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© 2013, Dave Cornelius
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SMAC and Innovation Transformation

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• Innovation
• Leadership Agility
• Leading Organizational Change
• Lean Startup Principles
• SMAC and the Transformation of Innovation

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SMAC and Innovation Transformation

  1. 1. Page 1 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana SMAC and Transforming Innovation Dave Cornelius, Agile Leader, Info Intel, Inc. Abstract Social media, mobile devices, analytics, and cloud computing (SMAC) have combined to create a technology ecosystem that supports disruptive and sustaining innovation. The ready availability of the SMAC ecosystem connects customers to new innovations and supports shopping on e-commerce sites and in brick-and-mortar stores. Importantly, the SMAC application has transcended retail and consumer marketing activities, and also has significant relevance in banking, healthcare, and other business functions. This paper will discuss SMAC technologies and their use in and impact on various industries. Using the SMAC platform, entrepreneurs can develop new products and services by renting technology capability without owning the infrastructure, software, and support staff. Project management information systems (PMIS) can leverage the SMAC platform over a secure Internet connection to support collaboration between team members and enable transparency about a project’s health. Social media, mobile devices, analytics, and cloud computing are the amalgamation of mature technologies for the 21st century. Overview The convergence of social media, mobile devices, analytics, and cloud-computing technologies has increased the anytime, anywhere, and any person opportunity for connecting, collaborating, and creating. In the 21st century, an entrepreneur can launch a product or service and rent the technology capability without owning the infrastructure, software, and support staff. The Spanx lingerie line launched for $5,000 and is now worth more than $1 billion (Tulshyan, 2012). Never before have entrepreneurs been as empowered to connect with customers globally and capture information to gain insights about their needs, opinions, and connections to product and services. The instant availability of software solutions to support a startup business’s planning, operations, sales, and marketing efforts is unprecedented. Potential customers are armed with mobile devices that facilitate commerce anytime of the day and anywhere. Deloitte opined that SMAC is the “postdigital era” — an era described as “catalyzing value from the elements of mobile, social, analytics, cloud, and cyber” (Deloitte, 2013, para. 1). The opportunity for commerce in the digital realm is continual without boundaries. Importantly, SMAC technologies are being used beyond traditional consumer models. This includes President Barack Obama’s campaign machine, which leveraged the SMAC platform to engage voters based on data analytics, mobile devices, social media, and the Internet to drive behavior and outcome. Scherer found data-driven decisions led to the reelection of President Obama (Scherer, 2012). The data analysis provided insights into the preferences and opinions of potential voters and campaign contributors. The campaign managers established celebrity access competitions to attract women and other special groups (Scherer, 2012). The centralized data provided many options to create predictive profiles about potential Obama voters nationally. The SMAC platform creates a technology ecosystem that supports disruptive and sustaining innovation. The entrepreneur (external) and “intrapreneur” (internal) are now empowered to connect, collaborate, and create globally. Examples include Wikispeed, the developer of the 100-mpg car, leveraged blogs, agile, and collaboration to win a $10 million innovation prize (Denning, 2012). Its team was highly decentralized, with 150 members from 15 countries (Denning, 2012). Finally, there is a tremendous untapped market. One-third of the world’s population can connect to the Internet, which creates the opportunity to connect the remaining two-thirds (Popper, 2013). The inclusion of 7 billion people globally in the SMAC platform will create innovations comparable to immigrants’ contribution to the United States economy (Hunt & Gauthier-Loiselle, 2008). The participation explosion in the SMAC platform will introduce additional consumers, innovators, and potential pirates.
