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Striving for innovation

Striving for innovation

Pointers from Guido Jouret, CTO of Cisco's 'international incubator' unit.

ICT companies should be alert for innovation and new business opportunities, but they must beware of spreading themselves too thinly, says Guido Jouret, chief technical officer of Cisco’s emerging technology group. Jouret describes the unit he heads as an “international incubator”, specifically tasked with spotting major new areas of business worthy of investment. It acts as far as possible like a private venture-capital organisation, he says, applying strict criteria of relevance, viability and likely return on investment to any new territory before it recommends investment of Cisco’s capital.

Jouret spoke with CIO New Zealand in Brisbane, where he was a keynote speaker at the Cisco Networkers user conference. One key criterion is “market adjacency”, he says. Any innovation worthy of investment must be sufficiently related to some part of the existing business, to make it possible to reuse existing expertise to help kick off and sustain the new venture.

Companies striving for innovation sometimes strand themselves in an unfamiliar area, he says, where not only do they struggle to understand the technology; their partners too may be ill-equipped for a radically new direction or simply uncomfortable with it, and the company can find itself having to develop a new set of channels.

As an example of adjacency, Cisco’s core business of hardware for networking has given it skills in transferring large amounts of information quickly, as customers’ business needs demand. This means, in particular, an increasing amount of video.

Hence, Jouret argues, “telepresence” — high-quality videoconferencing, said to make a remote conversation as easy and natural as a face-to-face meeting — offered just such an “adjacent” opportunity. It’s now a significant and growing business for Cisco.

Through being related to core business, the new businesses often have elements of skill and assets in common with one another and so have a certain synergy among themselves, Jouret says.

“Large companies struggle with innovation and people assume that’s because they don’t see enough opportunity,” he says. In fact, they often spread their investment across too many unrelated areas, ending up running too low on funds to continue to invest in many of them until they reach the stage of real payback.

He also wonders whether the timing is right with respect to the market, “and that doesn’t necessarily mean being first. That doesn’t tend to work in technology”.

If you’re first, he says, you have to educate all your potential customers. “In my former field of pharmaceuticals it is important. If you’re first to market with a new drug, you usually get about half the market share. But that’s not so with technology. The iPod wasn’t the first mp3 player and Google wasn’t the first search engine.”

Jouret’s team also looks for “a key disruption”, which makes people aware of the need for the product or service. In the case of telepresence, the pressure to reduce costs and a drive to sustainability meant businesses pared their travel budgets.

Lastly, differentiation is important, Jouret says. While it may be good for the market to be primed with products or services in the same general area, and it’s easy to copy someone else’s innovation, that doesn’t maximise returns; your product or service must have a vital point of difference. Moreover, that difference must continue in the long term, he says, which means continually re-examining and tweaking the product to retain its edge.

Jouret’s career took a serendipitous route to Cisco. He qualified as an electrical engineer in the US and the UK, but ended up working for a pharmaceutical company in the 1990s, “because there was a recession and it was the first good job I could find”.

He was put in charge of computing to serve the needs of the research laboratory and was responsible for introducing the internet and intranets into the company.

“In so doing, I came across Cisco. I’d never heard of them, but when we were looking at suppliers for our network I saw they had 65 percent of the market for this interesting thing called a router. We chose their equipment and two weeks after that I saw an advertisement where Cisco was looking for a head of IT for Europe.

“So I applied and got the job, and now I’ve been with the company for 15 years. I was seven years in IT, then became part of the internet business solutions group in Asia. Then I was invited to come to head office and two years after that to join the then new emerging technologies group. That was in March of 2006.”

“Thinking as a user of IT gave me a different perspective as CTO,” he says. “What I had to learn after I started was how do we build product, how long does it take us and what are some of the ‘gotchas’ in building product and assembling teams to build product.

“You’re placing a four to five year bet,” he says. “It takes about a year and a half to get the product out and another two to three years to figure out whether we’ve got it right, and in the meantime the market has moved on.”

As such, there is always a degree of uncertainty and a need for continued reappraisal, but it’s a business environment he enjoys.

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