The recent acquisition of Whole Foods by Amazon sent shivers across the retail industry, with stocks across the sector plunging at the prospect of competing with the technology behemoth. They were right to be concerned: Amazon has shown it is adept at using its technology to enter new sectors and rapidly take market share.
The question is how do retailers and other enterprises with decades (and even centuries) of history defend themselves against expanding tech companies? The standard answer is to embrace the latest technology and orient themselves towards what younger customers want today. But that is often just putting a Band-Aid on the problem: Whole Foods has had an online business for years, but that didn’t put them at the cutting edge.
Instead corporations have to learn from the competition while leveraging the one advantage they still have: scale. It isn’t enough to simply launch a rollout of a smart technology, whether it’s software robots, chatbots or data analytics. Instead, CIOs have to develop a new culture and outlook at their corporations that will allow them to implement these in a way where size works in your favor. The opportunity is massive – but so is the challenge.
A culture shift
It hasn’t been easy for enterprises in recent years. With new tech solutions going to market every day, and start-ups offering faster, simpler and more flexible options, long time customers’ loyalties are being swayed. While corporations recognize the need to introduce new technologies like automation and robots into their processes and workflows, they are held back by a few persistent hurdles. Most notably, the culture of established, decades old companies lean towards the mantra of “if it isn’t broken, don’t fix it” – especially as it relates to legacy IT infrastructures and processes.
Convincing leadership to overhaul systems and processes that have been in place for years is easier said than done, particularly in a multi-layered, large organization made up of numerous departments and thousands of employees. The sheer size of a company can sometimes get in the way, and slow down the path to innovation. Getting all executives and division heads on board for a brand new process or IT infrastructure is a huge challenge for the enterprise CIO.
To take one example of many, start-ups routinely automate sales and financial processes like invoicing, ordering, and procure-to-pay from day one. Enterprise CIOs don’t have that luxury. They are tethered to their ERPs that keep the business running and generate cash. There is an enormous opportunity in this case to inject robotics and automation into these departments, as often these systems are 10 or 15 years behind the times. But changing the system means changing the role of all those people who are invested in the system. It is often easier to simply leave things as they are – large-scale corporations work by consensus.
Excellence at scale
While size can often dull down a corporation’s innovation strategy, it can also help and enable broader technology innovation if leveraged appropriately. The advantage for big companies lies in their scale – something that has been developed and honed over decades that small start-ups cannot yet fathom. In order to fully realize the opportunity in utilizing scale to rollout technological advancements, CIOs need to ensure that all divisions, executives and layers of their organization are on board.
To date, the approach of CIOs has been more piecemeal. And that piecemeal approach has yielded as many problems as advantages. Instead of boldly changing the overall business, a specific area changes – a new online feature, or a specific process in the back office automated. This may yield a quick hit of results, but a piecemeal strategy by definition cannot scale. As a result, these tactics have limited shelf life, and a CIO can frequently find that tactic A and tactic B are in conflict, creating demand for yet more small-scale solutions.
To maintain uniformity and streamline the innovation process, corporations should assign a center of excellence made up of executives from various divisions to oversee and lead the broader company through the overhaul of legacy IT systems and implementation of agile and innovative solutions. This will bring in the various groups who have a stake in the IT system to help develop a consensus around a strategy of implementing new technology.
Learning from the competition
Corporations should look to learn from their new competition, and cannot be afraid to take start up software and infuse it into their processes. After all, technology like robotics, machine learning, cloud and analytics makes a bigger impact and has a larger return on investment for large organizations, not start-ups. But learning from does not mean copying – enterprises have their own IT needs, and must ensure they have their own solutions.
The fact is, the biggest opportunities for innovation are still in the enterprise. That is where efficiencies can have the biggest impact and where new products can reach the maximum number of customers at once. If CIOs have the confidence to embrace technology and do things their own way, they can achieve an even greater level of relevance in the C-suite.
Neil Kinson is Chief of Staff at Redwood Software.