Dream, Engage
and Execute
The Essential Components
of an Innovative Corporate Culture
By James Bargent
“People believe in innovation. They really think they can change their life for the
better through innovation and that is a basic change – people believe now” Javier
Anguiano, Innovation Officer BBVA
In the recent past, the concept of innovation belonged firmly in the sphere of R&D
departments, a science-based world from where new ground-breaking technology
would sporadically emerge. However, over the last decade innovation has ascended
to the forefront of business priorities and is now seen as essential not only to growth
but also to survival. “Within the space of ten years, innovation went from a magical
realm into the common consumer space and people started demanding it,” according to Dr Ervin Caraballo, who recently concluded a three-year study into business
innovation for consultancy and research firm Global Targeting.
Innovation has assumed its new mantle as a driving business force due to the
seismic shifts over the last decades in both how people do business and how they
think about innovation. Javier Anguiano is an Innovation Officer at Spanish bank
BBVA. “Ten years ago people didn’t believe in innovation,” he said, “they believed in
their business, their business model, in doing business the way they knew how to do
business. Now people are concerned because the changes are faster and deeper
every time.”
Nowhere are those changes coming faster or deeper than with technological
developments. While the speed of technological change exposes companies to the
risk of being left behind, it also offers opportunities to innovate like never before. “As
technology changes exponentially you are being exposed to new things that could
transform your business every day whenever you realize it or not,” according to
Guibert Englebienne, the Chief Technology Officer and co-founder of software
developers Globant.
The spread of technology has also contributed to another development that has
brought innovation to the fore: “We are in a time when innovation has been democratized,” said Englebienne. “Everybody is creating new technology and it is easy and
it is cheap, so what we are seeing is that the traditional players in different industries
are being challenged by all these new and different arts – that is putting a lot of
pressure on business.”
That pressure is exacerbated by operating in an increasingly global market place,
where businesses find themselves challenged from all sides – particularly on cost.
“Many of the advantages companies had before have gone away,” said Dr Caraballo.
“Now they are seeing competitors coming from places they
never expected before and the only way they can differentiate themselves is by
out-thinking and out-innovating the others.”
These changes have not just led to a re-evaluation of the importance of innovation
but also of what innovation actually is and how businesses can utilize it to gain a
competitive advantage. Innovation no longer has to be ‘radical’ - involving a
completely new breakthrough – it is just as likely to be ‘incremental’ - sustained
change using existing forms or technologies as a starting point. Innovation is also no
longer limited to end products or new technologies and many companies now
chase ‘process innovation’ for greater efficiency or ‘service innovation’ for customer
retention. The pursuit of innovation has also led to expanding business boundaries
as companies increasingly look outside their own organization for new ideas and
solutions – ‘open innovation’.
However, this conceptual explosion in innovation has created its own problems, not
least that while innovation is widely demanded, it is often poorly understood and
fuzzily defined. “The problem with companies right now is they don’t know how
people are defining innovation,” said Dr Caraballo. “They are confused and blurring
the message and not really delivering because they don’t understand what innovation means and that people are defining it differently.”
This lack of shared understanding of a key business concept is what drove Global
Targeting to launch its empirical research into innovation. When they surveyed tech
companies across the Americas, they came back with 60 distinct definitions of
innovation. Starting from this base, analysts narrowed it down to three common
factors; improvement, change and creating something new.
For Dr Caraballo, establishing a shared vision and understanding of innovation is the
first step to becoming an innovative company. However, after taking that step the
challenge remains to ensure, in the words of Global Targeting, “Innovation becomes
a managed activity rather than a random and spontaneous event.”
Fostering Innovation
“Companies forget that everything revolves around individuals – innovation
emanates from human beings so what you want to do is create the best
environment for individuals to be innovative” – Dr Ervin Caraballo
Creating a business model that converts the spontaneous into the consistent is the
daunting challenge now faced by businesses everywhere. For Dr Caraballo,
addressing that challenge involves the creation and management of an ‘innovation
micro-ecosystem’. “What we found,” he said, “is that to have a successful innovation
project you have to integrate people, processes, technology and your customer”
According to Dr Caraballo’s research, the most important of these and yet the most
frequently neglected is people. “It is all about finding the right people, and when
you have the right people the rest of it flows from there.” But who are these “right
people”? How does a business find them and maximize their potential? Innovative
recruiting and an innovative approach to creating a working culture can help
attract innovative individuals but this alone is not enough. According to Dr
Caraballo individuals will only consistently produce innovative results if they not
only share common goals and methods but also a common understanding of
innovation. “Many companies put these individuals together and they all try and
work on innovation but they work differently because they view innovation
differently,” said Dr Caraballo.
