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Mikael Eriksson Björling

About digital transformation, design, creativity and lifestyle in the Networked Society.

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Digital Transformation

Adopting design thinking to embrace a changing business landscape

During the last few years many of the big traditional management consultancy companies have acquired creative and digital agencies. Why? I believe they want to ensure they have the right competence and the right toolbox to future proof their business in today’s increasingly digitally transformed business landscape.gui_design_2-90068crop013667083774resize1500844autoorientquality90stripbackground23ffffffextensionjpgid8

In my opinion, traditional management thinking will simply not be enough going forward in the new digital business landscape. The big consultancy companies have realized they need to add creativity and methodologies into their portfolios.
McKinsey, for example, has added a digital arm to its operations by acquiring Veryday, Lunar and Carbon 12. Accenture did the same by acquiring Fjord and Kaplan. Elsewhere, Deloitte has acquired Mobiento and Acne. These are just some examples from bigger players but there are many more examples.

How design thinking is related to business

At Ericsson, we believe that organizations need to leverage on connectivity to thrive. About five years ago, we also started to take bigger steps to develop more digital ways of working that are better suited for the business landscape of the future.

In our Future of Work report we explain how life is undergoing dramatic changes and organizations will have to rethink how they structure work. As described above, this is happening all around us – at your workplace and mine.

By creating a culture that focuses on individuals, organizations can build a reputation of being a progressive and talent friendly company.

When individuals get the opportunity to work on meaningful tasks, they embrace the organization, and they will also attract talent from their own network. Organizations that quickly learn how to manage talent will not only innovate faster than their competitors, they will also outperform them on the bottom line.

McKinsey recently published The Value of Design report in which they also conclude that “the best design performers increase their revenues and shareholder returns at nearly twice the rate of their industry counterparts.”
So, design – good design – and revenue are closely related. This means there is less space for bad design in todays connected and transparent market were users have such widespread access to all information. Back in the day, bad design had a bigger chance to survive in the analogue and physical world that no longer exists.
Good design meets the needs of the customer and user. Good design makes the complex easy to understand.

So, if we can agree that good design is a necessity in the emerging business landscape, how do you go about creating and fostering good design?
To create a good customer and user experience you need to get three areas correct. First your product or service needs to fill someone’s need for something. That’s what we call usefulness, i.e. we need to design the right product.

The next step is to design the product right, i.e. usability. Users and customers need to understand how to use and interact with your design.

The third area is brand or the aesthetics. The design has to reflect your brand and have an esthetic expression that matches the purpose of the design.

To get these three areas right there are processes that businesses can use and there are specific competences and craftmanship which they can employ – that is what the consultancy firm is paying these creative agencies for).

In future blog posts I will explore these processes, competences and what you can do to boost creativity in your business.

This blog post was originally posted on the Ericsson Blog >>>

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3 ways that new technologies are accelerating innovation

vr-headset-1

Most innovation is directly or indirectly driven by new technology – even business model innovation and changed consumer behaviors – and the way new technology transforms our world and various markets. In this way then, an understanding of new technology and its impact is a prerequisite to be able to innovate, and to do it constantly.

So, how are emerging technologies, such as 5G, artificial intelligence, and virtual and augmented reality contributing to innovation? They do it mainly in three overall ways:

  • As founder of new markets
  • As vehicle for innovation
  • As enhancer of human capabilities

Let’s go through these three ways one by one:

Technology as founder of new markets

New technology has a huge impact on markets and market dynamics. This has always been the case, but in the digital age this is happening faster than ever before. Over the last decades we’ve seen how digital technology has disrupted many different markets. Streaming has disrupted the music industry, as well as TV and film, and social media has radically disrupted the entire media sector.

Let’s take a look at 5G – a technology that Ericsson is developing. As 5G starts to become a reality in the marketplace, many new capabilities and possibilities emerge, such as network slicing, ultra-low latency, lightening fast speeds, and extreme reliability to mention a few. And these capabilities are enabling many new use cases: from remote controlling vehicles in a mine to small sensors that have 10 years of battery life. These technology features will transform the current logic in many businesses and create new markets for those who sees the possibilities.

When new technology becomes established in our society it also drives new behaviors among people and their role as consumers, and these new behaviors represent potential new markets. The same thing happens in industries: when a new technology becomes available organizations can possibly change areas within their business, such as value chains and operations, but also whole business models and the entire market itself.

Artificial intelligence (AI) is another hot technology area that will open new markets and market niches in many industries. Today, most areas are related to innovation efficiency and effectiveness (the areas to the left in the model I described in my previous blogpost).

