Thoughts on Business Innovation in Croatia

I presented at the SAP Forum in Zagreb this week. Here is a Q&A with my answers to questions from SAPMag Croatia.

How does SAP “recognize” the business opportunities that can lead to innovation? Tell us about the thought process that leads you (that is, SAP) to that?

We have strong, long-term relationships with our customers and user groups. They give us feedback directly, through the SAP community network, and the hundreds of special interest groups organized by industry, function, and technology. That gives us lots of information about what we need to take our products to the next level in the future, both in terms of new features and additional solution areas, such as our new sports and entertainment industry applications. Working with these groups has also been important for guiding our acquisition strategy for companies such as SuccessFactors (cloud solutions), Ariba (procurement and business networks) and Hybris (omnichannel retailing).

We also work closely with thought leaders within SAP and from the academic community, analyst groups, leading-edge customers, and the general community (using, for example, the SAP Idea Incubator platform).

We know that innovation processes are essential: good ideas and powerful new technology is only a tiny part of the overall challenge. Over the last forty years, we have spent a lot of time on the business systems required to take good ideas and turn them into real business improvements.

Specify the three most important innovations that SAP has developed in its (recent) history and how they affected the operation and development of the company?

The most important technical innovation is clearly the introduction of the SAP HANA in-memory platform, inspired by research done by the Hasso Plattner Institute. A lot of the press around the product has emphasized the speed of the new platform, but the real opportunity is to radically simplify IT landscapes and allow more agility. So far, we believe we’ve only just scratched the surface of what is possible. For example, the recent launch of the Financials Add-On for SAP Business Suite powered by SAP HANA promises to revolutionize the way companies are run.

Just as important has been the business innovation around helping SAP customers move to the full benefits of new cloud and mobile platforms, without having to sacrifice their existing IT infrastructure investments. There’s a big technical aspect to this, but it also requires big changes to the SAP business model including how we sell and support our products, remunerate sales people, and innovate in the future.

A third recent innovation has been about the innovation process itself. We want to help our customers imagine and execute new business models. This goes further than helping them support, improve, or extend existing business processes like manufacturing, logistics or human resources. We’ve put in place a big program of Design Thinking workshops to encourage our customers to take a fresh look at the needs of their customers, and their customers’ customers. The goal is to have “big ideas” that shake up the traditional business systems that were based on yesterday’s technology limitations. These workshops bring together the business people and the technologists in new ways, and have been incredibly popular.

How do you innovate business models in SAP — do you have brain trust for this? Can this happen accidentally?

As much as possible, we try to make innovation part of everybody’s job in the company. Internal communities encourage all employees to share ideas, and propose new opportunities. Outside of our traditional business selling software and services, we make investments in leading edge technology through our SAP Ventures team, investing in technology companies looking to scale their business opportunities. The SAP HANA Startup program has been designed to make sure that we understand the needs of the next generation of disruptive companies, and we have experimented with co-innovation projects that involve different business approaches, such as the SAP Smart Vending platform.

As for “accidents,” it’s true that not everything can be planned — a lot of innovation is being in the right place at the right time, and being able to take advantage of the situation because you have prepared for it. “You make your own luck” as the saying goes…

How does SAP encourage and reward innovation in the company?

We have a whole series of programs to encourage individuals to innovate, whatever their business area. This includes a special career track for experts and thought leaders, so that people can advance their careers and get promotions without necessarily having to manage large teams of people. We also have financial rewards for things like patents, for example. The ultimate recognition is the “Hasso Plattner Founder’s Award” for the employee who best embodies the entrepreneurial spirit of the companies founders, who inspires innovation, and demonstrates courage.

How can organizations be more innovative? How SAP can help organizations to be innovative?

New technologies are enabling innovation in almost every area of every industry. In particular, there are four areas we think companies should be looking at: engaging with customers in new ways; empowering and inspiring employees; optimizing resources in real-time; and harnessing the potential of social and business networks.

