API Product Management

How the World’s Biggest Companies Foster Innovatation

And why exceptional companies are moving the development lifecycle to the service catalog.

 

Every company, large and small, is on the hook for innovation. For global enterprises, whose systems are incredibly nuanced and complex, innovation is a bit harder to implement — but no less sought after.

Often, innovation is backed by a push for new business opportunities. Other times, it’s a pull; whether a competitor’s big idea spurs a reaction, or an idea from another industry rallies a call to catch up.

In a third scenario, the call for innovation stems from the inside, in order to get resourceful and crank out new solutions to a problem. But the question we really want to explore today is how? How is innovation fostered in the enterprise setting? Or in other words:

 

How Do the World’s Biggest Companies Innovate?

Innovation is a buzzword that gets tossed around often, but it’s still relevant — according to the 2017 PwC CEO Survey (n=1400), it’s the #1 area CEOs want to strengthen for competitive advantage. After all, killer ideas that rake in millions don’t just grow on trees. Today we take a look at five tactics the largest organizations in the world use to foster innovation.

 

1. Innovation Labs

Companies like GE and IBM have taken the route of building entire units devoted to innovation, and some have seen great success. However, as Fintech expert and consultant Richard Turin points out in his article on why most innovation labs are failing, many factors make labs a difficult venture, particularly for large companies. Those factors include undervaluing ROI, not having a clear plan for implementing the innovation strategy, and trouble breaking the product-pushing mindset, rather than listening to customers. To top that, innovation labs are quite costly, and the success rate is pretty low. Most shut down within three years of their launch. Ouch.

The innovation lab setting is undeniably a great place to foster big ideas, but at the biggest companies, the biggest shortcoming is the disconnect between innovation unit and business-as-usual. For the modern enterprise, where battling silos is already a challenge, creating an out-of-house arm for innovation adds more to the problem than it solves. For this reason, many innovation projects hit a wall when the baton is passed back to the business units to execute. As Scott Kirsner of Innovation Leader points out, this can be tackled with the right mix of intertwined innovation between the innovation unit and lines of business.

Innovation Labs: Pros & Cons

  • An inspiring space for innovation uninhibited by typical business demands. 
  • Not always aligned to business demands.
  • Huge and costly undertaking.
  • Low success rate.

 

2. Innovation Incentive Programs

Google famously encouraged their employees to spend 20% of their time on innovating — though this theory is often debated, incentivizing innovation is not unheard of.

Many companies opt for incentivized innovation policies, such as patent bonus programs. While the employee patent portfolio has seen unethical uses, Twitter’s Innovative Patent Agreement, a ‘defensive patent portfolio’ policy, stands as a shining example of ethical idea-spurring.

Innovation Incentive Programs: Pros & Cons

  • Fosters an innovation-focused company culture.
  • Inexpensive.
  • Patents are often ideas without legs.
  • A business ethics concern to be handled carefully.

 

3. Acquire Innovation

According to VentureBeat, there are really only 3 ways to innovate: buy, partner, and build. The same article argues that build isn’t an option worth pursuing; acquisitions are the best option if you’ve got the money.

This notion is certainly reinforced by the battle raging between retail giants Amazon and Wal-Mart, who have entered a full-on acquisition war, as evidenced by Wal-Mart’s purchase of Jet.com, Amazon’s absorption of Whole Foods, among others, and the current battle for FlipKart in India.

Acquiring Innovation: Pros & Cons

  • Very actionable, immediate ROI.
  • Expensive.
  • Integrating with new company’s systems can take years, and add to technical debt.
  • Lack of governance as more systems are added.

 

4. Open APIs & Hackathons

Sometimes the innovation comes to you. APIs (Application Programming Interfaces) offer a new and secure way for companies to innovate, by giving external third-party developers a chance to create innovative products with internal data through ‘Open APIs’ made available to them, typically in a secure dev portal. And of course hackathons can give more structure around innovation incentives, by bringing innovators together with the promise of a prize and a deadline. As research firm McKinsey points out, hackathons are often used by the largest companies to solve for outdated processes than growth. While many are still proving the success of their Open API program, we believe that open APIs and hackathons are only one part of a larger equation. Which brings us to our next and final innovation strategy.

Open APIs & Hackathons: Pros & Cons

  • Low cost, low distraction, no internal resources used.
  • Low success rate.

 

5. API Catalog Tied to Development Cycle

While many of the above tactics work well for many of the world’s largest companies, they each come with their pros and cons. Two important demands most innovation solutions fail to meet, speed and governance, can be solved by this fifth and last solution.