  2. 2. Page 2 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana Innovation Innovation is an uncertain process and attempts to answer the hypothesis about the viability of the proposed concept. Innovation introduces a platform for change, wealth, and improvements to the quality of life. Drucker (1985) stated, “because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs” (p. 75). The innovation results benefit individuals and organizations by providing a new set of values and experiences (Christensen, 2010). The benefits of innovation are evident in the quality of life in the United States and other developed countries. Companies must select the right innovation that answers uncertainty for technical capability, market adoption, financial gain, and competitive advantage (Shane, 2009). Technology innovations provide competitive advantages for the organization (Shane, 2009). Innovation has two categories, which include sustaining and disruptive paths. Sustaining innovation represents the change that incrementally improves the product for a profit (Christensen, 2010). An example of sustaining innovation is the car manufacturers’ annual release of new car models that are incremental improvements from the previous year. Disruptive innovation removes the market leader and provides a dramatic breakthrough by introducing a new customer base with a more simple and affordable product (Christensen, 2010). The Apple iPod and iTunes online store are examples of disruptive innovation that changed how people experienced music and transformed the way in which the music industry handled the rights to music. Synergies of SMAC Technologies The amalgamation of mature technologies provides a new path to explore innovation. Social media, mobile devices, analytics, and cloud computing create a platform for collaboration to introduce new products and services. Figure 1 illustrates the SMAC ecosystem. The SMAC platform creates new experiences that benefit the consumer and merchant. A consumer can purchase an e-book via a mobile phone and then share it with friends within minutes through social media networks. The merchant receives notification of the purchase and the viral feedback of the service received. In addition, the merchant’s store lives in the cloud and can obtain validated learning about customer experiences through analytics. The merchant’s total cost of ownership is significantly less than 10 years ago. The SMAC platform offers individual innovators and organizations an alternate way to connect with customers, measure their engagement, and accelerate the adoption rates of new innovations. Figure 1: SMAC Ecosystem Ideas Cloud Mobile Innovation Analytics Social Media
  3. 3. Page 3 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana Mobile Technologies Mobile devices have become a commodity and a common asset to many people around the world. By the end of 2013, the number of connected mobile devices will exceed the number of people on earth, with more than 7 billion devices (Cisco, 2013). The potential pool of viable customers presents a key market opportunity for merchants with products and services for sale. Mobile devices extend the reach to customers and increase the connections to information from various sources (Simhan, 2012). Imagine an existing customer connected to an opt-in email, text message, or social network that provide information about specific products of interest. The customer responds and indicates the date and time of arrival at the store. The merchant, armed with technology to determine the arrival of the customer based on mobile device data, can select the desired product and meet the customer’s need. The Massachusetts Institute of Technology (MIT) innovation that tracks mobile devices connected to mobile networks is called “Path Intelligence” (Biggar, 2012, p. 1). The Path Intelligence technology uses mobile devices to ping against connected cell sensors to identify the location of consumers. The ability to know when a customer is present at a merchant site is powerful information. The explosion of smart mobile devices will alter how people experience information. Yu-Doo and Il-Young (2013) stated, “A smart device is an electronic device that is cordless, mobile, always connected, capable of voice and video communication, Internet browsing, geo-location, and that can operate autonomously to some extent” (p. 40). More people access the Internet via smart devices than desktop computers (Yu-Doo & Il-Young, 2013). The mobile device preference also influences the way people work and the mobility of work. The advances of connectivity will enable people to connect to information in a different way. For example, a device that knows a person is in a meeting could recommend contact via a text message versus voice message. Boland (2011) found mobile devices would connect to an information galaxy that provides intelligent responses to the individual need. Social Media Social media networks enable collaboration and expand the way people interact. Facebook, blogs, Twitter, and LinkedIn have changed the way people interact and connect in the digital domain. This interaction creates information that organizations and individuals can use for insight into opinions about a number of subjects. Information available in social media environments can be easily mined for data because of the digital representation (Blank, 2013). While the data captured in the form of text, images, and videos are unstructured data, the data still represent behaviors and attitudes towards products, services, organizations, and individuals. The data answer questions beyond the quantitative model of how many people participated and provide qualitative answers of why people participated in specific activities. The growth of social media users continues to increase daily. Facebook has exceeded 1 billion users, which translates into one in seven people globally with a Facebook account (Smith, Segall, & Cowley, 2012). Imagine the conversations of 1 billion users, rich with