August 2, 2017

Sustainable innovation is bone-deep, not skin-deep

There is a big difference between ad-hoc APIs and having a well-planned and well-managed set of APIs that partners--internal and external--can leverage to reuse, evolve, and scale their capabilities.

Innovation is a necessity today, not a choice. Enterprises are waking up to this inevitability but most are chasing innovation by refreshing the business process or user experience on an ad-hoc basis. For them, digital transformation is skin deep, a cosmetic approach that looks good from the outside but lacks a solid core transformation. It is like a smartphone camera that boasts a high number of megapixels but lacks a superior lens. Legacy infrastructure with a digital wrapper is skin-deep innovation.

Innovation, if one-off, is not sustainable. Bone-deep innovation is deep-rooted and sustainable. That is what makes a business agile and ‘programmable’. Programmable businesses take into account the current fluctuating market scenarios and are nimble  enough to make tweaks to its infrastructure according to circumstances.

Using an anatomical metaphor, programmability could be seen as the bone around which innovation in the form of muscles develops and finally gives way to the UX in the form of the skin. It’s the bones or the core that should be strong. Similarly, it is programmability that should form the base above which the infrastructure of innovation and user experience should be built.

The road to bone-deep innovation is paved with strategic APIs

The primary component of bone-deep innovation is optimizing the potential of APIs. There is a big difference between ad-hoc APIs and having a well-planned and well-managed set of APIs that partners--internal and external--can leverage to reuse, evolve, and scale their capabilities. Building ad-hoc APIs just for the sake of it doesn’t refresh the backend processes. It only improves the UX momentarily but does not make it sustainable or ties it back to a programmable tech DNA. To enhance APIs, one needs to identify what kind of APIs are needed based on business objectives, how much will they be regulated, what each API would do, and finally deploy them. The API program is not a one-off process, but an agile model. One needs to constantly monitor it through management tools to regulate access if required and use them at scale.

According to ProgrammableWeb, API adoption has surged more than three times--from about 5,000 APIs in 2012 to 17,000 in 2017--with social and financial sectors being among the most popular API adopters. Enterprises are increasingly recognizing the benefits of APIs in decreasing effort to scale business, increasing access to solutions, and providing customizations. While Salesforce generates 50% of its revenues via APIs, eBay’s figures stand at 60% and Expedia, a whopping 90%. IBM has earmarked $1bn for the commercial use of its AI Watson via APIs.

Adopters of innovation

A good example of how a legacy enterprise has opted for bone-deep digital transformation is Lufthansa. Founded in 1953, the 32bn euros company wanted to arrive at solutions in a short time and also spur innovation in the enterprise. Recently, Lufthansa’s Innovation Hub partnered with DXC Technologies and implemented an open (yet controlled) API program that serves its 100 million passengers. With an increase in brand visibility and precise targeting, sales took a jump. The program also improved travel experience for customers and positioned Lufthansa as an innovative organisation. Qantas Airlines too is investing on placing REST APIs in front of their legacy systems. It has further plans to add SOAP API support to “unlock value from their legacy services”.

In contrast, look at Blockbuster which was a powerhouse in the world of video rentals in the 1990s. It boasted over 8,000 stores at one point of time. However, with limited commercial data in the digital domain and lack of proper technological shift, it had to shut shop in 2013. In the same year, BBC’s doomed Digital Media Initiative had the company write off GBP100mn worth of assets and sack its CTO. An audit by PwC highlighted that BBC assumed that digital transformation was all about solving technological problems while failing to realize that a cultural, behavioural, and capability shift was also required. In 2016, BBC announced another digital transformation initiative pegged at GBP289mn. This year, it has entered into a five-year contract with Atos to provide technology services. The new contract results in the reduction of costs by one-third.

Microapps. Macro innovation

Innovation in the post-app era is not about building separate apps for various needs but building a select few with a strong focus. Apps shed their baggage of noise and irrelevance and turn microapps. They are economical, focused, cleaner, lighter, and easier to boot--and highly compatible to all personal devices. Instead of spending months to build a bulky app, developers can rapidly make smart and highly focused microapps. Cases in point: Facebook Messenger or any weather forecast app.

The ‘easily pluggable’ and highly customizable nature of microapps makes it agile. Microapps are to enterprises what a buffet with bite-sized portions is to restaurants. They are focused, very accessible, and highly alterable. Microapps can easily be integrated to existing software platforms. Enterprises which build and deploy apps that bring together internal communication, HR policies, leave management, social media etc are programmable. Employees can have access to relevant services at a click on their personal device and this increases satisfaction as well as productivity.

On another level, WeChat is an aggregator of microapps and that is what makes it so programmable. One can chat on it, book a cab, transfer money, and even order a burger. Microapps also leverage the power of APIs and are one of the precursors of bone-deep innovation.

The ploy is to deploy at scale

A killer feature of programmable businesses is their ability to deploy apps and microapps at scale. The ability to deploy on various cloud platforms--Google, Amazon Microsoft or hybrid--and the ease at which they can be shifted across seamlessly based on market/ tech demands is the essence of innovation in a programmable business. Faster deployments with increased confidence builds trust in users and thereby boosts business. This is also a precursor to effective support, monitoring, and managing of the apps deployed.

Transform fast, or fall back

The idea is to shift fast. According to the Progress Global Survey 2016, 86% enterprise decision makers feel they have a time of two years to either digitally transform or concede financial losses. Thankfully, based on the Global Digital IQ survey by PwC 2015, 53% companies have a transformation blueprint that includes IT as well as business shifts. The transformation should take into account business capabilities and processes as well as digital and IT components.

Real innovation is beckoning. Are you listening?