Hopefully by now, as a manufacturing enterprise or business serving the global supply chain, you are into SaaS up to your knees. You have more flexibility, you are building capabilities in the market that are delighting your customers, so what’s next? Let’s tackle innovation!
One of the reasons that our discussion on innovation follows my previous articles on agility and capabilities is that they are precursors to innovation. New skills and flexibility within the organization gives us confidence that we can do more.
This was evidenced in our empirical research. Remember the story about the marketing manager at the OEM who used SaaS to identify and mitigate a major competitive action against his business area? Well, after that success, the SaaS administrator got a lot more attention. Others in the division came to her first to try and solve their problems because she was quicker than the IT department, and free. As the capabilities and the agility of the division improved, they began to think they could try new things and create more value for their customers. They started thinking “out of the box” because they had confidence that this new platform might be able to help them experiment inexpensively and without the time inherent in more traditional development “sandboxes”. Time is one of the biggest advantages of the SaaS platforms. When you are faced with a competitive action or opportunity, the last thing you have is time. You need to act or react effectively, so you need the right information and capabilities to respond quickly.
Defining Innovation
Before we go any further, let’s clarify what we are looking for in terms of innovation. Is it an invention – something completely new that we can patent? Is innovation making money from something that was already invented, or is it doing something different, better, more efficiently and more effectively? Most of the time, we are looking for something more modest than the official definition of innovation. We want to be innovative, open to new ideas and ways of doing things. No matter what your definition, the culture of the company is important. Getting people to accept new things (diffusion of innovation) is fraught with obstacles, so to be innovative, you must be open to experimentation and potential failure. Otherwise, innovation is too risky and employees will be resistant. We have spoken about this risk aversion and fear in previous writings. If the experiment doesn’t work out, employees fear humiliation or job loss. Sometimes success is scary, too, because of the potential shift in responsibility and power at management levels.
If your objective is innovation, you must embrace experimentation, its subsequent successes and failures at a cultural level.
A Correlation Between SaaS and Innovation
The great thing about a SaaS platform is it minimizes the cost of experimentation. The cloud-based platforms are built and running and oftentimes have tons of features that are not being used. They can be turned on and off to try out different things. The only loss/risk is the time it took to configure the platform, which might be a few hours or a few weeks depending on the experiment. No more starting from scratch; justifying and allocating capital, buying systems, deciding on software layers, months, and years of coding just to find out your idea isn’t right for the market. Now, like the Automotive OEM, you can take a little time to configure a new idea and launch it to your users and/or customers and see what sticks. If it works, you can further refine the innovation. If the idea doesn’t work out, you just turn off the feature and move on to the next.
Our research showed a significant relationship between Software as a Service implemented in the enterprise and innovation. There was also a corresponding increase in revenue and improved productivity because of the innovation.
The table below shows responses to the survey question; Software as a Service improves our ability to innovate.