text, images, and videos communicating behaviors, beliefs, opinions, and attitudes about many subjects. In addition to sharing information in social media channels, users also are learning about new products, services, knowledge, and cultural norms (Naylor, Lamberton, & West, 2012). Merchants using social media as a strategy to engage customers can influence behaviors and responses to existing and new brands. This influence also is greatly enhanced by celebrity endorsement of a brand. Social media has enhanced citizen engagement in politics, community outreach, and global issues (Bryer, 2013). The application of social media is universal and creates an environment for collaboration and engagement. Analytics The large amount of data found in social media, blogs, micro blogs, news articles, and other sources require text analysis tools to glean insight into customer opinions. Analytics provide insight into customers’ interaction and experiences with products and services, which support the decision to pivot (change direction) or persevere (continue with the direction). The analytics results are quantitative metrics and qualitative themes to support informed decisions. An important method of qualitatively understanding consumers’ attitudes and behaviors is sentiment analysis. Sentiment analysis provides insight into a customer’s opinion about the organization, product, or service (King, 2011). A company can capture and evaluate the perception of individuals in a specified moment of
  4. 4. Page 4 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana time (King, 2011). An entrepreneur will find this information valuable in determining the course to chart for the organization. People react to sales and interactions based on emotions (King, 2011). Sentiment analysis results can direct customer engagement by changing strategies based on facts over gut feelings. Predictive analytics provide information to direct decisions based on past and present observed behaviors. Mitchell (2012) found predictive analytics is “the forward-looking data mining discipline that combines algorithmic models with historical data to answers questions” about customer behaviors (p. 29). The application of predictive analytics to social media channels and mobile devices can project forward consumer buying habits and sentiments toward products and services. Intuit, the innovator of QuickBooks and Mint, used predictive analysis to anticipate the financial transaction categorization in the QuickBooks and Mint products (Mitchell, 2012). The ultimate goal is to learn from consumer patterns and optimize business processes for a measurable improvement in outcome. Cloud Computing Cloud computing — the practice of using a network of remote servers hosted on the Internet to store, manage, and process data — changes the delivery of information to organizations and individuals. Cloud computing allows businesses and individuals to rent technology capability to execute business functions (Caytiles & Byungjoo, 2013). A typical organization might normally house hundreds of computer servers, network and storage devices, applications, and services to support the ability to scale to customer demands. Cloud computing can replace in- house IT capabilities by using a multi-tenant environment to enable an organization to scale to market demands with an decreased time to market and nominal costs. Cloud computing is very agile and can be managed to scale at a much lower cost that in-house resources. Cloud computing is becoming pervasive and supports public, private, and hybrid models. The public model is a service provided by a service provider to anyone for a fee. The private model is owned and operated by an in-house IT group and provides services to a limited number of people (Todkar, Limbore, & Zargad, 2013). The hybrid model is a blend of the public and private models. The pervasive nature of cloud computing provides users with connectivity from any location and availability at any time (Youssef, 2013). Caytiles and Byungjoo (2013) described three classification categories for cloud computing: • Software as a service (SaaS); • Infrastructure as a service (IaaS); • Platform as a service (PaaS). SaaS is the most common model, enabling customers to use software on the Internet without having to install it on a personal computer or mobile device. SalesForce.com provides a customer relationship management (CRM) system to manage customer sales, Microsoft Office 365 products enable document creation and serve as a knowledge management system, and Intuit QuickBooks financial management software supports financial transactions via the Internet (add references here). Sales, knowledge, and financial management are three critical activities that are now available through the cloud-computing SaaS model. The IaaS model is a service to reduce in-house computer servers, networks, and storage devices to support the business technology infrastructure needs. A well-known IaaS service is Dropbox, which provides storage for files and supports secure file sharing. Examples of enterprise-level IaaS services include Amazon’s Elastic Compute Cloud (EC2), Rackspace Mosso, and GoGird’s ServePath. Web hosting also is a common service provided by the IaaS model. The PaaS model provides a solution where customers can develop, test, host, deploy, and maintain their applications in the same integrated environment (Youssef, 2013). PaaS leverages IaaS services to enable the development of business applications. Examples of PaaS include Google’s App Engine, Microsoft’s Azure, and Salesforce.com’s Force.com. Cloud computing is not only good for business by reducing costs and increasing business flexibility and efficiency, the technology innovation is good for the environment. Computer infrastructure can be outsourced to IaaS and PaaS providers, reducing expensive energy consumption and carbon emissions. Rashid (2010) found that “cloud computing has the potential to reduce energy consumption and carbon emissions by 30 percent or more” (para. 1).
