The Budget Paradox, Optimize to Innovate; what you need to do to remain strategic and valuable to your clients
By Bill Benedict
In my previous article, Quality Assurance - When to Start? How Soon Is Now? I covered the value of embracing and investing in a quality program for a 30X ROI. This becomes more relevant as you refine your strategy for long term success.
We all have been there; on the cusp of a transformative moment, having a great idea, or a new project that your client needs delivered and this endeavor requires capital, you go to your CFO or Board of Directors and the answer is yes but your budget is your budget.
This is where the paradox begins, most importantly you need to run and grow your business; you need to spend money to make money. As I reflect back on my experiences, this has often been a critical point and a defining moment, having to find the funding to support the initiative. Early in my career, I created my next position with a business plan that had a 10X return on my fully loaded cost. This was the start of what later became the Business Development team; I took this success and expanded it to a team of 6.
As I matured this practice, I utilized a multilayer approach: 1) Defining what you need to innovate or transform, 2) Operationalization of this practice to establish and maintain a competitive edge, and 3) Optimize, making the offering as efficient as possible in order to create capital to invest in future innovations. Where many fail is they optimize to create more cash but do not invest to innovate.
Repeatability requires a Quality Program, focusing specifically on continual process improvement; defining what job needs to be done, creating a prototype, analyzing performance, and adjusting operations to an optimal state
Innovation must be well played, understanding the voice of the customer and market evaluation is critical, as this path will put you on a multiyear plan, define your place in the market, and success. In addition, one must be mindful that a simple three step process this is not, and that current success does not always dictate future successes.
I recently had the opportunity to meet with the CFO of one of the largest distributor of technology products and services in the world and discussed their innovation. They have made a $500 million dollar investment in order to shift their portfolio to Cloud centric offerings, focusing on a single marketplace that includes the best of breed cloud providers, ISV’s, and other Digital Service providers.
Being a world class organization, I was interested in knowing how they enabled such a large investment and not surprisingly it boiled down to running their business more effectively and utilizing systems to drive efficiencies, and being a global organizations they utilized support from their entire organization instead of creating duplication of support and expertise in each geography. These practices allowed them to free up the necessary capital to make this future bet, a great example of optimizing to innovate.