The most common area of exploration today is the automation of business processes, for example, digital and physical tasks. Harvard Business Review recently said that 25 percent of the 250 business executives in their survey think AI will help them pursue new markets. Far more of these executives see AI as helping out with efficiency and effectiveness in their current business logic.

Technology as vehicle for innovation

As we’ve previously discussed, innovation and technology are tightly interlaced. Two very notable ways technology propels innovation forward is that it boosts tinkering and experimentation, and that in itself accelerates innovation processes.

Not long ago experimentation with new technologies was only possible by multinational corporations or government-funded research labs. Today, affordable technology – digital and other – makes it possible for most enterprises – big and small – to experiment with ideas and concepts in whole new ways, and also in reality instead of only in test labs.

For example, it’s now possible to test products and services online at a very low cost, as well as test out updates, alterations and tweaks. Prototyping has become available to all through easy to use software and 3D printing. AI can simulate various market scenarios based on available real-life data. Virtual reality makes it possible to create completely new types of blueprints that actually make products and services come alive for real, and thus make them possible to evaluate prior to building or manufacturing them.

Digital technology and the new technologies that it enables (like AR, VR and AI) cut the traditional industrial age innovation process short. What used to take years of planning, testing, and executing can now be accomplished in months and sometimes even weeks.

Another way emerging technologies – AI in particular – can speed up innovation, is by removing obstacles of uncertainty or lack of information. Continuously identifying and ruling out hypotheses at a quick pace will no doubt make the innovation process more focused and effective in generating strong solutions. AI, being far superior to humans in analyzing big amounts of data in an instant, cuts innovation processes significantly. Data is the protein of AI systems: if there is a sufficient amount of data, AI will be able to increase the speed of innovation.

Technology as enhancer of human capabilities

One way of looking at it is that digital transformation, after having transformed domain after domain, has reached technology itself and is beginning to recursively transform technological evolution as we know it. This unlocks a great potential, but it also raises concerns as to what it means that technology – and not only humans – has control over technological progress. As discussed further, there are both optimistic and pessimistic stances in regard to our technological future.

Regardless of position in this matter, it is clear that emerging technologies are becoming increasingly important in the very process of innovation.

Now, technological evolution has reached a point where it can help us overcome – or at least circumvent – our own cognitive short-comings. Where the human mind fails to display characteristics beneficial for driving change and creative thinking, technology can give us an extra push towards a greater innovative capacity.

One area close to my heart is design, and in particular design and innovation. The designer today has a completely new set of possibilities and tools for designing and prototyping. Both rapid as well as creating shapes and interactions that would have been impossible a decade ago.

Ericsson Strategic Design Lab is working with cities and city planning questions, and for this they are using AR to remove buildings from a real environment and place models of the new architecture into it, creating a tool that makes it possible to explore city planning with an extreme low cost and possibilities that were only fantasy some year ago.

Another example is seen in car manufacturing, were companies are starting to do car models in VR instead of the super expensive and time-consuming clay model that was traditionally used. And in the same industry, there are newcomers such as Local Motors who are challenging the traditional way of designing and producing cars using crowd sourcing, open source and 3D printing technologies for physical prototyping and production.

Finally, and to summarize, an understanding of new technology is necessary in two primary capacities:

  1. Understanding technology as a starting point: Organizations that want to innovate must (in most cases) understand the seedbed that new technology creates for any market today. How has new technology changed the conditions in your market and what technologies are out there that will transform your products and services, and how do you model them for the market?
  2. Understanding technology as an enabler: The second capacity in which an understanding of technology is necessary for innovation is as an enabler. For example, how new technology can help make new ideas and inventions possible to realize on the market. Technology is also an enabler for experimenting with new ideas and testing out new concepts, and organizations that understand how to utilize new tech in this phase of innovation will gain leverage that other organizations lack.

So, how will 5G, AI, VR and AR, contribute to innovation in your industry? Do you see the possibilities, or only threats?

Like this post? Don’t forget to check out the first and second at Ericsson Big Ideas Blog

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5 key steps to creating an innovation mindset

mindset

If innovation is about developing something new that impacts the market and creates value for users – what is required to make that happen?

Innovation is a question of mindset, and creating that mindset precedes everything else. In my opinion, it’s the innovation mindset that overrides the aspects of human nature that are often holding back innovation in large organizations.

So, how do we create an innovation mindset?

1. Be open to change

To be open to change means to admit and embrace the notion that the world is in constant transformation and all areas of society are challenged by this change. It also means to be aware of where this transforming world is heading and to curiously keep track of change and new phenomena. Finally, it also means that you have to constantly keep analyzing what the transformation means and what the possible consequences of the transformation will be for your business.

