SHIROMAL COORAY SPEAKS ON INNOVATION AND MARKET RESILIENCE

Forbes rates the failure to innovate amongst the top 10 risks that businesses fear, as organisations that don’t renew their strategies, processes and products to suit the changing environment and consumer requirements often fail.
To address this, CIMA held a management accounting conference yesterday in order to make innovation both understandable and accessible. The conference brought together both local and international experts who have lent their expertise to some of the world’s most innovative companies.

Corporate resilience via innovation
Jetwing Travels MD Shiromal Cooray delivered the session’s keynote speech, discussing the role of innovation in creating resilience in a variety of organisations. Kicking off her address with the admission that the world is changing incredibly fast, Cooray referred to a recent Harvard Business Review report that stated that the world is becoming more turbulent at a far quicker rate than it is becoming resilient enough to cope with it.
She added: “The new name of the game is continuous innovation – the ability to combine operational effectiveness and strategic innovation. Until recently, the two have always been thought of as antithetical properties.”
Cooray explained the urgency of innovation, saying that companies that did not keep pace with customer requirements almost always found themselves losing market share heavily and dealing with the consequences that it brought. She added that change is happening at a radical rate today, and sometimes it seems almost impossible for us to keep up.

Elaborating on her previous point, she said that the old order is changing, and if an organisation doesn’t adapt, it will be rendered a worthless entity – resulting in complete failure or bankruptcy. Some companies then opt for the restructuring path, after which the CEO is hailed as a whiz kid for resurrecting a dying company.
A lack of strategic flexibility can result in a lack of innovation and failure as entities that may be successful in one situation or field may be incompetent in another. Previously, there wasn’t much reason to question and probe the core of the company to keep it relevant. Cooray used the example of Sri Lanka’s own Alerics ice cream, which comfortably ruled the ice cream market a few decades ago and is now rendered completely obsolete and forgotten.
Cooray outlined a few further examples, adding: “Today’s unpredictable conditions require companies to set up a flexible strategy that can adapt to change. When the rate of change is accelerating, the rate of response must accelerate as well.”

To bolster this point, she discussed the Scandinavian company Stora Enso, Founded as a copper mining company 1288, it is considered the oldest company in the world. It explained because it remained committed to its people, purpose, and values. In this way, it survived mine collapses, world wars and plagues. It is thriving to this day as the world’s second largest forest products company and is placed on the Dow Jones sustainability index. They are constantly innovating and call their process “rethink” – rethink the old, expand to the new in order to offer customers innovation solutions based on sustainable material. Stora’s website states that they challenge themselves and the outside world to rethink everything.

Advising that unless companies innovate completely, Cooray said that they may not withstand the catastrophes ahead. It is necessary to actively listen or be in tune with the environment. This can be done via installing flexible procedures, encouraging innovation and experimentation, and creating a culture of shared value and purposes. To survive or build resilience, constant innovation is necessary and can be achieved via lean processes, environmental sensitivities, or even after sales services.

Switching tack to consider HR issues with innovation and change, Cooray said that in today’s world, a company needs to learn how to attract and retain the Gen Y millennials. “Unless companies understand how this generation lives works and thinks, they will not succeed. The level of freedom and empowerment that companies may have to offer now would be previously impossible to fathom.”
Cooray mentioned that innovations shift competitive advantages, and that early movers benefit from significant advantages. She elucidated that typical causes of the need for change include new technology, shifting needs, input costs, and government regulations. She said “Aside from watching industry trends and bringing out new products, the value chain is a systematic way of tracking the way a firm conducts its business.”

Discussing innovation in various other aspects of business, Cooray mentioned that Sri Lanka’s loss of GSP Plus affected a large number of companies. Yet some companies took it as an opportunity to up the ante and became dominant players by devising seamless production for the fashion industry amongst other things while others downgraded or shut down their operations. Cooray further emphasised that in this way, competitive advantage can come from anywhere along the value chain.
She also outlined the importance of nurturing the right culture within companies. “It is easy to squash innovation by micromanagement or incorrect incentives. The company’s culture should enable and encourage innovation and new ideas.”

Using her own company, Jetwing, as an example, Cooray explained that during the period of ethnic problems, tourism suffered and there seemed to be little point in preparing long term strategic plans. It seemed as though cost control was the necessity of the time. However, she added that they did not do this the conventional way.