This perception gap is often at its most pronounced with the generation gap and
one of the biggest challenges facing companies today is integrating the new
generation currently entering the labor force in large numbers - ‘Generation Y’ or
the ‘Millennials’. “There is a big difference as to how the generations view
innovation,” said Dr Caraballo.
According to research conducted by PwC, “Millennials tend to be uncomfortable
with rigid
corporate structures and turned off by information silos. They expect
Why
Globant?
rapid progression, a varied and interesting career and constant feedback. In other
words, Millennials want a management style and corporate culture that is markedly
different from anything that has gone before – one that meets their needs” Yet
Millennials have also grown up around new technologies and are adjusted to living
in a world of constant change and so are often the most attuned to the possibilities
of innovation, and it is the companies who have successfully appealed to and
integrated Millennials that have the reputations for being the most innovative.
According to the PwC report: “The companies that have already been the most
successful in attracting talented Millennials – Google and Apple among them – are
naturally innovative employers who are never restrained by ‘how things used to be
done’.
However, talent and a shared vision and understanding are just the starting point
for constructing a business model of consistent innovation. Respondents to Global
Targeting’s survey identified two key areas for giving workers the tools and space
to innovation:
Clients
Benefits
• Training and education, is an obvious necessity to staying competitive in a
constantly changing global marketplace.
• The second though, was less obvious - the freedom to work in areas of individual
interest. “People were telling us that to be successful in innovation the company
has to provide areas they want to work in and the skills and information they need
to be successful,” said Dr Caraballo. Encouraging this sort individual freedom has
long been a central policy at innovative companies such as Google – where it’s
famous 20% rule states employees should spend a fifth of their working day doing
whatever they want.
Employee training and education is also key to the mastery of technology required
to generate innovative solutions. Nevertheless, this does not mean technology
itself is the source of innovation - a common mistake made by companies
struggling to keep pace in the modern market. “Technology doesn’t drive
innovation but is a result of innovation,” said Dr Caraballo. Another common
mistake is to focus on the next-big-thing technological breakthrough instead of
maximizing the potential of what already exists. Innovation is often more likely to
involve the innovative application or adaption of existing technology as it is design
of radical new technology. Even the IPad, frequently hailed as one of the most
innovative products of recent times due to its success in creating a market where
previously there was none, was based on existing mobile technology. “Technology
has evolved a lot and it has evolved in a way that we as developers are based on
innovation made by other people,” said Englebienne.
Once a company has the right people in the right environment with the right tools,
it still requires the right methods to ensure a constant stream of ideas pass through
the ‘innovation funnel’ and result in end products. According to Englebienne,
“Innovation is not something that happens instantly but it is the result of processes
that you need to create within your organization – traits of your organization that
will allow you to continuously innovate and come up with new things that will
keep you competitive.”
In the most successfully innovative companies, these processes not only focus on
ensuring the best results from employees, they also create channels to bring in
outside expertise and knowledge – open innovation. Javier Anguiano described
how BBVA went down the open innovation route after discovering the limits of
internal or ‘closed’ innovation. “First of all we thought we could innovate out
anything and out of anywhere by ourselves without help,” he said. “Later we
thought we could control the innovation process, but we are a very large company
and that is very hard because you need innovative people to lead by themselves.
Finally we decided to concentrate not only on where we want to innovate and how
we want to innovate but also who we want to innovate with and what our role is in
that process. We learned what are we good at and what are we not good at so we
can find the right partner for the right market for the right project. It took us a long
time to learn it, but it is very useful.”
