over a number of years through the Framework Programmes schemes (FPs). The FPs provide financial support of between 50 per cent and 75 per cent of the research costs (depending on the type of organisation) for agreed collaborative research projects. The current scheme aims to provide €9 billion in grants to support research in the ICT domain. Formal collaborative research allows companies to leverage technology and insight from industry partners, suppliers and universities through participation in projects that are part of formal EU research programmes. The ‘outreach’ provided by such collaborative research provides an invaluable perspective on the global science base, and affords some protection against new technologies that could disrupt current business models. In addition to undertaking the collaborative projects themselves, BT currently participates in three European technology platforms. These are industry driven groups producing Strategic Research Agendas to advise the EU on the key research challenges that should be addressed by future calls for project proposals. The financial support provided by these funding programmes helps to lower the barrier for companies to engage with collaborative research. This reduced risk means that companies can research areas earlier than it could otherwise. The involvement of partners in a collaborative project means that additional skilled resources are available to address complex research challenges that could not be addressed by one organisation working alone. In a global environment many technologies are interconnected and a single country or even a large region cannot work in isolation. Given this, funding programmes need to be more flexible and allow non-EU players to participate. There are also some global challenges where there would be benefits in working with equivalent funding schemes in other regions to create a global initiative. Then too, the process to review proposals and allocate funding can be long and complex. As technologies evolve faster many areas might not be able to use these funding programmes to support innovation. Another issue is that projects that aim to address challenges which cut across the organisational structure of the Commission find it difficult to get funding under the current funding programmes. There is another important area where the EU can drive the way to more innovation and competitiveness. This is by creating a more level playing field in the telecommunications industry across the EU. This will have a positive impact not only on those that provide electronic communications services, but even more importantly on those who use them: residential and business customers. Politicians often overlook the indirect benefits of a competitive electronic communications sector, as they tend to have the residential customer more in mind than the business customer. However, modern networked IT solutions play an increasing role in the competitiveness of European businesses. They are an enabler to compete in a global market place. Competition in ICT helps businesses in all sectors – whether these are major international corporations or local businesses. The availability of innovative ICT services attracts more investment, and improves business processes. Competition means lower prices and forces incumbent players to become more efficient, which ultimately leads to lower costs for consumers. Lower costs for communications and other ICT solutions make international companies more likely to invest in a country (it is not just about manpower costs). Therefore, there is also a direct and an indirect impact on employment. All this makes ICT essential to future economic growth and prosperity. With its proposals for the Review of the European Electronic Communications Framework, the European Commission has put forward the right key parameters. They could help to regulate the electronic communications industry in a more effective and consistent way across the EU. It is now up to the Member States and Members of the European Parliament to make the right political choices and not to fall into the trap of favouring national champions or supporting protectionist policies in times of economic crisis. Open trade and open innovation are key components of the solution to the current situation. We are all facing challenging times ahead and the innovation agenda will be important for Europe’s future success. The pace of change will quicken, so we need an environment in place that rewards innovation for the benefit of European businesses and European citizens.