‘Let’s use tech to say what best practice should be’

We want to drive innovation pervasively all the time — whether we are looking at cost take-out or growth or business as usual — and to create a culture of innovation, TREVOR GRUZIN tells RitwikSharma

What kind of strategy innovation in terms of various spends do you advise for businesses today?

A cost take-out programme makes you more profitable but you just do that and get on with business as usual and don’t fundamentally channel into the right investments. Most of our research shows executives have struggled with that for the last decade or two. But what we are trying to pull together with our framework is to say, the biggest immediate pressure point is that the world is being disrupted. So either I am struggling today or unable to respond to it or I see it coming and want to get ahead and need to put more money into growth and customers with digital, but I don’t have the money available.

Sixty to 70 per cent of the S&P 500 companies are now doing billion dollar-plus cost takeout programmes globally. The reason they are re-looking at their cost structures is to say, I need to free up some investment headroom to invest in digital. We are doing that ourselves every year and we call that fuel for growth. We want to do it in a sustainable way, which is why the zero-based idea comes in. With a lot of companies historically, let’s say a particular department gets 20 million a year. When it gets to budgeting the next year their starting point is to say “I got 20 million last year, I need 22 million this year”, and lots of companies have this mindset of “my budget this year is some factor of what it was last year”. When you do that you build this inflexibility and inefficiency.

How companies can maintain profitability and growth with less spends?

In the traditional way people worked at what the best practices were. For instance for flexible vending machine, you could say the best practice for a company of your size was XYZ because that’s quartile 1 and we are looking at a hundred companies. What we say now to bring innovation is, let’s not spend the next year or two catching up to what’s best practice today. Let’s say how can we use technology to say what best practice should be. The second thing is what does it mean to innovate? We want innovation to be in all aspects including cost take-out. How can we use innovation to drive a different way of thinking? And also when we do growth in customer initiatives which is where we know all the innovation occurs in the digital formats. Even at Accenture for 400,000 people we are trying to put innovation in our day-to-day business. Because we want to drive it pervasively all the time — whether we are looking at cost take-out or growth or business as usual — and to create a culture of innovation.

Could you give an example of such work culture?

There is this technique that is used by P&G called “how might we”. Basically you try to find out how you could be more innovative in products. So if they are having a conversation, instead of asking questions as to what can we do or what should we do or what should I as the boss of this area do, they found through a lot of research that applying this concept of “how might we” changes and allows people to be much more innovative. The “how” opens the way of thinking in the group as a much more powerful way of exploring options than “what”. “Might” is a much more powerful word than “can” or should.

How recent and integral is this new approach?

I think it’s a very significant part of our practice, if you call it the profitability, cost take-out zero. We call it ZBX, zero-based X, where X could be spend, organisation or supply chain. It is a very substantial piece to fuel investments in digital; that to me in the last one to two years has been the majority of our work. The other big thing that’s happening is speed. It is becoming more agile, taking projects that used to take months to projects that go in weeks with lots of sprints to enhance and add to. So the traditional mindset was to do the project the first time you managed to in 10 or 15 years. “Let’s put everything that we have ever dreamt into the project.”

This whole move to agile is of adopting the concept of MVP (minimum viable product). Let’s get the minimum we need to get something out that is useful for customers. Let’s do that in applying innovation, whether it’s cost take-out or growth or digital or sustainability, let’s apply co-creation which is all this design thinking concept — we get the real users and real customers, and we bring the executives together which gives us speed as opposed to groups going off and then convincing executives that they will be making the decisions when they get the insights. So, co-creation, agile, working with speed and innovation and doing these things in sprints.

What are the demands made at the leadership level of companies when we push for innovating businesses and operating models?

What does that mean for our leaders? They need to be much more open to innovation. They need to sponsor it. Innovation also implies failure and as Einstein said, failure is a necessary part of success. In lots of corporate cultures when something fails, people feel they get penalised people, so they are reluctant to stick their head out and try things. So you have to create a culture. It’s easy to say but hard for people to celebrate failure.