“At our core, we believe in our people and their commitment, especially since we are a service company. Our associates bring forth innovation and ideas, and try to give only the best value possible. With such a valuable asset, we did not make our associates redundant or freeze salaries. Despite having periods of negligible revenue, we increased our training budgets and put together reputed staff training programs. And so, with the dawn of peace, our team was fabulous and prepared for the influx.”

She added that even now the process continues relentlessly as the company tries to stay relevant and at the top of its game in this increasingly competitive environment.

Intelligent information: Driving innovation
WSO2 Founder Chairman and CEO Dr. Sanjiva Weerawarana addressed the audience for the second section of the session, taking a look at the influx of data into today’s business and what can be done to effectively it.
He opened his session by stating that there are some things that are radically changing the new world order. These driving forces are the growth of data, infinite computing and storage, convergence of physical and digital worlds, people and things working towards a connected world, as well as real-time responses.
Dr. Weerawarana stated: “Every smart phone is constantly connected to a server- which means that you can be tracked at all times and the amount of data that enables is huge. The technology allows them to track you, where you’ve been and what you’re doing thanks to constant internet connection and GPS. The growth of data means people already receive more than they can handle. When there’s so much information, it needs to be handled and analysed.”
Another key aspect is the convergence of the digital and physical worlds, he added. “Digital technologies used to exist but they weren’t consumerised. The convergence of everyday life and the digital spectrum has happened. All of this has driven towards getting people and things connected. It dramatically changes the world. A paper came out in 2012 about the existing 6 degrees of separation being replaced by the 4.8 degrees of separation between any two people on the social networking site Facebook. That collapses and connects the world.”
Displaying an infographic, Dr. Weerawarana explained that quite a bit happens in “an internet minute”. The amount is staggering – 61,000 hours of music played in one minute, 20 million photos viewed on Flickr, six million Facebook views, 2.9 million emails. Each day, 50 million tweets are posted, and Google processes 24 petabytes of information. He assured that the content generated may seem mundane but it has an incredible implication on the world.
There is also a certain contraction of physical size and expansion of physical density. One microSD card contains more information capacity than every digital storage device for 20 years previous. A recent Harvard study cracked the DNA storage codem which can cram 700 terabytes of data into a single gram. Dr. Weerawarana explained that this meant you could store all the knowledge in the world in a non-deteriorating box about a cubic foot in size. It’s not just size – computing power has increased 1,000 times in just 10 years.
He added that innovations such as machine to machine integration technologies enable a lot of physical and digital integration. These have led to other commercial uses such as immediate in-store coupon messaging tailored to individual consumer wants, as well as marketplace integration with smartphones. Companies such as Amazon pioneered their model on concepts of unlimited inventory due to a lack of reliance on physical space and display. Many supermarkets and business also use technology to enhance virtual assistance.
Tesco HomePlus in Korea for example has large photos with groceries on subway walls alongside QR codes. Customers can simply scan the code, pay online, and expect their groceries to be delivered by the time they get home. In this way, technological innovation has taken something very physical, and brought it to the consumer in an ubiquitous electronic form.
Dr. Weerawarana highlighted that “things” in the world have gone up to 50 billion. People are at seven billion and places at one billion. The number of objects connected to the internet is equal to the current population – seven billion – and is poised to grow exponentially. This means that there are sensors everywhere that accumulate data. Data, information and insight drive innovation. Data is simply raw information, so to move from data to info to insight is something that only people are good at – so far.
“Insight is necessary to businesses, and is necessary for executing strategy. Decision making is unleashed by data. What happened and why? This is about analysing the past, observing the past and present, predicting the future and shaping the future. Both business value and strategic direction can be gained by analysing data and insight,” said Dr. Weerawarana.
He added that on the flip side, the risks of heavily present and integrated technology are prevalent. Privacy is a real issue – “big brother is real”. The privacy implications are staggering, especially in terms of who can access it and how as well as digital abuse. The growth of computing and communication is going to create a different world from what currently exists. For example, Google just got allowance for automated cars in two states in the US. The time it takes for a certain technology to be adopted by 50 million people has shrunk considerably.
Also data is not useful unless it can be transformed into information and insight. Being an observer is not an option anymore. Businesses are deeply affected by this and lack of participation requires getting in the game. To build a culture of risk taking in organisations is necessary in today’s environment.
Putting innovation to work