Change is a tricky thing – we all have to deal with it and organizations are no different. Accepting the fact that technological transformation is about to impact your business is usually very hard for established organizations.

Let’s apply a light version of the Kübler-Ross Change Curve to this:kubler-ross-change-curve-768x401

Denial is a common reaction to new technology and new market forces that can potentially overthrow an organization’s incumbent business.

‘We’ve been doing what we do for many years: it has proven successful and if we just continue to deliver on our quality we will be back on track again. The newcomer does not even have a working business model and are financed by venture capital.’

Defense is the next stage in the Change Curve: a kind of anger or aggressive energy to defend one’s current business model. A prime example of this can be seen in the music industry when MP3 and streaming came along as new technologies, and established organizations tried to change laws and prosecute against their customers.

The next stage is depression, where an organization will begin lamenting the state of affairs. Only after this depression stage are they ready to accept the new market paradigm and start working towards managing and adapting to it.

In today’s fast-moving markets there is little time to dwell in the different stages of the Change Curve, as competitors and new market entrants are pushing forward while you’re in the first three stages. To be innovative, established businesses must learn to shortcut the Change Curve and go directly from shock (pre-denial) to acceptance, without dropping into any of the stages in between.

2. Embrace creativity

The other aspect of an innovative mindset is to truly embrace creativity. An innovator’s attitude is that creativity is the solution to problems, rather than a traditional scientific method. This argument is predominant among many of those who have successfully practiced innovation in the realm of daily business activities. The innovation-as-art perspective in business stems – to a large extent – from the concept of design thinking.

But importantly, to equate innovation with art doesn’t rule out the necessity of structure, processes and methodology for innovation. All these are required also when practicing the art of innovation. However, the innovation-as-art perspective stresses that the starting point for innovation is creativity, rather than implementation of management processes and organizational structures for innovation. Which, in turn, requires a certain kind of culture and organization that enables creativity. In this area, we see many digital companies positioning themselves. For example, Valve Software, who stress their flat organization and the freedom – and every employees responsibility – to be creative in everyday work in their company handbook.

3. Think big

Today, most academic researchers and experts on innovation agree that innovation is about more than just incremental improvements to existing products or product extensions.

This leads to the point that innovation requires an ability and the courage to think bigger and beyond the current norms and truths in the market. Innovation is about stretching one’s thoughts out of everyday ordinary thinking and analysis.

We’d argue that big thinking and innovation is a combination of analytical skills, entrepreneurial spirit and the ability to fantasize. Few individuals are blessed with all these capabilities, but a group of people – and certainly organizations – are well equipped to accommodate these capabilities under the same roof. This is also one of the reasons why a diverse organizational culture has emerged as a key prerequisite for innovation: diverse groups that combine skills and capabilities can accomplish big thinking more easily than homogenous groups that are likely to reproduce versions of similar thinking over and over again.

4. Show courage

Innovation doesn’t happen unless organizations and the innovators within them have the courage to constantly rethink how things can be done. It takes courage not to conform to widespread beliefs and popular “truths” in big organizations. It takes courage to challenge proven strategies and successful products and services before they go into decline. It takes courage to question management and colleagues for doing things the way they have always done. It takes courage to constantly problematize and be that one person who always goes against the grain and tries to think about things from a different angle. It takes courage to be vulnerable rather than playing it safe according to established business practice. It takes courage to venture into the new and uncertain, risking failure.

But all of the above is necessary to push innovation forward and to create an innovative climate in organizations. Because when has anything new ever happened unless someone dared to take that step into the uncertainty of the unknown? When I think about the courage needed to take that first step I always think about the guy that started a dance party at Sasquatch music festival. That is exactly how things can work in an organization as well.

5. Think and act fast

Innovation within an organization must be a fast-moving process to keep up with the change going on outside of the organization.

Twentieth century innovation was often a slow process, with long lead times from idea to concept, and concept to market. A lot of time usually went into extensive R&D. In the automotive industry, for example, the timeframe to invent, design and launch a new car model has been around eight years. But today, eight years is an eon in an automotive market that is transforming year by year. Potentially disruptive business models for auto manufacturing like Local Motorshave proved that a new car can be dreamed up and launched in the market in 12 to 18 months, and with advanced 3D printing technologies and VR-aided design and manufacturing, that timeframe can probably be cut even shorter in the years to come.

To sum all of this up succinctly, there are five main ingredients to an innovation mindset. We need to be open to change, have a bias towards to creativity, an ability to think big, unrelenting courage to challenge the norm, and be characterized by speed of thought and action.

