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Deploying Innovative Technologies – The Sberbank Experience

April 2014

Dr. Mircea Mihaescu Managing Director, Sberbank Digital Ventures

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Automobile

The Pace of Technology Innovation is Accelerating

0 25 50 100 125 150 75 Years

0

50

100 Telephone Electricity

Radio

Television

VCR PC

Mobile Phone

% P

enet

ratio

n

Internet Services: Pinterest reached 17 million unique visitors nine months after launch in May 2011

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Emerging Technology Evolution Gartner Hype Cycle

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Analysis Framework for Emerging Technologies

“The right technology innovation at the right time”

Research

Pilot?

Why Not Yet?

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Entry point decision is critical to avoid “long fuse” effect

French Matra videophone 1970

AT&T Picturephone 1964

Motorola DynaTAC 1983

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Technology Innovation Projects Management Model

“Ideas” Portfolio of Innovation Projects

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Technology Innovation Strategy

•  Supporting Internal Factors –  Technical capabilities

–  Organizational capabilities

–  Success of the current business model

–  Funding

–  Top management vision

•  Influencing External factors –  Capabilities in the external

network – vendors, alliances

–  Industry structure

–  Competition

–  Rate of technological change

•  Invest in changes in technology and business models with the intent of outpacing competitors through radical innovation.

•  Commit to a portfolio of investments that are fundamental for ongoing success

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Technology Innovation Activities

•  Monitor and analyze the technology innovation landscape

•  Competitors, partners, vendors, industry experts •  Customers, employees (crowdsourcing)

•  Explore new ideas, develop and pilot new solutions

to help business divisions and their customers •  Innovate to accelerate new product and process

deployment •  Demonstrate what “the future of business” can be

•  Collaborate with universities and research institutes in Russia and worldwide

Innovation Projects

Advanced Studies

Technology Research

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Technology Innovation Projects Assessing Maturity and Value Gaps

•  Technology Innovation Maturity Stages

–  Embryonic – research –  Emerging – startups –  Adolescent – adoption –  Mature – version 1.0 à 3.0

•  Innovation Value Gaps – concept vs. solution

–  Performance, scalability

–  Integration with existing environment »  processes, infrastructure, organizational

structures and capabilities

–  Penetration – by when is it expected to achieve critical deployment / mass adoption?

–  Payback, ROI – estimate timeline

•  Innovation team KPI / Value Metrics need to address all 4 value gaps

Technology Research Center

IT Department

radical

incremental

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Technology Innovation Projects High-Level Plan Template

Concept = Idea Creation and

Selection

•  Scope the problem •  Track, rank, decide

Development

•  Evaluate technology, share, test, review, revise plans

•  Incubate prototypes, pilots

Deployment

•  Large-scale pilots •  Evangelize, transfer, support,

training

AG

ILE

-- F

LEXI

BLE

-- N

IMB

LE

Willing to change quickly to accommodate new directions that lead to further growth

Experiment, learn fast – Launch and learn -- Learn by doing

Development and

Integration Vendors

Emerging Technology Vendors

Internal Resources

“build/buy/partner” mix based on skills availability

10% to 30% target “fail rate”

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Technology Innovation Projects The Innovation Team (Forrester model)

Technology Innovation Council

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Project Name: Project Lead:

Description (the “elevator pitch”) In simple terms- what is the business problem or opportunity? How does this address it? Where does this fit into the existing portfolio of applications our employees or customers use today? Why would this be considered a better alternative or strong addition to the portfolio?

Size of proposed investment __ Minimal __Small (1-2 ) __ Medium(3-4) __ Large ( 5 and over) Other costs – vendors, special HW/SW

Current approach and what is the proposed innovation? How is this different than existing approaches (are there any)? Does functionality exists anywhere else - if yes, why is this better, faster, smarter, etc? If this is a new capability, how would this improve productivity, reduce cost, increase revenue? Who else is experimenting with similar ideas - who are they aligned with, how are we aligned with them or how is their work different? For updates: What's new in our thinking since we started project? Is technology still right /relevant, is this still the right approach?

Use case/business value statement and potential stakeholder Who (end user types) are we talking with about this concept? Who is the potential audience and how large is that audience? Who is the stakeholder(s)? What decision maker is (should be) involved? Who should we be aligned with for pilot and eventual deployment? What role does this play in strategic initiatives? Key Milestones/Date Amount of time estimated in each phase? When is project end planned? What are exit criteria? How have we aligned with key stakeholders in each phase? Are there any dependencies on other projects or tools?

Strategy Alignment – name of strategic initiative, if any

Innovation Project Tracking Template

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Technology Innovation Projects Portfolio Management

VERY HIGH CCC AAA

HIGH DDD BBB

MEDIUM FFF EEE

LOW

VERY LOW

VERY LOW LOW MEDIUM HIGH VERY HIGH

BU

SIN

ES

S IM

PAC

T

RISK and COMPLEXITY

Safe Risk Preferred Avoid

LEGEND Completed Projects Small team Large team XLarge team

Standard IT Projects

Incremental Improvement Projects in BUs

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Technology Innovation Derailment Factors What Can Go Wrong…

•  Balance creativity and value creation

•  Too many incremental innovations

•  ROI is the only success metric

•  Inflexible funding

•  Focus on innovation process efficiency as opposed to value creation

•  Managers respond to good ideas with indifference and/or complacency

•  Too much criticism, not enough support/collaboration

•  “If it’s not my idea, it must be bad”

•  Failures are punished •  Incentive system for short-

term efficiencies

Metrics Culture