January 03, 2019

Is Automation the Same as Innovation?

Bonnie Singh

Bonnie Singh
Business and Innovation Leader/Global Pharmaceutical Company

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The new year has come up and every organizational team has put up their budget. Excel sheets were furiously worked on, workload estimated, staffing recommended, and finally, a presentation to the President made. The President now asks a simple question: “A lot of the money you’re asking for in 2019 is for automation of systems and processes. Does automation equal innovation? If we automate all these systems, could we call ourselves the most innovative company in our space? And by the way, every group who has presented to me has kept a separate line item for automation. Is their automation different from yours? Aren’t we double-counting budgets for automation?”

It’s a great question, and one that doesn’t have an easy answer. If you google ‘Automation vs Innovation’, the common refrain encountered is ‘Automation is a subset of Innovation’ or ‘Automation is one of the prime drivers of Innovation’. Innovation is broader, by definition.

But practically, do a lot of automation projects constitute innovation? More specifically, should a separately funded, stand-alone innovation team (“Incubator Lab”, “Process R&D”, call it what you may) be set up to do automation? Or if a company already has such a team, should it focus on automation or should that be left to individual functions (while the innovation team does something else)?

Here are some learnings I’ve gathered, after speaking with tens of practitioners in IT, Data Sciences, innovation teams, and functional SMEs.

 

Innovation Is About Culture

 

Innovation is a cultural tenet, not just an initiative. If the only team talking of innovation is the ‘incubator lab’, there’s a problem. As with all facets of organization culture, the value system begins at the top. Senior management needs to decide if innovation is something that truly defines the organization (either from past DNA or from future aspiration). And if yes, then everything from market positioning to product development to sales to delivery needs to speak the language of innovation.

Once that is decided, every team needs to eat, live, breathe, sleep innovation (just as they would any other cultural tenet like say, customer orientation). Which means that in the example above, yes, every team would have a separate budget line item for ‘innovation’, whatever that might mean to them. If that means process re-engineering, so be it. If it means technology automation, that’s fine too.

 

A Culture of Innovation Leads to ‘Functional Innovation’

 

If every department or group is immersed in innovation, they will continually push to do things a better way. We could call this, ‘functional innovation’. An example of functional innovation might be, say, when Legal funds and builds/buys a front-end that can search disparate, global legal databases and systems with proper access controls. This saves time and effort, increases productivity, and saves on expensive IT license costs by not requiring additional licenses of each separate system as the organization scales.

The advantages of functional innovation are immense:

  • Each function is forced to stay abreast of the latest trends in their space (in order to come up with newer and newer ideas)
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  • No one (from outside the function or the organization) knows the function better than the functional SMEs themselves
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  • Functional innovation adds up, leading to organizational innovation, and hence competitive advantage
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  • Functional teams can best quantify the business case (return on investment) from automation projects
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The Need for an Independent Innovation Group

 

And yet – a separately funded innovation group is also something the CEO must consider. In many organizations, innovation cannot only be left to functional teams. Here’s why:

  • Functional teams will (by definition) think in a siloed, functional fashion and will lag in cross-functional innovation
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  • Busy as they are in day-to-day work, functional teams cannot focus on innovation. That would just become one of the many other priorities they have.
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  • Functional teams will be able to frame and execute only on incremental innovation ideas. It would be unrealistic to expect anything ‘revolutionary’ from them. The innovation by a functional team would fall more in the realm of continuous improvement (nothing wrong with that! But while continuous improvement is good for efficiency, it’s usually not enough for competitive advantage)
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Charter for a Dedicated Innovation Group

 

So, what should an innovation group do?

  • The revolutionary projects and outcomes, not the evolutionary ones. These are projects which have potentially high returns but no clear business case yet. An example could be: Face and Voice Recognition for Human Resource systems to bring down infrastructure security costs by 50%; or the use of Holograms and Augmented Reality in Learning & Development to scale up re-tooling with minimal additional investment in travel and SME availability
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  • Scourer the market for upcoming trends and technologies. The innovation team would have its ear to the ground and typically run a series of PoCs (proofs of concept), each with an upcoming technology and a suggested use case. 4 out of 5 PoCs might fail, but the one that makes it to full development could be a huge differentiator for the company
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  • Critical Automation projects. Some automation, though technically simple, might have high criticality – either from an urgency perspective, or from an impact/ return on investment point of view (example: a global dashboard for compliance audits). Those projects are best left to the innovation team to accomplish, as opposed to the functional team (that might get side-tracked fighting day-to-day fires)
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  • Offer a vision or roadmap for the future: The projects or automation taken up by the innovation team must have a clear vision laid out. A roadmap defined upfront is one of the primary differences between an innovation project and a continuous improvement initiative.
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  • Portfolio Management. The innovation function could be chartered with keeping track of the various (functional) automation projects going on in the company. Componentization and re-usability, knowledge management, IP management, maintaining a library of assets and ensuring work is not duplicated would all fall under this head
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To summarize

 

Automation can very well qualify as innovation, especially for companies that are still fairly manual in their business processes. However, while every function can and should focus on automation (which I refer to as functional innovation in this article), there is yet sense in having a separately-funded process innovation team that looks at innovation at a broader level. Automation projects should form perhaps no more than 50% of the workload for such a group, which must additionally focus on revolutionary changes, external research, critical and high-return initiatives, visioning and portfolio management.

Comments? You can contact me directly via my ExecRanks profile.

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