Digital Transformation
Aug 01, 2016

Selling innovation? CEOs should start with their own organizational innovation

Innovation routinely lags invention by years. That's because getting enterprises to embrace (and buy) more innovation is often a struggle. Clearly, clients who lack vision and effective change management capability are a large part of the problem, but they aren't the only issue.

CEOs at innovation companies may be overlooking something important in their own backyard. Whether focused on product or service innovations, their companies are getting something wrong that isn't talked about enough. I'm referring to the old-fashioned roles of their direct reports and their organizations, which – from sales, to marketing, to product management – have too often gone virtually unchanged for 20 years.

The role of sales has changed. The sales force is still extremely important, especially in developing a consultative streak, but its leadership must recognize that clients can now explore their buying options elsewhere, including at renewal and cross sale. By some estimates, 70 percent of their journey now goes through marketing. That includes everything from social media networks to industry or vendor websites. Advances in sales and marketing automation requires sales to rely a lot more on cloud-based CRM tools like for their workflow management, and analytical capabilities, as well as for the related sales-support organization.

To what degree have sales people and their leadership embraced this new world? That should be a first diagnostic every CEO should run.

The role of marketing has changed. Marketing's first reaction to these new conditions was to create branded content to support the customer journey, and use digital channels to deliver it. The result has been an explosion of pretty but often bland branded content that at times adds up to nothing but noise. We've also witnessed a dearth of CMOs who can leverage big data to act at scale. Even fewer understand their company's business well enough to create content that enables useful and informative client discovery.

That's another diagnostic that would expose serious learning deficiencies and skill gaps.

And in turn, the role of product management has changed. While technical skills (engineering or more recently information technology and big data) have always been crucial, that's not enough anymore. With the advent of customer co-creation in the last decade it's evident harnessing the collective intelligence of buyers and sellers yields stronger results than the usual R&D-engineering-marketing-sales sequence.

The upshot? Where development of innovations once involved long waterfall cycles, today, iterative and agile crowdsourcing vehicles like Innocentive or Kaggle are so ubiquitous Silicon Valley couldn't exist without them. That's also why Apple – its patent portfolio brimming with crowdsourced IP – has eclipsed IBM as possessor of the most valuable enterprise technology. No longer is Apple just a great innovator of consumer tech. It is a tech innovator without peer, anywhere.

And that's why many CEOs should evaluate the ability of their product innovation groups to harness the ecosystem, and leverage marketing's engagement power.

Innovation companies' CEOs must consider encouraging the creation of hybrid genomes. To engage people at scale and ignite co-creation, product executives need marketing skills. They must learn that marketing is what attracts users before a product fully exists. They must see that, ideally, marketing can provide the relevant messaging and organizing principles – a.k.a., the lens – that inform sales discussions with clients. This is particularly true for technology-based business services. Though their every client solution is slightly customized (making "productized" innovation harder) these business can benefit from sticking to new approaches that strong marketing can foster.

An example is the Lean Digital positioning we have adopted at Genpact. It helped tune client and sales conversations, making them more cohesive and reflective of the technology innovation that was happening across the enterprise, and enabled the digital technology and analytics product organizations to access relevant opportunities at the early stages of digital innovation.

The organizational implications can be many, from mastering analytics and technology, cross skilling, and developing more varied career paths. But what about hybrids? Sales and marketing are often combined, but what about product strategy and marketing that collaboratively engage with clients to shape products daily? And what of their power to deliver a message that acts as an organizing principle for all bespoke services?

Some have embraced the new paradigm. GE for instance, as a recognized breeding ground of enterprise leaders, gave CMO Beth Comstock a broader role that borders on product innovation. The result? GE is now the de rigueur story that everyone uses when talking about the internet of things. This obviously helps its reputation, but also its ability to co-create and launch new products.

But most companies' organizational structures haven't gone down this path. Perhaps there's not enough diversity in the top executive ranks. Habits built over decades of work can also be hard to shed. Perhaps they've not evolved because measuring marketing impact early in the client engagement cycle is still harder than measuring sales conversion. Whatever the reason, it's why innovation isn't happening as fast as pundits would expect.

It's time for sales, marketing and product organizations that still like to manage innovation like it's 1999 to embrace a new paradigm. For those that can't, the party may not last long.

About the author

Gianni Giacomelli

Gianni Giacomelli

Chief Innovation Leader

Gianni serves as Chief Innovation Leader where he drives and sponsors Genpact’s strategic initiatives aimed at sustaining clients’ transformation into digitally-enabled companies. He also co-leads the Massachusetts Institute of Technology (MIT) efforts to set up a Collective Intelligence Design Lab.