We have huge quantities of Big Data about customer preferences and behavior pouring in every minute, and no end of fancy tools for analyzing those data. And yet, for every Sony Walkman or Apple iPad to rapidly dominate its respective sui generis market, there are hundreds of less successful innovations piled up in the bargain bins at the Dollar Store. With all these Big Data, then, why aren't we that much better at innovating? The answer: data analysis is much better suited for optimization than innovation. As we leverage data to get better and better at marketing, carving out a percent of market share here and a percent of conversion there, we're actually making decisions that end up stifling innovation. Our incessant march toward "better-faster-cheaper" is actually making us more brittle, not more innovative. In fact, innovation depends more upon disruption than optimization. Disruption -- both internal and external -- can lead to periods of intense creativity and intuition. And yet, without data-driven optimization, disruption-driven innovation is nothing more than a crapshoot. Leveraging data to properly balance optimization and disruption, therefore, is essential for achieving market-leading levels of innovation.

1. The Paradox of Data-
Driven Innovation
Copyright © 2014, Intellyx, LLC
1
Jason Bloomberg
President
jason@intellyx.com
@theebizwizard

2. About Jason Bloomberg
• President of Intellyx
• Advise companies on their digital
transformation initiatives & help vendors
communicate their agility stories
• Write for Forbes, Wired, &
DevX on Digital Transformation
• Buy my latest book,
The Agile Architecture
Revolution
Copyright 2 © 2014, Intellyx, LLC

3. Henry Ford & Innovation
If I had asked people
what they wanted,
they would have said
faster horses.
Only Ford never said anything
of the sort!
Copyright 3 © 2014, Intellyx, LLC

4. The Real Story!
Contrary to his true innovation
Leveraging
economies of scale
so that much of the
population could
afford an automobile
for the first time
Copyright 4 © 2014, Intellyx, LLC

5. Any Color, as Long as it’s
Black?
• Economies of scale
limited ability to
respond to changing
market pressures
• Primary long-term
benefactor of Ford’s
take on innovation?
General Motors
Copyright 5 © 2014, Intellyx, LLC

6. What about the Data?
• Huge quantities of Big Data
about customer preferences
& behavior every minute
• No end of fancy tools for
analyzing those data
• For every Sony Walkman or
Apple iPad, hundreds of less
successful innovations
• With all these Big Data,
why aren’t we better at
innovating?
Copyright 6 © 2014, Intellyx, LLC
Photo Credit: Asim Bijarani https://www.flickr.com/photos/asimzb/

7. Data & Innovation at
Cross Purposes
• Data analysis better suited
for optimization than
innovation
• As we leverage data to get
better at marketing, we’re
making decisions that
stifle innovation
• Incessant march toward
“better-faster-cheaper” making us more brittle,
not more innovative
Copyright 7 © 2014, Intellyx, LLC
Photo Credit: David Prasad https://www.flickr.com/photos/33671002@N00/

8. How do You Manage?
• Each Line of Business/Division has its own
goals & business outcomes
• LoB Management drives
toward optimizing those
outcomes
• Maximize shareholder
value/profit/revenue
• Better-Faster-Cheaper,
then repeat
Copyright 8 © 2014, Intellyx, LLC
Photo Credit: Kenny Loule https://www.flickr.com/photos/kwl/

9. The Problem with Better-
Faster-Cheaper
• Both technology and the organization
become brittle
• Unable to deal with unexpected
situations
• Innovation requires a different approach
Copyright 9 © 2014, Intellyx, LLC
Photo Credit: Frits Ahlefeldt-Laurvig https://www.flickr.com/photos/hikingartist/

10. Organizing for Innovation
• Move from high
connectivity to low
connectivity
– Provide flexible technology
– Autonomous, self-organizing
teams
– Teams must cut across
organizational silos
Copyright 10 © 2014, Intellyx, LLC
Photo Credit: Melissa Marques https://www.flickr.com/photos/melissamarques/

11. Optimization vs.
Innovation
Innovation
Disrupt status quo
to allow human
creativity to
flourish
Optimization
Establish
feedback loops
that maximize
business
outcome
Copyright 11 © 2014, Intellyx, LLC

12. Optimization Pitfall
Copyright 12 © 2014, Intellyx, LLC
Photo Credit: Jason Bloomberg
The Problem of Local Optima

13. Innovativeness
• The ability to introduce change into the business
environment in order to achieve a strategic
advantage
– New products or services
– Expand market share
– Enter new markets
Copyright 13 © 2014, Intellyx, LLC
Photo Credit: Kay Kim https://www.flickr.com/photos/kaykim/3883340152/sizes/o/

14. Innovation Requires
Disruption
• External Disruption
– Competitive pressures/new
entrants
– Globalization
– Regulation
• Internal Disruption
– Digital Transformation
efforts
– Innovation initiatives
Copyright 14 © 2014, Intellyx, LLC
Photo Credit: Charles Wagner https://www.flickr.com/photos/chazwags/

15. Disruption Introduces
Risk
• Optimization without
disruption stifles
innovation
• Disruption without
optimization is an
innovation crap shoot
• Optimize what you
can & disrupt what
you must
Copyright 15 © 2014, Intellyx, LLC
Photo Credit: epSos .de https://www.flickr.com/photos/epsos/

16. Recipe for Agility
Copyright 16 © 2014, Intellyx, LLC

17. New Role for
Management
• Leverage data to
properly balance
optimization and
disruption
• Essential for
achieving market-leading
levels of
innovation
Copyright 17 © 2014, Intellyx, LLC
Photo Credit: James Jordan https://www.flickr.com/photos/jamesjordan/

18. Better Way to Manage
• Build cross-organizational teams
• Leverage data to
understand when to
optimize and when to
innovate
• Embrace disruption
• Give people the tools
they need and
get out of their way
Copyright 18 © 2014, Intellyx, LLC
Photo Credit: Philip Leara https://www.flickr.com/photos/philleara/

19. Thank You!
Jason Bloomberg
President, Intellyx
jason@intellyx.com
@theebizwizard
Send email NOW to dm@intellyx.com to
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