Because API-driven companies operate on cloud software, their data is digital, in the sense that it can be accessed anywhere in real-time. When it comes time to build a new experience, this feature becomes an enormous advantage. Exceptional companies take this a step further, by building an abstraction layer where their business functions can be kept separately from their applications for reuse. This avoids costly duplication while allowing their teams to ideate in one central setting; a catalog with constantly growing contributions where even third-party functions can be managed to feed global enterprise innovation.

This catalog-lifecycle becomes their foundation of execution, where much of the development cycle can be deskilled and digitized, such as the mappings and the code generation. Here, the role of developers switches to one of assembly and added business logic. Meanwhile, every change and all versioning can be captured… speed, meets governance.

API Catalog Tied to Development Cycle: Pros & Cons

  • An inspiring space for innovation tied directly to business goals.
  • Fosters an innovation-focused company culture.
  • Inexpensive.
  • Very actionable, immediate ROI.
  • Low cost, low distraction, no internal resources used.
  • Fast.
  • Takes three months to set-up.
  • Requires company culture change.

 

For the greatest enterprise innovation, move the development lifecycle to the API Catalog.

In a fantastic a16z podcast on the API Economy, Augusto Marietti, CEO and founder of Kong, makes the connection that APIs are like the veins in an organization, moving information around the complex system of organs, e.g. Payments, Shipping. To run with that metaphor, if APIs are the veins, your API catalog is the heart, your holistic central source, pumping information to the limbs of your runtime environments.

But what is a heart without a pulse? digitalML customers believe the service catalog should do far more than stand as a repository — it should be the place ideas and information are flowing in, and pulsing out, to the enterprise and beyond.

When the plan, design, and build of APIs and services happen within the catalog (and run is reported back to it), aligning all enterprise systems, services, data, and humans in one central place — you’re looking at your greatest chance at innovation.

For this reason, the ignite platform allows you to import existing services, data, models, and convert them into business capability building blocks. These building blocks can be combined (together or with a third-party functionality) and generated as an API, event, microservice, message, etc., and pushed directly to your testing environment or CI/CD.

Because governance, business glossary, and naming conventions are baked in at the design stage of every building block created in ignite, your global innovators can self-serve their own search and discovery — not even the barrier of language can hold them back.Use a Bussiness Glossary to Keep Your Global Teams on the Same Model

Half of the battle is knowing what you have — and in some enterprise settings, you’re dealing with different regions, different systems, and/or different silos. For a global enterprise, you run the risk of putting resources into the same exact services in 2 regions. Nearly every company we work with comes to us with duplication, often in the same monolithic code string.

But with ignite they’re able to view these building blocks in the catalog by LoB (Line of Business/Department), function, API type, owner, and current SDLC stage. They’re able to find and combine, at different levels of granularity to build innovative prototypes that can be sent directly to production. And because their teams have powerful real-time views of production stage, business function, consumption-readiness, and reporting, innovators of all technical backgrounds are closer than ever to the creation, execution, and success or fail of their implementations.

 

Catalog-driven enterprise innovation in action.

Say an insurance company is trying to decide which API Product to build first, View My Deductible or Change My Plan. A business leader may take a look at the catalog and say “Oh, it looks like 2 of the 4 functions we need for Change My Plan are already in runtime, but those other 2 are in the early stages of plan. Meanwhile 6 of the 6 functions we need for View My Deductible are already built and running. So let’s build that first. Meanwhile, let’s get a team to prioritize those other 2 we’re missing for Change My Plan.”

When the catalog is where people are building, the leftovers, the pieces they’ve built, i.e. resources, design patterns, information models, etc., stay stored within that catalog for future reuse, this becomes a great source — the source for enterprise innovation.

As more people are contributing to this global catalog, and you have greater coverage of governance-ready building blocks to innovate from, the quicker services can be spun out. As the diagram shows below, a catalog with 100 services might take 1 week to build a new product. But a catalog with 4,000 services gives your teams enough coverage to complete a product in less than a day.

 

Because the lifecycle takes place within the catalog, much of the manual processes can be digitized, removing bottlenecks such as requirements gathering, mapping, and generating code artifacts so that from one design you may create a RESTful API, a SOA service, an event, a message, or whatever the future brings.

Does your organization have a central place to put their ideas? What about the ideas they’ve built and tested? What happens to the ones that failed and had to be retired? Even those can be valuable to your future innovators.

Have more questions about how ignite fosters enterprise innovation? Book a call with one of our experts today.

 

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