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Helping Firms Prepare for an Outside-in World – Our 2014 Research Agenda

The main theme of our research during 2013 has been the need for companies to become more outside-in. We have used outside-in as an umbrella term to describe the mindset and operating model that is needed to keep up with today’s rapidly changing business/IT environment where many of the most important opportunities and pressures stem from developments outside of the walls of the firm.

Outside-in

Clearly, there is now a major shift away from traditional internal IT infrastructure toward external capabilities such as cloud computing, Software-as-a-Service, app stores and BYOT

Thus far, we have emphasized how outside-in changes are affecting business strategy and Enterprise IT alike. Clearly, there is now a major shift away from traditional internal IT infrastructure toward external capabilities such as cloud computing, Software-as-a-Service, app stores and BYOT. More importantly, the creation of new business value is also becoming much more outside-in. While internal innovation will always be important, external dynamics – such as industry ecosystems, customer co-creation, community content, open innovation processes, the internet of things, and many new forms of collective intelligence – are becoming the main drivers of business/IT change today.

The more we discuss these issues with our clients, the more confident we are that we are on the right research track. Most companies have strong internal cultures and biases that must now substantially evolve so that outside-in thinking and strategies become second nature. This is particularly challenging for Enterprise IT which – given its heavy traditional emphasis on internal systems and processes – is often the most inside-out part of the firm.

The need to help clients adapt to this broad range of outside-in change is the guiding principle behind our 2014 research agenda. We are excited to announce the following projects.

What is the level of outside-in pressure today? How well is BYOT working? How strong is the momentum behind cloud computing and Software-as-a-Service? Is open innovation really a widespread requirement? Is our firm sufficiently customer-centric? Who is really good in these areas? How do we know if we are ahead or behind?

To answer these frequently asked client questions, we will conduct research on two fronts. First, we will survey several hundred business/IT leaders in Western Europe and North America. This will enable us to quantify both the extent of outside-in progress as well as the expected rate of change in the key outside-in areas we have identified. Second, to better anticipate next practices, we will identify world-class firms in each of the core outside-in domains. While I will be heading up this project, our entire research team will be involved in their respective areas of expertise.

HR 2.0 – Leveraging Network-based Talent Recruitment and Development Strategies (Q2)

Succeeding in an outside-in world requires a revitalized skill set across the firm. Within Enterprise IT, there is often a shortage of relevant social, mobile, web and analytics skills and a surplus of more traditional capabilities. Outside of IT, firms are facing a growing demand for double-deep leaders and employees, skilled in applying digital technologies in areas such as smart products, marketing and customer service. Our clients consistently tell us that they don’t have the talent they need.

Traditional high-touch HR and recruitment services are often too expensive, too slow and too disconnected from emerging talent sources. Fortunately, new community and network-based approaches are emerging. These include global talent pools such as LinkedIn, as well as specialized communities such as Kaggle and GitHub. They also include new talent evaluation processes based on contests, ratings, endorsements and other public content. Geographic communities – typically near universities or urban areas – are another growing source of both free agents and full-time employees. In this project, our newest research associate, Steve Hutson, will assess how these next-generation talent recruitment models are being used today, and how they will evolve over the next few years.

In 2005, our influential report Successful Business Relationship Management introduced the 4Ps. Enterprise IT’s primary relationship to ‘the Business’ could be one of four main types: Provider, Promoter, Partner or Peer. We learned that the great majority of our clients were trying to make the transition from Provider to Partner, and our BRM workshops have helped many firms toward this end.

But to thrive in the years ahead, Enterprise IT must adopt an outside-in mindset focused on today’s increasingly interconnected marketplaces. This requires understanding how digital technologies are being used across the entire ecosystem of the firm, and what Enterprise IT hard and soft skills are needed to drive and support these changes. Kirt Mead and Alex Mayall will assess how some of the most advanced firms in the world are managing the Business/IT relationship at a time when technology is pervasive and each of the 4Ps must be rethought from an outside-in perspective.

It is a truism that as outside-in change builds, industry value chains must continually evolve. Throughout his career and in his three years with the LEF, Simon Wardley has been developing a set of models and processes that can help companies anticipate, understand and communicate how their particular business/IT value chains are likely to evolve. In 2013, Simon defined these models in both a workbook and workshop format. In 2014, our plan is to convert our value chain mapping process into an iPad app so that clients can become self-sufficient in conducting their own mapping exercises.

