4 Rules of Innovation: What Nike And SAP Know

Recently Fast Company highlighted the top 50 most innovative companies of 2013, with Nike being identified as the most innovative.

In an article that graced the cover of Fast Company’s magazine last month, Austin Carr broke down the reasoning behind this nomination and identified four key factors that Nike employed company-wide to help them become so innovative.

The Four Rules of Innovation

  • Rule 1: To disrupt, you must go all-in
  • Rule 2: Anticipate a product’s evolution
  • Rule 3: Direct your partners
  • Rule 4: Feed company culture

After reviewing these it is clear that these four distinct rules not only apply to any business that is attempting to innovate, but can be applied on a much broader scale to any person, group or product that is reaching for innovation. With that in mind, let’s turn the lens of Austin Carr’s four rules of innovation towards SAP’s Analytics, an area that is constantly evolving, to better understand where innovation is being made today and how it can be improved.

Rule 1: TO DISRUPT, YOU MUST GO ALL-IN

In the Nike article, Austin explains how Nike has completely committed itself to several new technologies, one being the Nike Fly Knit shoe. The Fly Knit shoe completely revolutionizes the way shoes are manufactured, using polyester yarns and cables to “get rid of all the unnecessary excesses” of a traditional shoe, ultimately making the shoe much lighter and more comfortable. But in order for Nike’s R&D labs to reach this point it required them to step back from the old process and acknowledge it could be done better (which isn’t always easy considering Nike was dominating in the “old way”). But that idea of whole heartedly throwing themselves into something that would disrupt not only their competitors but the way they do business themselves, is what really separates them as innovators.

When looking at the Business Analytics industry it’s hard not to draw comparisons between the way Nike is approaching their Fly Knit shoe and how SAP approaches it’s HANA In-Memory appliance. Much like the Fly Knit aims to help athletes shave vital seconds off of their times, HANA allows businesses to shave minutes and ever hours off their business processes, taking a process that would normally last 45 minutes and reducing it down to 45 seconds. Just as Nike did, SAP’s chief technologists took a step back several years ago and realized the complex and overweight world of operational data stores and datawarehouses wasn’t working. To help cure this, SAP came up with HANA in an attempt to get rid of all the unnecessary excesses (sound familiar?). Instead of having to maintain all of those systems, businesses could now have a one-stop shop for all of their business data and they could reach it faster and more efficiently than ever before. But as noted above, it isn’t enough to simply innovate, one must go all-in. To this point SAP has done that, committing itself whole-heartedly to HANA as the future of business software.

Rule 2: ANTICIPATE A PRODUCT’S REVOLUTION

As if to anticipate the naysayers of Rule # 1, the article is quick to point out that going all-in does not necessarily mean the need to stick with one idea and never waiver. In fact it is just the opposite; Nike’s constant revision of its innovations is one of the keys to its company’s success. To truly innovate one needs to understand not only where the product needs to be today, but should anticipate where the product needs to be tomorrow. In the shoe industry alone you can see how athletic sneakers have evolved from the days of the Chuck Taylor’s where they were completely made of cloth and a rubber sole, all the way now to the present day with the newly made Fly-Knit shoe. What is key to this change is fully understanding what the customer is looking for in a shoe, whether it be speed, support or both.

Business Analytics is no different than this, with innovation constantly being driven and dictated by what the customer needs. In the past several years business intelligence has seen a complete overhaul, as the customer focus has turned from engaging just business analysts to engaging everyone in the company. Just like with shoes, this customer trend dictates what developers are working on right now. With the target audience of business intelligence becoming the everyday user, two key features have become the focal points of business intelligence innovation: ease of use and big data. Users today want to see the big picture but want to do it in an intuitive and simple way that doesn’t take away from their regular job.

The problem with trying to combine big data and ease of use into one tool is rather akin to the dilemma a racecar team faces: How do you give your car more horsepower while at the same time trying to make the car lighter. As a result of this we have seen SAP and other BI companies turn to visualization tools that allow users to easily parse through mass amount of data in an intuitive and simple way. Much like the light weight shoe, the visualization tool market is one that is continuously heating up from all sides and shows no signs of slowing down as customer’s needs continue to be heard. Whichever tool can ultimately harness both the ease of use while providing access to massive data will see the most success.

Rule 3: DIRECT YOUR PARTNER

Along with the Fly Knit shoe, Nike came out with a second and even more impressive innovation in 2012: the Nike Fuel Band. The fuel band, an electronic wrist band worn by users to track their general activity, went through a number of iterations before coming to the final product. While working on those iterations, the article explains how Nike “had to open its doors” and reach out to partner companies to assist with the innovation. Using companies like Whipsaw to come up with the 120 LED lights on the display or Synapse who developed a curved lithium battery for the wrist band, Nike acknowledged that they could not do the work on their own and needed to harness the expertise of other teams and companies to come up with a superior product.

As the article notes, “In a world of rapid disruption, companies no longer must — or can–own all the skills required to thrive. Just as Google needed Android to attack mobile and Apple needed Siri to give it a foothold in search, successful businesses need to constantly evolve, either through partnerships, new talent, acquisitions–or all three.”

This need for evolution through partnerships and acquisitions certainly holds true in the business analytics world as well. With trends like social media and mobile becoming central cogs in the analytics machine, traditional business analytics companies are realizing they need to go outside for many of the answers. SAP has been at the forefront of this, acquiring companies like Sybase for their vast mobile capabilities and partnering with teams like Netbase to help companies with their social media analysis.

Innovation becomes truly stagnant if every time you look to do something new you must learn a whole new trade. Companies like Nike and SAP can innovate much faster by utilizing the already existing knowledge of other companies that they acquire or partner with. Companies that fail to realize this ultimately find themselves the jack of all trades and the master of none.

Rule 4: FEED COMPANY CULTURE

At the opening of the article Austin depicts a scene in one of the Nike Labs where a group of researchers have hooked up a Nike technology to an old Nintendo video game and are seeing who can run the hurdle competition. This type of scene is becoming more and more common as companies attempt to straddle the line between being hip and innovative while still driving their bottom line. As a company that has built it’s brand on consumer technology Nike, like Apple and Google, must foster this type of environment within their own office to not only attract top talent but to also encourage the free thinking that results in products like the Fly Knit or the Nike Fuelband. The Nike campus is riddled with gyms, swimming pools and climbing walls in a constant effort to reinforce the active and fun culture.

But business analytics companies are different than these consumer driven companies and are increasingly finding themselves at a cross roads of maintaining the business like atmosphere of the past while attempting to infuse the “new and innovative” culture that has become so popular. Every tech company is in such a rush to become more like the Googles and Apples of the world but it’s not as simple as hiring a bunch of kids in jeans and rolling out the keg for Friday happy hours. After all, you’re talking about companies’ business information, the mainframe of what decides their success, which still needs to be treated with a certain level of reverence. The analytics companies that can foster an environment that is open and innovative while at the same time staying true to the core of what business analytics is (a reporting platform aimed at helping people understand their information more clearly) will ultimately be the most successful and innovative ones.

It is clear that both Nike and SAP Analytics have realized their innovation success in many of the same ways. What seems to be at the heart of both innovation strategies is a customer centric approach and the constant question of “How can this be simpler” Although the similarities do end at a certain point, as it may be a long time before you see a Nintendo in an SAP office hooked up to an SAP Dashboard analyzing Mario’s Gold Coin to Number of times he’s saved the princess. (actually I think I’ve got my next blog topic!)

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