  5. 5. Page 5 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana Imagine the ability to access business critical information globally without owning expensive computer infrastructure. These new capabilities help reduce the carbon footprint of information technology (IT) much like mass transportation helps to reduce carbon gases in our environment. SMAC & Innovation The SMAC platform is flexible and applicable to sustaining and disruptive innovations. The banking industry has successfully leveraged social media, mobile devices, technology, cloud computing, and the valuable insight provided by analytics. Today, a check can be deposited via a mobile phone and a payment for services can be made with mobile money. Mobile Technology now allows banking to be done anywhere and at any time, with great benefits for customers. The bank benefits from reduced brick-and-mortar costs by encouraging electronic transactions on the SMAC platform. Banks also benefit by being able to capture and analyze their customers’ behaviors and transactions in order to determine the next steps in product development. The SMAC platform is a relatively new phenomenon in the industrial automation industry. Nuclear plants, oil refineries, water and waste treatment, and energy plants leverage industrial automation to actively monitor the safety and performance of the plant environment. Security is a critical requirement for all information systems used for integration with programmable logic controllers (PLC). The PLC captures and transmits information about the health of the plant operations. Naturally, the initial response would be a read-only feature to mitigate risk and security breaches. The large amount of data captured by the PLC is a natural fit for the cloud IaaS model to enable remote data storage. Predictive analytics applied to the big data captured by the PLC enable direct decisions based on past and present observed behaviors. Another feature of the SMAC platform is to provide remote monitoring of a plant operational health over a secure channel for read-only services. Technology companies and IT groups must seek strategies to derive benefits from the unique synergy between established technology platforms. SalesForce.com provides a SMAC offering that enables the sales organization to connect with customers with minimum boundaries through a CRM solution. The CRM solution runs on a mobile device, integrates social media networks, provides analytics, and operates in the cloud environment. Cognizant Technology Solutions, a global IT consulting and business process outsourcing solutions provider, identified SMAC as the new enterprise IT model and predicted that it will reshape operating and business models and markets (Cognizant, 2013). Google, the search engine leader, adapted to the mobile industry by launching mobile devices and Google+, acquiring the YouTube social network, and creating Google Docs, a cloud solution. The importance of the SMAC platform is the empowerment of entrepreneurs to lead the innovation revolution in small towns and communities. People come together to establish a community business enterprise (CBE) to solve the needs of the neighborhood or region. The community business enterprise is a self-organized group of individuals focused on creating value for each other. The SMAC platform provides the critical tools for collaboration, problem solving, and commerce for the CBE. There is an abundance of cognitive surplus sitting in bars and in front of television sets and these community members are prime targets to help solve problems facing our society, such as education deficits, unemployment, and homelessness. The CBE can play a powerful role by creating opportunities for communities to reduce poverty through education and employment using the SMAC platform. A prime example is Khan Academy, a non-profit organization improving education worldwide. Khan Academy provides free online courses that provide quality educational courses globally (Davidson, 2013). SMAC & Risks SMAC introduces risks that include availability, security, and reputation vulnerabilities to the organization. Implementing the SMAC platform requires risk mitigation strategies to minimize the impact of availability, security, and reputation risks. The availability risk implies the SMAC platform is unavailable to support the business operation. The security risk identifies the SMAC platform vulnerability of critical business data. The reputation risk describes the impact to the organization’s reputation if the availability and security risks are realized. Another critical risk is private customer data loss that results in access by unauthorized resources. Project managers (PMs) are familiar with risk management and procurement negotiations. They lead procurement activities to deliver contracts that manage the availability, security, and reputation vulnerabilities in the SMAC platform. The
  6. 6. Page 6 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana organization must develop contingency plans to mitigate availability, security, and reputation vulnerabilities. Figure 2 illustrates a risk management process to mitigate potential SMAC vulnerabilities. The key steps include: • Identify potential risks • Document the risks • Evaluate risks with stakeholders • Mitigate risks through an execution plan Figure 2: SMAC Risk Mitigation Process A critical aspect of mitigating these risks is contract and procurement management. Contract negotiation with SMAC vendors must include service level agreements (SLA) to provide predictability of the SMAC platform availability. The SLA defines the procedures and time to restore services in the event of a service outage. Procurement management evaluates the viability of the SMAC vendors to ensure availability and security by the service provider. A well-orchestrated practice of contract and procurement management minimizes the risk of availability, security, and reputation vulnerabilities. SMAC & Project Managers The SMAC platform provides a rich environment for the PM to lead sustaining and disruptive innovations. The PM is equipped with collaborative, mobile, analytic, and cloud-computing tools to engage members of the organization regardless of geographic location. The SMAC platform tools enable collaboration with local and global vendors for project support. A project requiring technology resources to support various projects can be sourced through the SMAC platform. The global sourcing activities expand the ability to acquire the right resources at the right time. The SMAC platform enables a centralized repository for project artifacts to create a robust knowledge management system that can be analyzed for project performance insights. Project stakeholders can review the project performance insights and make informed decisions. Project managers and key stakeholders are empowered to leverage predictive analytics to determine the project outcome. SMAC Transformation of the PM Role The role of the PM is to lead sustaining or disruptive innovation that delivers value to stakeholders. The Project Management Institute (2012) stated that, “the project manager is assigned to lead the team responsible for achieving the project objectives” (p 40). The dynamics of the PM role shifts in the SMAC environment. The SMAC Identify Document Evaluate Mitigate
