Want to be an agile giant? Mimic a small startup

Enterprise IT has decades of process and procedure in place, which can hinder innovation. Executives share their strategies to inject new ideas into an established operation.

CAMBRIDGE, Mass. -- Startups and competitive businesses are forcing large enterprises to adapt to the digital age by mimicking a lean and agile startup company structure.

The IT leaders of four major companies spoke here at the MIT Sloan CIO Symposium in May 2016 about how their companies have leaned on digital innovation. Business leaders and executives are placing greater emphasis on IT as an integral part of the business that works together with other groups to identify problems and create the best solutions. These executive conversations will change how IT ops teams work, what they do and the results they achieve.

The panelists at the CIO Symposium see this rise of IT within their companies as a way to generate the best products and respond better to customers.  

"IT as the order-taker is over," said Michael Nilles, CEO at Schindler Digital Business and chief digital officer at Schindler Group, a Swiss-based international manufacturer of escalators, elevators and moving walkways.

Schindler had to digitally innovate to sustainably differentiate itself not only from within their industry, but from outside threats. To do this, the company came up with a two-prong plan.

First, Schindler used IT to defend their core business from eroding prices caused by market pressures, particularly in the service business. Second, Nilles talked about extending their business into areas that relate to their core business, such as the smart cities movement.

Mendix CEO on bimodal IT

CEO Derek Roos says bimodal IT is a transitional strategy, not the end goal.

Putting people together from different silos leads to creative and new ideas, Nilles explained.

"You need a unity of effort: traditional IT with newer capabilities, more in-the-field people with direct points of view, research and development people with concepts -- all working together," he said.

Christopher Paquette, a partner at McKinsey & Company, echoed this sentiment, highlighting the importance of consistency in the design of a company and how customers' experiences with the company are important.

"If the business team is over here and operations [is] doing this -- and if they all kind of do their own thing -- it feels like patchwork," Paquette said.

One way to make large enterprises more cohesive is to mimic a startup company structure with controlled incubation, an idea that Sean Belka, senior vice president and director at the Fidelity Center for Applied Technology, adopted for the financial services firm.

"We have seven different incubators working on specific problems," Belka said. 

Innovation comes from unexpected places.
Derek RoosCEO, Mendix

Technology delivers the customer experience, so Fidelity is investing in all the ways it can to constantly create new technologies. However, unlike some startup incubator structures that encourage collaboration, these innovative incubators are not only isolated from the core business, but from each other as well.

While teams dedicated to coming up with new ideas are great, fostering a culture of innovation means creating an environment where ideas come from all parts of the company, said Derek Roos, CEO at Mendix, a platform as a service company that provides on-demand application creation.

"Innovation comes from unexpected places," Roos said, whether that's employees in the field, on the factory floor or elsewhere. A decentralized approach that frees innovation from incubators and exposes customer-facing services to the startup mentality is far more difficult for enterprises to adopt.

One attendee at the Summit asked the speakers about return on investment for innovation.

"Do you need to require a return on investment in innovation and digitization, in terms of a business case for it, or can we create a safe space for innovation?"

For Schindler, IT innovation and digitization was a necessity to stay relevant, and used what came out of the process to their advantage

"To generate new business, we are looking to target not our customers, but our passengers," Nilles said.

Nilles says Schindler wants to tap into their customers' customers because that market is so huge. Schindler moves over 1 billion passengers a day on its equipment, and Nilles hopes they can tap into that market using IT.

Next Steps

Mind the technology skills gap

Cooperate, compete in the digital marketplace

Changing the CISO reporting structure

Data governance strategy as an offensive measure

A reactive approach to IT modernization

Dig Deeper on DevOps Team Organization