The final aspect of developing processes is the incorporation of the role of the
customer, as no matter how innovative a solution is if it does not match the client’s
vision or solve their problem then it has failed. According to Dr Caraballo,
“Companies inherently know they have to have their customers thinking of them as
innovative. The trouble is after you deliver the customers thinks, ‘well that is not
innovative’ - that’s because they didn’t understand not what the customer was
looking for.”
Innovation in Practice
“Globant is in the fitness business – our business is to help our customers, our
employees and the countries where we operate to remain competitive in a
landscape of exponential growth that is putting a lot of pressure on everybody to
innovate” - Guibert Englebienne
Argentine software developer Globant has developed a reputation as market
leaders in innovation, a reputation that has helped it assemble an impressive client
list that includes Google, LinkedIn, My Space and Electronic Arts. A look at how
Globant integrates the key factors identified by Global Targeting gives an
indication of how and why.
For Globant, the innovation process starts with people. “We want to create an
organization where people will grow and they will be able to have their own voice,”
said Englebienne, “and we start by recruiting the right people.”
Globant’s approach has been to attract innovative talent through innovative
recruitment. In the past, the company has even recruited via cryptic messages in
newspapers - applicants with the smarts to decode the message received a number
which gave them access to a computer that they had to hack to submit a resume.
According to Englebienne, Globant’s personnel policy is also based around
maximizing the potential of Millennials. “This is a generation who has been shaped
by the technology that we have available, who are eager to become producers not
just consumers, who are used to having a voice – at least in their private lives - who
know and understand technology and who have the feeling of belonging to a
global community,” he said. “We must embrace Generation Y as a blessing not a
challenge.”
One of the major problems facing companies trying to integrate Millennials into
the workforce is the attrition rates of a workforce whose technical expertise is in
high demand and whose attitude to work and career is characterized by a sense of
constant change and flux. Globant’s approach is to develop a business modal that
can manage a roaming workforce without detriment to the company as a whole.
“As an organization we need to think we will not always have the best engineers
and the best people and we better open up to remain competitive,” said
Englebienne. “We need to nurture by connecting to other organizations other
groups of people, by importing innovation and exporting ideas – open innovation.”
As part of this ethos of ‘open innovation’, Globant has embraced open source
platforms as a constantly improving and readily accessible base for innovative
solutions. The most immediate benefit to ‘Rational Sourcing’ – the careful blending
of established open source software with proprietary software - is a
reduction in cost and time. “Innovation often needs a practical approach, it doesn’t
have to be reinventing the wheel, it can use existing technology as building
blocks,” said Englebienne. “The idea of Rational Sourcing is to think about what is
out there that can help me be faster and cheaper.”
However, Globant’s adoption of open source does not end with the technology but
reaches into the open source communities themselves. The company maintains
relationships with core development groups and collaborates with them in open
innovation projects, where both parties throw their frameworks and knowledge
open to each other. “We are not starting from scratch we are starting from different
layers of innovation from communities around the world and that makes it very
easy for us to innovate,” said Englebienne. One Globant initiative designed to foster
this open innovation and engage with the broader tech community is through
regular Hackathons, where experts from outside the community are invited to
meet over pizza and beers to explore new technologies or projects. Working
alongside Google, Globant ran Hackathons to develop the social media linking
OpenSocial framework. Engaging with outside communities though, is not just
seen as a new source of innovation, but also as key to continuous the education
and development of workers, who can learn from outside experts while staying
abreast of new technologies.
Globant’s talent is assimilated into an organizational structure carefully designed to
foster autonomy and personal growth by breaking with traditional hierarchical
business models. “Typically, the structure of a 20th century organization was
created with all the smart people at the top and a very hierarchical pyramid to
ensure that what was decided was actually performed,” explained Englebienne.
“Now we have moved into a knowledge economy where talent is becoming the
most valuable capital you can have. This challenges the way we structure the
organization – rather than putting all the knowledge at the top, the idea is to
distribute the smart people and tap into the different ideas of people within the
organization”.
This diffusion of talent is facilitated by dividing the company into eight different
“Creative Studios”, each offering specialized expertise. The studios have a broad
range of focuses taking in technical specializations such as the ‘Luminous Gaming’
and ‘Cloud computing and Infrastructure’ studios to business practices and
outcomes, such as the ‘Business Productivity’ and ‘Consumer Experience’ studios.
