Fernando Fischmann

How We Think About Innovation at Cisco

13 June, 2016 / Articles
Fernando Fischmann

No one doubts that the future belongs to the Internet of Things. From drones to refrigerators, from massive industrial robots to tiny, implanted medical devices, machines already are communicating with other machines, sharing data and, without human guidance, accomplishing ever more sophisticated tasks. Gartner predicts that there will be more than 6.4 billion connected “things” in use this year, and forecasts that the IoT will encompass 21 billion things by 2020 – almost three devices for every human being on the planet. In the manufacturing sector alone, market intelligence firm IDC expects the IoT market to grow to about $100 billion by 2018, a five-year combined annual growth rate (CAGR) of 18%.

All of this change will require new technologies that enable faster, more secure ways for machines to share and process data. To keep up, new standards, architectures, and infrastructures will have to develop at the same pace. The question confronting Cisco and other companies is how to do that – how to speed the process of innovation, especially as technological change threatens to upend our current business models.

At Cisco, we are learning to answer these questions through three initiatives designed to broaden our knowledge base by bringing multiple perspectives together: embracing diversity within our walls; reaching out across industries; and building partnerships with former (and current) competitors.

Internal diversity

A 2013 study found that companies with a diverse workforce – both culturally and in terms of professional experience – “out-innovate and out-perform others. Employees at these companies are 45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.” This makes intuitive sense (fresh ideas come from fresh faces), so at Cisco, we’ve tried to bring together people with different backgrounds, educations, and geographical origins to find new lanes of opportunity.

We find that innovation flows from the dynamic created by putting people with different backgrounds together; it emerges naturally from the tensions that exist between opposite requirements. For example, if some players within a team are inclined to be risk averse (say corporate risk managers) and others are not (an innovation group), incorporating the risk managers’ input will produce more innovative and viable ideas than if the group had not had to synthesize opposing viewpoints.

Experts from outside industries

Including experts from other industries – especially very different ones – can offer similar problem-solving benefits. For example, we recently hired an expert from the high-end watch industry to help us develop a program for customers in emerging markets. We had some last-generation inventory that we knew would be an upgrade for some markets that had long desired our products, but considered our latest products too expensive. Developing new markets for unsold inventory has become an area of expertise in many luxury product businesses, so it was natural for us to look to that sector for expertise on this issue.

In this instance, tailoring solutions for customers in specific geographies was new to Cisco. Doing so – even conceiving of doing so – required thinking from outside our walls.

Partnerships with outside organizations

We believe partnering is one of the best ways to broaden a corporation’s knowledge base. To advance the development of fog computing technology and architecture, Cisco partnered with Microsoft, Ericsson, and other leading players, creating the Open Fog Consortium.

In the Open Ledger Project, IBM, Intel, Cisco, and others have joined forces to explore new business possibilities for blockchain – a dynamic ledger of executed transactions first developed to record and validate Bitcoin transfers – that could allow anyone to exchange anything that carries value (stocks, bonds, mortgages, car titles) securely, reliably, transparently, and automatically. This technology could eliminate expensive middlemen, and close loopholes that allow traders to game systems.

Along with bringing many minds to the table, partnerships open up new sources of investment. A single company need not pour resources into creating a new idea (while diverting capital and people from core revenue generators); that investment can be husbanded for prototyping, piloting, and building, while the initial investment in the idea or technology is shared. Indeed, for some partners some resources are much less expensive to provide than for others. A hardware manufacturer can provide computing power more easily than others can, and a bank might contribute real (anonymized) transaction data to a “sandpit” for development. Even businesses blockchain could disrupt, such as brokerages and financial services institutions, may want to partner to ensure their relevance going forward.

As the digitization of business continues to disrupt industries on many fronts, an isolated, internalized approach to innovation is becoming increasingly suboptimal and impractical. At the same time, the opportunities offered by new technologies, such as the Internet of Things, are enormous – if they are approached with an expansive strategy that embraces diversity, crosses industries to partake of external expertise and experience, and recruits new partners.

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

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