Why Technology Innovation Is No Longer Just For Tech Firms

If every company is now a technology company, then tech is a core competency which means it is not enough simply to learn and install; enterprises need to become leaders in pioneering the development of improvements.

Competition can come from any quarter, which means leadership has to invest in tech as a horizon-scanning strategic imperative. JL


Sara Castellanos reports in the Wall Street Journal:

The pace of change has accelerated over the past two years as corporations have looked to IT departments to play a deeper role in the business.Process automation has freed employees to work on more-strategic initiatives. Analytics tools built in the cloud are helping create a smarter supply chain. “We’re able to forecast now in ways that we couldn’t before. We’ve seen improvements  to the quantity of raw materials we buy, and the costs associated with ship and restock.”
Information-technology executives at companies of all kinds in the Drucker Institute’s Management Top 250 ranking of the most effectively managed U.S. companies have found ways to incorporate the best strategies from the technology sector to promote innovation, collaboration and new business models.
IT executives at companies such as Wal-Mart Stores Inc., WMT -0.24% Procter & Gamble PG 0.30% Co.—both among the 20 companies with the highest scores for innovation—and Capital One Financial Corp. COF 0.76% are taking on a more central role in the business, helping their companies adapt to the digital age. To that end, they’re using cloud services and collaborative work models to speed up the development and delivery of technology, automating mundane work processes for employees and embracing cutting-edge technologies that add business value.

“We’re modeling ourselves off the best technology companies out there,” says Rob Alexander, Capital One’s chief information officer. “Not legacy tech companies, but companies that have been built in the era of the cloud and the internet.”

Working together

At Capital One, IT and business groups work together instead of in silos to develop, test, revise and deploy software in days and weeks instead of months and years. “We’re taking software engineers who write code and putting them in the room with product owners who know the things they want to build,” Mr. Alexander says.
Some features in Capital One’s voice-controlled customer assistant and artificially intelligent chatbot were released in a few weeks with this process, he says. Such projects would have taken up to 18 months in the past, he says.
Capital One, which began migrating data and applications to Amazon.com Inc.’s Amazon Web Services cloud in 2014, is on track to reduce its data centers from eight to three next year and expects to see cost benefits in the process, Mr. Alexander says.
The cloud has also been a godsend for Procter & Gamble. “What was previously cost-prohibitive is now cost-effective with the use of the cloud,” says Javier Polit, P&G’s chief information officer.

Cloud services have helped Procter & Gamble’s data scientists deploy “game changing” data-analytics capabilities in recent years, Mr. Polit says. For example, analytics tools built in the cloud are helping create a smarter supply chain by helping managers better predict shifts in inventory, he says. One such tool drastically reduces out-of-stock and overstock inventory and is saving the company hundreds of millions of dollars annually, he says.
“We’re able to forecast now in ways that we couldn’t before,” Mr. Polit says. “We’ve seen improvements in regards to the quantity of raw materials we buy, and the costs associated with ship and restock.”
New technologies also have helped generate new lines of revenue for Procter & Gamble. For example, it offers an Oral B toothbrush that links over Bluetooth with a mobile app to alert users to problems with their brushing routines. Another mobile app the company launched last year can assess a customer’s skin through advanced facial recognition and recommend particular products or skin-care regimens.
Mr. Polit says his teams are conducting “global industry scans” to find small and large business partners across the world—those that have a clear grasp on technologies such as artificial intelligence, data analytics, and robotic process automation, the term for automation of mundane processes with artificially intelligent software robots.

Speed, agility and risk

Process automation has freed up time for employees to work on more-strategic initiatives at companies including Procter & Gamble and Wal-Mart.
For instance, P&G is working toward automating as much as 90% of claims investigations in the accounts-receivable division next year, and a bot named Lucy helps quickly answer questions from employees about technical issues and benefits, Mr. Polit says. Early tests this year show the bots are increasing productivity in their areas by as much as 30%, he says.
In November, Wal-Mart posted its strongest sales growth in nearly a decade, boosted by a 50% jump in e-commerce sales from a year earlier, part of a broader effort to embrace digital technology. About 500 software robots have been deployed throughout the company, says Clay Johnson, executive vice president and enterprise chief information officer at Wal-Mart. Some AI-powered chatbots are used to answer employee questions. Others help workers sift through 30,000 pages of audit documents, and supervisor robots manage teams of bots to determine ways they can be more efficient, Mr. Johnson says.Since he was appointed enterprise CIO in January, Mr. Johnson says he has tried to foster a culture of speed, agility and risk-taking throughout Wal-Mart’s 10,000-person technology and services department, which includes employees and contractors.
He recently implemented a system in which IT employees are hyper-focused on specific technology applications for departments such as finance and human resources. In essence, he says, they become “product owners” of those systems, whereas before, they would oversee multiple applications at once. One important feature of the new work model is that it will allow IT teams to “fail fast and move quickly,” particularly when employees want to tackle challenging projects such as integrating artificial-intelligence capabilities into software, he says.
Corporate IT has changed immensely over Mr. Johnson’s two-decade career, during which he has worked for General Electric Co. and Boeing Co. But the pace of change has accelerated over the past two years, he says, as corporations have looked to IT departments to play a deeper role in the business.
“You’re starting to see IT become a strategic, competitive advantage for the company,” he says.