The breaking down of traditionally rigid hierarchies also helps foster the type of
employee autonomy and creative freedom identified by Global Targeting as key to
innovation. At Globant, employees are encouraged to use the ‘Globant Labs’ - a
dedicated space to investigate new technologies and ideas that interest them.
There are currently over 100 active projects running in the labs, exploring cutting
edge technology such as artificial intelligence, augmented reality gaming, and
bio-informatics.
However, autonomy is not just limited to freedom to explore new ideas but also to
allowing employees to find their own solutions to set problems. “We are a
company that sets the goal but then leaves freedom on how you execute – we
respect that everyone will come up with new ways of getting to different places,”
said Englebienne. “Our culture is based on giving people autonomy.”
Although Globant’s business model focuses on non-hierarchical structures, the
company has also created an intellectual elite – the Premier League – to facilitate
the innovation process. Selected from the top 1% of Globant workers and including
the heads of the individual studios, the Premier League constantly investigates new
trends and technologies. At the start of any new project the Premier League begins
the process with a brainstorming session that brings a wide variety of expertise to
bear on a problem. “It gives us the ability to supervise different projects by people
who know a lot and are outside the scope of what a company requires,” said
Englebienne.
Globant’s working practices are also carefully designed to foster innovation. After
initial research into the clients and their problems, any new Globant project begins
with ideation sessions. The sessions are characterized by the application of design
thinking to a client’s problem, and several often run concurrently to generate the
largest possible quantity of ideas. Particularly challenging projects are often
thrown out to workers outside of the project in company-wide crowd sourcing
initiatives.
The generation of ideas is also integrated with new technologies and Globant
explores solutions through technologies that clients have not even suggested or
that are coming up from the Globant Labs. Any new project is run through an
‘innovation matrix’ where the needs of the customer are cross-referenced with new
and developing technologies.
Clients are invited to participate from the ideation of stage of a project and usually
work closely with Globant teams throughout. Globant predominantly works with
Agile methodologies, which allow the teams the flexibility to adapt to changing
customer requirements or unexpected innovations through working in close
partnership with the customer stage by stage. BBVA’S Javier Anguiano, who
worked closely with Globant on a project, identified this as one of the key benefits
of working with the company. “They were flexible, which is something hard to find”
he said. “They were good because they knew how to make a team”.
The next challenge, as Englebienne defines it, is to “Make ideas survive in the
customer environment.” To which end, Globant presents customers with videos,
proof of concepts and mock-ups. However, according to Englebienne, the key for
innovative ideas to be embraced by customers is ensuring a shared understanding
of the issue. “You need to make your customers part of the team and work together
on finding common ground on understanding what the problem is,” he said.
Millennial Business
The rise of innovation has left many companies fumbling in the dark as they grasp
for the type of sustainable, consistent innovation that will ensure they remain
competitive in a high-velocity global market place. Meanwhile, businesses like
Globant demonstrate the sort of successful management of the innovation
micro-ecosystem that has seen the company grow from a barroom conversation to
an internationally renowned, multi-million dollar company with an elite client list in
less than a decade.
However, Globant’s success also highlights an important opportunity for
established companies struggling to adapt long-established business models to
the ever-changing demands of the modern marketplace. The type of open
innovation utilized and offered by companies such as Globant opens up the
possibility of bridging the gap between young, dynamic “Generation Y” companies
and established businesses struggling to change and offers the opportunity to tap
directly into the innovation revolution.
For more information visit
www.globant.com
Globant US
34 Hayden Rowe
Street Suite 122
01748, Hopkinton, MA
1-877-798-8104
Fax: +1 (774) 759 3019
Globant Argentina
Ingeniero Butty 240 6th floor
Laminar Plaza Tower
C1001AFB - Capital Federal
+54 11 4109 17 00
Fax: +54 11 4109 18 00
Globant UK
Sistemas UK LTD
Central Point 45 Beech Street
London | EC2Y 8AD
+44 20 70 43 82 69
Fax: +44 20 79 45 61 26