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February 4, 2016updated 04 Sep 2016 10:32pm

Don’t rush innovation: What to learn from the Uber digital business model

C-level briefing: Oracle's Neil Sholay and John Abel share their thoughts on digital transformation.

By Alexander Sword

A company that is commonly held up as the most successful example of a digital business is Uber.

But since this is a company that could not have existed twenty years ago, it can be hard to see how this relates to companies that have been around for much longer. Uber, after all, launched an entirely new business model using location services and mobility.

This interdependency between different industries means that where an individual company might have the will to innovate, they are dependent on other industries to provide the platforms that they need.

This is what Neil Sholay, Head of Digital at Oracle, calls OPP: other people’s platforms.

"Uber had to wait for mobility to be ubiquitous, because Uber couldn’t have existed before that. They needed to wait for the mobile operators to expose location as a service," Sholay says.

Since they don’t have control over all of the technologies that they will use, this presents a problem for all companies. For example, if Oracle itself wants to stay ahead of the market enough to be useful to its customers, it will have to invest heavily in R&D to look at technologies even when they are emerging and before their value is proven by market acceptance.

Of course, it is all well and good for a company whose job is to innovate in technology to experiment in this way. But non-technology companies may find it less natural to do so, when they are unsure of which technologies will help them.

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The connected home, Sholay notes, is an example where people are waiting for the central product that will make it all make sense.

"If you take the connected home, you have Google, Nest, Apple and Sony fighting it out to own the connected home gateway.

"You’ve got the utility and telco companies that want to own it. Everyone is waiting for this connected home platform to reach critical mass. It could happen today but the critical mass hasn’t been reached."

But although it hasn’t become a must-have product, in the Oracle definition of digital business, it is platforms like smart homes where customers will have to look to build their new business models.

"Digital business is where you build an entirely new business model based on a set of technologies that are either brand new or have existed before."

He elaborates that digital transformation is where "an organisation starts to use digital technologies not for technology’s sake but to incorporate them into their strategy and build new business models enabled by these technologies."

Sholay advises that it is important, however, not to invest in platforms such as the Connected Home simply because they are there.

Taking the example of an energy firm, which could be a key user of the connected home platform in coming years, alongside telecoms and electronics, Sholay explains how business goals would naturally lead to the adoption of digital platforms.

The chosen business outcome might be that the company wants to have more regular engagement with the customer. As Sholay says, the average consumer probably engages with a utilities company maybe three or four times a year.

The energy company might want to use technology to interact with these customers much more frequently, perhaps on a weekly basis.

"As part of that outcome, I want to interact more frequently and offer them products or services or just have an open dialogue."

With this overall objective in mind, the company might then decide that digital channels were the best way of doing that. This would, in the Oracle model, lead them naturally to use the connected home to achieve this.

"Don’t focus on a set of technologies," says Sholay. "Look at the outcome that you want and choose the technologies that will support that outcome."

As John Abel, Engineered Systems & Public Technology Cloud Leader for UK, Ireland and Israel, says, this is about using the "whole A to Z of digital offerings."

Abel emphasises that becoming a digital business is about more than digital box-ticking or which technologies are used; it is also about culture.

"If you’re taking IT department X that manages legacy systems and saying it is the digital division of the future, the culture probably isn’t there."

He says that being a digital business does not mean having "an ok website."

Sholay says that companies must "put the technology to one side and worry about the other things: process and people. One of the biggest barriers to transformation is culture."

This cultural shift will involve experimentation, and some failure. Sholay believes that employees must be empowered to experiment with technologies, and must know that they "won’t be penalised for failure."

In other words, a company that has an innovative culture but with clear business goals in mind will adopt new technologies as they come along just because they are the best tools for the job, allowing them to engineer an Uber-style transformation of their business.

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