An organization with the desire to be innovative must think fast and apply a fast-paced innovation process with an efficient go-to-market roadmap. In this context, it’s also critical to adhere to the notion of “failing fast”, as new ideas and concepts have to be tested out quickly and be shut down just as quickly if they don’t fly. In this way, the organization can move resources to the next concept instead of getting stuck in a dead-end innovation project, because after all, the world’s next “big idea” is just around the corner.

This is the second post in a four-part series on innovation:

Why is innovation the buzzword right now?

3 ways that new technologies are accelerating innovation

5 ways to master the new innovation game

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Why is innovation the buzzword right now?

factory

What exactly is innovation? And how does it work in the business transformation context within ICT?

At Ericsson, we have talked about the fundamental digital transformation that is taking place across our entire society for many years, with particular focus on the new opportunities and challenges it brings.

This shift has matured recently: new businesses move from startup buzz to industry disruptor at lightning speed. Just take a look at the great impact on traditional businesses that companies such as Airbnb and Uber have had in their industries. This will only accelerate as more and more intelligence moves up in the cloud.

Just a short while ago, digital transformation was only on the agenda of the larger tech players. Now, it’s on everyone’s agenda. Businesses and organizations of all sizes in every industry understand that digital transformation is also affecting them and the way they do business both now and into the future. They are all aware that in this new world there might be a garage startup, either around the corner or on the other side of the globe, with ideas that will disrupt their current market by offering radically different propositions.

So, when there is awareness, what should traditional businesses and organizations do? Let’s begin by answering the questions I asked in the beginning of this post.

There are four different drivers in our innovation model, which you can see in the figure below:innovation-model-768x332

  • ‘Outside Drive’ (at the top) are areas outside of a company’s control. This could be changed laws or regulations, shifting consumer behaviors, or new disruptive technologies such as AI, VR or 5G.
  • ‘Inside Control’ (at the bottom) are areas a company can control, such as definition of their core business, consolidation, scale gain opportunities or maturing technology.
  • The left side of the model is evolution from where the business is today, to the right which is disruption.

To secure a good position in the future market of your business, you must be aware of what is happening in your broader industry related to the fields in the model. If we plot where innovation is happening, we can see that traditional businesses focus naturally on the left side of the model in value chain effectiveness and efficiency, while we often find the digital giants and startups on the right side of the model.

The lower left corner of the model is about using new technologies to innovate for better performance of current offerings. If we take the example of a car manufacturer, this could be using ICT to automate the flow and construction of cars in the factory. Basically: do what you do more efficiently than the competition. ict-cityview-768x440The upper left corner is about using ICT to innovate value chain efficiency and improve offerings to the current market. In the car industry, this is typically a connected car. Today’s connected cars are sold as any other car, but they make use of the connectivity to improve the offerings toward the car buyer. This could be to offer safety features like calling 112 automatically if an accident happens, or having built-in connected features like ‘find where I parked my car’.

The right side of the model is a typical industry that is populated with a lot of startups or digital giants that are coming up with completely new propositions compared to traditional businesses.

The lower right corner is about innovating the backend: to use something internal in the company and expose that across other industries to find synergies. An example of that – if we are going to stick with the car industry – is the Ericsson Connected Vehicle Cloud which would be located in this corner. It’s a global cloud-based solution making it possible to create new services across industries, so that vehicle manufacturers can deploy services such as telematics, infotainment, navigation, or fleet management.

If we look at the upper right corner, that’s typically the most crowded area in any industry. It’s where you find many startups or digital giants launching their ideas or coming out with profoundly new offerings that create entirely new markets. This is the corner where we find self-driving cars, car-sharing services, or collaborative coordination to mention a few.

This is what the landscape looks like. But what should you do as a traditional company to meet the challenges coming from this digital transformation?

The short answer, is to innovate.

At Ericsson, we know quite a lot about innovation. It has been our game for over 140 years: from the industrial era, via electrification, datafication, mobile telephony and mass consumption, to a new era in a truly connected world. We have launched some of the most fundamental innovations in human history in the area of communication. And while innovation is in our DNA, it’s interesting to now see that innovation is becoming just as essential for practically all businesses.

In my next blog post, I will review some of the findings of a study we call ‘Organizing for Innovation’, and we will take a deeper look into some of the areas businesses have to address to maximize their creative output – be sure to keep an eye out for it.

Want to know more about what Ericsson is doing in the technology innovation space? Discover how real-time connectivity is fundamentally changing the way we innovate, collaborate, produce, govern and live sustainably.

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