In a recent conversation with a chief technology officer, he asserted all digital technology changes in his organisation were being led by IT and not by marketing. It made me wonder: How long a marketing function like this could survive?
There’s no doubt brands are increasingly looking to innovation as a way of coping with digital disruption. Some have chosen to invest in startups and standalone ‘innovation hubs’ that pool tech insights and expertise; others have set-up intrepreneurship programs in a bid to turn fledgling ideas into scalable business ventures.
But according to Anthony Johnston, head of new commercialisation business, OgilvyVentures, many are still struggling with how to take a new idea and turn it into a viable model that the business will actually support.
“Disruption is great but you’re looking at it in hindsight – you can’t plan for it based on real data because it doesn’t exist yet,” he told CMO. “That’s worrying for brands and it’s a difficult thing for them to get their heads around, even though they are getting disrupted constantly and being bombarded with information about why they need to change.
“It’s difficult for the CMO or CTO to go to the business and talk about the need to make that change – they have to show what that means.”
Johnston claimed a popular way of trying to tackle innovation - intrepreneurial programs – is failing because the very nature of disrupting the organisation goes against existing operational structures. A fear of risk is also continuing to stifle innovative thinking.
“You can get there by setting up boundaries and filters, so ideas have to meet certain criteria, but it’s still difficult,” he said. “Then what do you do with it? If you are an insurer for example, and that idea you’ve come up with truly is diversified and disruptive, how do you execute that when management structures are based on making decisions through data? By its nature, you are going to have to make some decisions that don’t typically fit the business case or model in place.
“There’s also managing internal issues like budgets and politics. Or by the time these things get into the cycle, they’re very different from the original intention.”
It doesn’t help that many organisations are confusing improvement with innovation, Johnston said.
“This is not about continuous improvement,” he said. “The latter is what the business does well when they optimise. I think that’s where the definition of innovation becomes murky.
“Sure, some of this improvement can be innovative, but if you’re looking at significant business growth from new revenues and new markets, it is less about continuous improvement and more about something that’s new and diversified.
“It’s not about business as usual.”
For Johnston, unlocking innovation is about tuning into “diversification” opportunities that are customer-oriented. It’s this quest that has led to the launch of OgilvyVentures, a commercialisation arm aimed at helping brands foster new business ideas.
Johnston said his team has its sights on three key areas: Startups, corporate ventures and corporate partnerships. To support its ambitions, OgilvyVentures partnered with technology services provider, Wipro, to build and launch several products, starting with the energy, insurance and banking sectors.
Johnston said the group is in discussions with a bank and insurer about setting up a separate venture to the rest of their businesses. As part of that arrangement, OgilvyVentures joins the advisory panel alongside the company’s CEO, COO and head of digital, and assist with establishing checks and balances for new ideas. These would include whether an idea is scalable, if there’s back-office capability to service and support it, whether there is a commercial model in it, and what potential options there are around it.
“We then get a go or no go – if it’s yes, we quickly get a proof of concept built,” he said. “A fictitious example is in banking – why can’t I as a businessman sell my energy I generate off the back of the space I have to other business as way of getting revenue? That’s outside the bank’s core product but bankers could offer that.”
OgilvyVentures is hoping to secure three to four partnerships every year. Johnston said the key difference between his new business and other services agencies and consultants is a willingness to share in the risk.
“We have 500 people who work on understanding and achieving an outcome out of the customer and it’s about repurposing the existing skillsets we have,” he explained. “We have planners, strategists, data, social, media and layers of communication management and customer engagement plus technology.
“We come in with ideas, package it around the customer, and bring in people who typically respond to briefs - in this case, they’re creating that brief. So when a CMO asks ‘what about my brand, why does the customer care, what’s driving that and the market factors’, we can tell them.”
In return, OgilvyVentures gains joint ownership or an annuity or licence for the offering, generating an alternative revenue stream to its core service-based model. OgilvyVentures is already working with a startup with video technology in the sporting space. In addition, the team is building a usage-based platform in the auto industry through its partnership with Wipro. Johnston expected to get the first proof of concept up by the end of the year.
A corporate venture is also in the works around the connected home, and a partnership with business startup incubator, Investibles, has given OgilvyVentures staff the chance to work with new talent and ideas in the financial tech space.
Johnston said the new commercialisation business has opened doors into the c-suite.
“CMOs might spend 10 of their 80 hours a week on brand, but they spend the 70 other hours worried about growth, margin, revenue and so on,” he said.
“They’re the things that keep the CMO up at night, but we hadn’t got an opportunity to talk to them about that as we don’t get asked to. That’s what this is all about: How we can help with that.”