In many ways, this is a new initiative for us, as it will be the first time we try to capture one of our key research methodologies in a purely software format. But it is also an extension of our ongoing digital efforts, as it follows our successful 2013 rollout of our LEF research app. While clients will still receive printed copies of our full reports, we believe our mobile versions now provide an equal or superior reading experience, and encourage you to consume our work in this way.

Since we first worked together in 2005, we have been impressed by the co-creation research of University of Michigan Professor Venkat Ramaswamy, and we look forward to his upcoming book, The Power of Co-Creation. Co-creation involves getting customers and other stakeholders directly engaged in your firm’s value creation process in areas such as testing new ideas, identifying new uses, personalization, community support and other dynamics. Co-creation is now an important form of innovation and a proven way to build brands and loyalty across a wide range of industries.

We see co-creation as a natural extension of our ongoing research into both Next Generation Consumerization and the need for more outside-in strategies. Thus, we are happy to announce that over the course of 2014, we will work with Venkat to develop a customer co-creation Position Paper. The goal is to show how co-creation is being applied today, and how firms can establish a co-creation mindset and process within their firm. The paper will be the foundation of a new co-creation workshop we will be offering to clients. Doug Neal and Jim Ginsburgh will be joining Venkat in this important new research initiative.

In addition to overseeing the development of the mapping app project, Simon Wardley will continue to push his lifecycle research forward. A cornerstone of this work is the idea that while today’s breakthrough innovation is tomorrow’s commodity, these commodities are not ends in themselves. Rather, they are the building blocks of future ‘higher-order systems’. For example, while the utility delivery of electrical power was an important achievement, its main significance was the enablement of new worlds of wonder such as radio, television, air conditioning and eventually computing.

What might the wonders of the future look like? While one can never be certain, Simon’s lifecycle evolution models provide a systematic way of assessing and anticipating various possibilities. As we can now see, cloud computing is becoming the basis for a whole new set of industries based on Big Data, 3D printing, vertical clouds and the internet of things. This makes it a great time to think about the next waves of disruptive change and the challenges they present to today’s industry titans.

Events and Study Tour

As always, we will align our research agenda with our annual conferences and Study Tour. Both of our 2014 Executive Forums – US in the spring and UK in the autumn – will focus on outside-in business change and feature Professor Ramaswamy as a keynote speaker. Further details of these events will be available shortly. Similarly, we expect co-creation and disruptive change to be major themes of next year’s LEF Study Tour. More details on the Study Tour agenda will be available early in 2014.

Research focus and continuity

Our goal is to have our work in these areas evolve in line with the market trends and client needs we see.

Every year our individual research topics change. But in many ways our work is consistently focused on a core set of issues at the intersection of business and IT. These include: Outside-in Strategies, Business/IT Co-evolution, Consumerization, Business/IT Relationship Management, Product IT, Double-Deep Employees, the Marketing/IT Relationship, Openness/Transparency, Value Chain Mapping, The Future of the Enterprise IT Function, and the Security Implications of these changes. Our goal is to have our work in these areas evolve in line with the market trends and client needs we see. As always, we look forward to any comments or suggestions you might have as we prepare for the exciting year ahead.

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AUTHORS

David Moschella
Research Fellow
David Moschella, based in the United States, is a Research Fellow for Leading Edge Forum.  In this position, he is responsible for research into the Digital Business Strategies domain, focusing on industry disruptions, machine intelligence and related business model strategies.  David is the project lead for our 2017 research into Disrupting ‘The Professions’ – Scenarios for Human and Machine Expertise. David was previously Research Director of the programme. David’s key areas of expertise include globalization, industry restructuring, disruptive technologies, and the co-evolution of business and IT.  David is the author of multiple research reports.  His most recently published reports include Embracing 'the Matrix' and the Machine Intelligence Era (March 2016) and The Myths and Realities of Digital Disruption (September 2015). An author and columnist, David’s second book, Customer-Driven IT, How Users Are Shaping Technology Industry Growth, was published in 2003 by Harvard Business School Press.  The book predicted the shift from a supplier-driven to today’s customer-led IT environment.  His 1997 book, Waves of Power, assessed global competition within the IT supplier community.  He has written some 200 columns for Computerworld, the IT Industry’s leading publication on Enterprise IT, and has presented at countless industry events all around the world. David previously spent 15 years with International Data Corporation, where he was IDC’s main spokesperson on global IT industry trends and was responsible for its worldwide technology, industry and market forecasts.    

CATEGORIES

Business / IT Convergence
Consumerization & the IoT
Digital Business Strategies
Learning from Silicon Valley
The Changing Nature of Work

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