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Embracing Cloud Innovation

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I've been brushing up on my William Deming recently so I've been thinking a lot about change and how change does not always come easily. Markets keep changing and companies, as well as people, need to learn to adapt.

Learning from others' mistakes

We can probably all recall brands that were dominant once, but now have faded. Some of the famous brands of my parent's generation like Jaguar cars and British Seagull faded quickly in the face of Japanese innovation

One of the most shocking examples is Eastman Kodak. Founded in 1888, they held around 90% of the film market in the United States during the 1970s and went on to invent much of the technology used in digital cameras. But essentially they were a film company and when their own invention overtook them they were not prepared. Kodak eventually emerged from Chapter 11 in 2013 with a very different and much smaller business. Do we say that this was a complete failure of Kodak's management in the 1970s, or do we say that it was almost inevitable, given the size of Kodak and the complete and rapid technological change that occurred?

Turning a big ship

Even very large, well established companies can cope with rapid technological change if they react appropriately. It is possible to turn a big ship. Two examples from the IT industry, Hewlett Packard (est. 1939) and IBM (est. 1911) have, so far, managed to adapt as their markets undergo huge change. The future is always uncertain and both have suffered major setbacks at times, but both continue to be top tier players in their target markets.

Attachment leads to suffering

Of those who failed to adapt, another famous example is Firestone. Founded in 1900 they followed Ford into the automobile era, but failed to keep up with the market move to radial tyres in the late 1960s. They then ran into several years of serious manufacturing quality problems which greatly reduced their brand value. In 1988 they were purchased by Bridgestone of Japan. One interesting thing about Firestone was that they had an unusually homogeneous management team, most of whom lived in Akron Ohio and many of them were born there. In management studies this homogeneity has come under some suspicion as a contributing factor to their reluctance and then inability to innovate. It might be significant if we compare that with the strife that IBM got into in the early 1990s and the board's decision to appoint the first outsider CEO who subsequently turned the company around at that time, a feat that was at least in part attributed to his lack of emotional attachment to past decisions.

These are big bold examples and we can no doubt find other examples closer to home.

Innovation in IT infrastructure

With brands and whole companies, failures to innovate will eventually become obvious, but with projects and IT departments, the consequences of failure to innovate can be less obvious for a time.

So why would anyone choose to avoid innovation and change? I can think of four reasons straight off.

  1. Change sometimes carries short term cost and more visible cost.
  2. Innovation carries more short term risk and more visible risk.
  3. If you confuse strategy with technology (which I think we are all guilty of from time to time) then you might worry that innovation conflicts with best practice (whereas the two really operate at different layers of the decision-making stack).
  4. Concern that what appears to be innovative change may turn out to be simply chasing fashion, with no lasting benefit.

These are all examples of what Edward De Bono would call Black Hat thinking, which is very common in the world of IT. Black Hat thinking is of course valid as part of a broader consideration, but it is not a substitute for broader consideration.

IT infrastructure commoditisation

Perhaps the biggest thematic change in IT infrastructure over the years has been commoditisation. My background is largely in storage systems and I see commoditisation as having a huge impact. In the past storage vendors have made use of commodity hardware, but integrated it into their products so that the products themselves were not commoditised.

It is no secret among IT vendors that manufacturer margins are dramatically higher on storage systems than on servers, so new storage solutions based on truly commoditised servers can be expected to have a significant impact.

Not only does hardware commoditisation underpin most cloud services like Azure, AWS and vCloud Air, but hardware commoditisation is also a driver behind on-premises hyper-converged storage systems like VMware Virtual SAN. With hardware commoditisation, the value piece of the pie becomes much more focused on the software function.

But hardware commoditisation is only one example of change in our industry. The real issue is one of being willing to take advantage of change.

The role of the IT consultant 

I started off this post with a reference to William Deming. 70 years ago he put forward his ideas on continuous improvement and those ideas are currently enjoying a new lease of life expressed through ITIL.

Three of the questions Deming said we need to ask ourselves are:

  1. Where are we now?
  2. Where do we want to be?
  3. How are we going to get there?

Together the answers to these questions help us to form a strategy and help us on the path to fostering innovation.

External IT consultants can be useful in all three of these steps in helping to frame the challenges against a background of cross-pollinated ideas and capabilities from around the market. Consultants can also help you to consider the realistic bite sizes for innovation and the associated risks. But ultimately change and innovation is something that we all have to take responsibility for.

Jim Kelly

Author: Jim Kelly

Jim specialises in cloud consulting, defining client requirements, developing strategies and designing infrastructure solutions with a focus on cost and risk optimisation.

06 May 2015 / 0 Comments