Bridges Business Consultancy Founder & CEO Robin Speculand held an exceedingly interactive session, urging his audience to engage and discuss each business problem he posed. He explained that his forte was the field of implementation. The current challenge is to implement new initiatives and ideas from around the world.
Using the analogy of the Encyclopaedia Britannica, he stated that it was a wonderful product which sold like hotcakes until the advent of the CD and the personal computer. Suddenly, people were using CD-ROMS, and brought out their own. With Windows 95 came free Encarta CDROM, and suddenly spending $ 1,200 on the Encyclopaedia seemed redundant and 93% of the market moved to Encarta. Speculand then urged the audience to envision themselves as the EB and to discuss the possible methods they could use to move forward from this dilemma.
Having to reduce their price from 1,200 to 100, their solution was to go online. They launched a website so people could get the information without purchasing anything. For the next seven to eight years, everything was fine until Wikipedia, which used crowd sourcing to gather knowledge online, came into being. As Wikipedia depended on crowd sourcing with a lack of authenticity, EB took scientific sources and academic methods and verified their information, creating a differentiation point.
Speculand added that the first challenge is to realise what is changing in your business and grasp it, and the second is to implement this successfully. As previous regional VP for Citibank, Speculand left and started Bridges Business Consultancy. In initial research, Speculand and his team realised that 90% of the time, innovation implementation failed in companies. Not only is it tough to come out with a great innovation and idea but also to implement it. This requires the ability to craft and the skill to execute strategy.
“Leaders underestimate the whole implementation challenge. People always seem to think that once the innovation breakthrough or idea is created, the implementation will be easy. Especially in emerging markets, the importance is on putting the spotlight on implementation as leaders have been taught how to plan not execute/implement. There is a pressing necessity to close the skills gap,” stated Speculand.
He went on to say: “The whole focus of implementation is ensuring you’re taking the right action. What does implementation really mean to the people in the organisation? It generally means more work for the employees. To get employees engaged is tough. One way to do this is sharing the business case with your team. The problem with leadership is the focus of communication. What is the goal of communicating in implementation?”
Speculand outlined that there were four goals of communication: 15% is sharing the implementation, 15% is explaining the right actions to take to implement the strategy. 20% is providing motivation as a leader why to change. 50% is constantly updating progress against the strategy and objectives. The 50% often tends to get lost as after the launch of business unusual, things go back to “business as usual”.
Speculand further added: “What are the objectives of implementing change? Are you tracking your performance against the objectives? Most businesses measures are wrong. Despite being called ‘assets’ by leaders, staff shows up as expenses on the balance sheet. This is the disconnect. We are still not good at measuring people and the intangibles. This is because you say one thing and measure it another way. You have to align your measures.”
Moving on to the concept of culture, he affirmed that it drives the way you implement. Each company has their own culture, and this has its own unique impact. Implementation methods have to be tweaked according to each company’s culture. He further added that it is important to align processes to the innovation. The challenge of getting people to align processes and follow through is tough. It must be questioned- do staff members have an opportunity to change the daily processes to meet the requirements of the new innovation?
Changing pay grabs people’s attentions. Are the behaviours and actions required to implement the new innovation encouraged and reinforced? It is not just pay – it is important to recognise and reward employees that step up.
Wrapping up, Speculand added that methods and implementation need to be re-evaluated often and honestly to evaluate what’s working and what isn’t – and not just as a formal six month process. The compass of implementation has a set of aspects – people, business case, communication, measure, culture, process, reinforcing, and review. He added that his company just launched the first portal in the world dedicated to implementation – the implementation hub.
The speakers’ addresses were supplemented by a panel session on ‘Transforming Strategic Innovation into Results,’ featuring the speakers themselves moderated by PIM Chairman Professor Uditha Liyanage. Robin Speculand also conducted a meet the author session before the break. The second half of the conference was opened by John Keells Holdings Executive VP Ramesh Shanmuganathan, who discussed the necessity of actionable analytics and insights in 2020.
This was followed by MAS Intimates Sourcing & Supply Chain Director Eranga Jayawardena presenting the best practices in entrepreneurship in the melting pot of innovation – Silicon Valley. Grow Margin Founder and Director Rajeeb Chowdhury then elaborated on how the role of management accounting in innovation is one with potential to create value for the organisation and could potentially be fostered.
The final address for the session was given by Google Inc Country Consultant Rohan Jayaweera, who discussed the creation of the right culture as a requirement for innovation. The panel discussion concluded the conference was titled ‘Managing Innovation: People and Processes Driving Profits,’ and was moderated by Tata Communications Lanka CEO Janaka Jayalath.

[Via Daily FT]