We obviously aim to help by providing the technology platforms to make these things possible. In addition, we have a lot history of successfully taking disruptive ideas and turning them into business opportunities. We think we can help provide our customers with a platform that gathers new ideas, helps evaluate them and nurture them into valuable solutions.

Above all, we believe that in order to be successful in the future, businesses have to rethink today’s IT landscapes, eliminating the complexity that increases costs and lowers agility.

We believe that one of the biggest opportunities is the strength of the SAP community. Together with our customers and partners, we can collaborate and co-innovate on new next generation of industry-wide best practice solutions.

Can you perform a quick SWOT analysis of Croatia?

Croatia has been going through tough economic conditions, and there are still only hints of recovery in areas like consumer goods, industrial firms, and tourism. Business and consumer confidence is low, battered by recent economic events. But unlike some other troubled European economies, the banking system is relatively robust, and greater integration with the rest of Europe should bring long-term advantages.

One of the key challenges will be making the best of the expected increase in emigration of younger and more highly-qualified workers. Although a negative trend in the short term, the experience of other countries has shown that emigrants can funnel surprisingly large amounts of money into the local economy, and eventually — if the right incentives are in place — bring back waves of experienced, international employees to help lead the next generation of business innovation.

What would you advise – how can we innovate the business model of “corporation” Croatia? Is it even possible, in the present circumstances?

Tough environments don’t affect all companies equally — there are always opportunities for the best-run organizations. In Croatia, across all sectors, more than 30% of businesses had revenue growth of 5% or more last year, and more than 20% of businesses in the consumer goods sector saw profit increases of more than 10%.

In times of economic hardship, markets are more competitive than ever, and with the shift from selling “products” to “customer experiences,” technology is an increasingly large component of every business.

Many European organizations are struggling to adapt their complex legacy systems. Croatia perhaps has the opportunity to leapfrog directly to the new simpler platforms. In addition, cloud-based deployments with subscription pricing make it much easier and cost-effective for smaller organizations to use technology than in the past.

What is new in analytics and social media, including topics such as big data, internet of things? What recent innovation in these areas could be, in your opinion, disruptive for the industry?

There are lots of different ways of listing what’s new, but analyst groups like Gartner and Forrester agree that the top four technology disruptions are Big Data, Mobile, Social/Collaboration, and Cloud.

What’s different about this wave is that it’s not about one technology (such as previous waves such as ERP, or the move to the web) — it’s about the new opportunities created by the four of these coming together. Gartner calls it the “Nexus of Forces,” Forrester calls it the “Third Platform,” and the real opportunity is not just more corporate efficiency, but brand-new products, services, and business models — the merging of the online and physical world means that “every business is now a digital business.”

How do you, personally, work on innovation? When an idea comes to your mind, how do you collect additional information about it, how do you design experiments that will either confirm or reject that idea?

I’m passionate about innovation, but I wouldn’t claim to be an important innovator myself (although I do have one small patent in my name). The analogy I use to explain my role is that there are, for example, “real scientists” that do research, and then there are the TV presenters of science programs who have a background in science, but whose expertise is in communicating what’s new in interesting ways. My job is essentially to talk to customers and other thought leaders about leading-edge uses of technology and gather the lessons learned. I then synthesize that into something that I can share with others trying to innovate.

One of the difficulties of business innovation is that it’s extremely difficult to do the controlled experiments that are the mainstay of scientific methods. The best we can typically do is compare the performance of groups that have tried new ways of doing things compared to groups that haven’t, and this is a big part of what I try to do in my role.

How does one become Innovation Evangelist for SAP?

I know that the word “Evangelist” surprises some people. But it’s actually a term from ancient Greek, derived from the money that one would give as a tip to a messenger who brought good news. It’s only many hundreds of years later that it had any religious connotation. I’m an Evangelist in the original sense: my job is to share good news about how others are innovating.

I’ve been lucky in my career: I’ve now been with SAP for over 23 years. Over time, I’ve slowly been able to spend more and more time turning my passion into a full time role.

My advice to anybody interested in doing this is to spend a lot of time talking to people, and building up your expertise and reputation, through research, speaking, blogging, and social media.

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