  7. 7. Page 7 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana environment requires agility to support the dynamics of global environments, dynamic markets, and distributed teams to support innovation. The pervasive practice of agile and lean methods in the SMAC environment changes the role of project management, especially in team leadership. In the agile model, teams are self-organizing and will need the PM support for removing impediments from integration with other teams. The critical role of project management shifts from team leadership to risk, financial, procurement, and communication management. The PM role can scale and serve the organization through facilitation, which may include portfolio, program management, and oversight of project execution. The PM role becomes strategic, while driving tactical activities that enable the organization to thrive using the SMAC platform. The consolidation of project management roles elevates the rich characteristics of PM knowledge in an agile environment. Figure 3 highlights the four characteristics assumed through the PM transformation in the SMAC environment. Figure 3: Four PM Characteristics in the SMAC Environment The four PM characteristics in the SMAC environment allow the PM to deliver new value to the organization. The strategic PM characteristic supports innovation activities that determine the investment themes and enables the appropriate projects to be selected for the organization’s competitive advantage. Leadership agility enables the PM to pivot between the expert, achiever, catalyst, co-creator, and synergist leadership levels for maximum guidance to all levels of the organization. Joiner and Josephs (2007) found expert level solves key problems; achiever level accomplishes desired outcomes; catalyst level mobilizes breakout endeavors; co-creator level realizes shared purpose; and, synergist level evokes unexpected possibilities. The scalable PM characteristics allow the interaction with local and global resources without boundaries. The facilitative PM characteristics accept the lack of team leadership responsibilities and respond by removing impediments to ensure project success. Conclusion The SMAC platform is pervasive and enables innovation that propels the advancement of products and services in society. Innovation is change, and change is continually moving entrepreneurs toward opportunities to innovate the next best thing. The availability of the SMAC platform connects customers to new innovations and supports commerce in both digital and brick-and-mortar stores. The SMAC application transcends retail and marketing activities, and can be applied in banking, education, and other business functions, as entrepreneurs develop new products and services by renting technology capability without the burden of owning the infrastructure, software, and support staff. The SMAC platform empowers project managers to facilitate projects locally and globally without the boundaries of time and distance. Stakeholders can interact with dashboards representing the project performance at anytime regardless of geographic location. In the SMAC environment, the PM role shifts from command and control to facilitative characteristics, supporting the project by removing impediments. Strategic Facilitative Leadership Agility Scalable Project Manager
  8. 8. Page 8 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana References Biggar, S. (2012). Smart phones, smart malls. Retail Property Insights, 19(2), 1-7. Blank, G. (2013). Blurring the boundaries: New social media, new social science (NSMNSS). International Journal of Market Research, 55(3), 461-464. doi:10.2501/IJMR-2013-040 Boland, R. (2011). Upcoming online experiences. Signal, 65(12), 57-65. Bryer, T. A. (2013). Designing social media strategies for effective citizen engagement: a case example and model. National Civic Review, 102(1), 43. doi:10.1002/ncr.21114 Caytiles, R. D. & Byungjoo, P. (2013). A study on analysis and implementation of a cloud computing framework for multimedia convergence services. International Journal of Software Engineering & Its Applications, 7(2), 219-226. Cisco. (2013). Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017. Retrieved on August 07, 2013 from http://www.cisco.com. Christensen, C. M., Dyer, J., & Gregersen, H. (2011). The innovator’s DNA: Mastering the five skills of disruptive innovation. Boston, MA: Harvard Business School Publishing. Christensen, C. M. (2010). Why things change quickly – Markey disruption [Electronic Version]. Retrieved on August 13, 2013 from http://www.ecampus.phoenic.edu. Davidson, M. (2013). Sal Khan wants to teach everyone: Here are 6 lessons for innovators. Retrieved on August 29, 2013 from http://www.xconomy.com/boulder-denver/2013/08/28/sal-khan-wants-to-teach-everyone-here- are-6-lessons-for-innovators/. Deloitte. (2013). Deloitte brings out 4th annual tech trends report [Electronic Version]. Retrieved on August 12, 2013 from http://www.deloitte.com. Denning, S. (2012). Wikispeed: How a 100-mpg car was developed in 3 months. Retrieved on August 29, 2013 from http://www.forbes.com. Drucker, P. F. (1985), Innovation and entrepreneurship: Principles and practices. New York, NY: HarperCollins Publishing, Inc. Joiner, W. & Josephs, S. (2007). Leadership Agility: Five Levels of Mastery for Anticipating and Initiating Change. San Francisco, CA: Jossey-Boss, A Wiley Imprint.
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  10. 10. Page 10 © 2013, Dave Cornelius Originally published as part of 2013 PMI Global Congress Proceedings – New Orleans, Louisiana Youssef, A. (2013). Towards pervasive computing environments with cloud services. International Journal of Ad Hoc, Sensor & Ubiquitous Computing, 4(3), 1-9. doi:10.5121/ijasuc.2013.4301 Yu-Doo, K. & Il-Young, M. (2013). Performance analysis of web-browsing speed in smart mobile devices. International Journal of Smart Home, 7(2), 39-47.

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