AE Team | Jan. 23, 2019
Aboitiz Group leaders once again engaged in fruitful discussions that zoomed in on a leader’s role in cultivating a culture of innovation.
The Aboitiz Leaders Conference 2019 highlighted the value of innovation in preparing a business in the face of constantly shifting realities of the world and the importance of having the willingness to accommodate and grow these ideas.
Innovation as a Mindset
Erramon I. Aboitiz
President & CEO, AEV
• Leaders’ roles focus on future-proofing Aboitiz by driving and leading a culture of innovation, to stay competitive, which is our way of ensuring sustainability in a VUCA (volatile, uncertain, complex, and ambiguous) world.
• Aboitiz leaders need to retain the best of what has made Aboitiz successful over the past 100 years, turning risks and uncertainties into opportunities while making adjustments in what and how we do things.
• For us in Aboitiz, innovation
– should go beyond continuous improvement, neither should digital transformation be the cure for all things.
– is a balance between incremental improvements and transformational changes; and
– requires out-of-the-box thinking and stretching our imagination to extremes we have never before tested.
• Leaders cannot command creativity and innovation. They need to ask questions differently, change behavior – lead by example, pull out ideas from our people, enable creativity across the organization, experiment smartly, learn quickly from productive failures, and hold people accountable for their decisions and actions
We have to think and act differently to make innovation real. Leaders cannot command creativity and innovation.
We first need to be willing to change our behavior and not expect only others to change. The days of denial where we dig our heels on doing things the traditional way because they worked in the past are over. As leaders we need to ask questions differently, inspire ideas from our people, and enable creativity across the organization.
Believing in and Adopting a Culture of Innovation
Sabin M. Aboitiz
• Professional and personal lives are so connected and that both must be totally engaged and integrated.
• Leaders have the responsibility of creating a good culture as a way of life, giving the right support, setting up everyone for success and leading with values which means leading by example.
• Leaders should be the first to embrace the Aboitiz values because everything starts with us.
• Not only is education needed, it also takes skills, good attitude, luck, intelligence, embracing our weaknesses, humility, and the willingness to seek out help.
• Ask questions from those who are more knowledgeable than us, especially in this day and age of digital disruption.
• Leading today in a connected world is all about speed. The new way is to do more with less time, using data to generate knowledge for competitive advantage.
We, the leaders, have the responsibility of creating a group culture and an engaged team. But the most powerful way of doing this is by leading by example. And how many of us truly believe and take to heart this simple way of leading by example? How many times do we initiate simple steps every day so we can live the Aboitiz culture? And if we do so, leadership becomes a way of life and our definition of culture would have been realized.
Bringing the Future of Banking to Customers
Chief Technology and Operations Officer, UnionBank
• In starting out with its transformation, UnionBank followed the customer journey while keeping TRUST at the core.
• The transformation involves handholding customers and leading them into an increasingly digital world. This entailed changes in design, people and the services they provide, as well as processes.
• The changes resulted in positive business impact for UnionBank:
– Recognition from award-giving bodies that assessed UnionBank’s transformation
– Increased efficiency in the bank’s transactions
– Increase in the customer signups
• Throughout the bank’s journey, UnionBank made sure the experience is tailor-fitted to the needs of their clients to deliver superior customer service.
One of our customers said ‘we like the fact that it’s balanced.’ It’s a balance of something new and different, but still familiar. It’s a balance between challenging conventions and still in keeping with the core of banking, which is [built on] trust and efficiency.
Lessons on Innovation
Tristan Aboitiz, COO of the Food Group-Philippines, Pilmico
• Pilmico’s attempt at making Innovation value of the year in 2016 failed. Back then, innovation was defined as challenging the status quo and embracing change. However, the WHY was not clear, the definition of the value was not personal, and a process or a structure that could be replicated didn’t really exist.
• But as Pilmico restarted its digital transformation, improvements and initiatives were introduced:
– A Digifair in 2017 was held to introduce team members to existing technologies that could be useful to the business
– Pilmico Leadership Conversations enabled the organization to link up with startups and expose team members to ideas outside of the company
– Promoted agile way of working for better collaboration
– Started on digital documentation
– Introduced a digitized procurement process to give more time for value-added work
• Innovation 2.0 is now all about operational excellence and customer experience
• A back-to-basics method was/is important in implementing innovation: a clear understanding of how our processes work so that we can roll out innovative new ideas that can contribute to our goals.
It is important that we ensure that in rolling out innovation 2.0, everybody in the organization can confidently say that I have the opportunity to contribute. This focus on continuous improvement initiatives is a good way of allowing that to happen, but we need to do more.
We must also put more emphasis on the readiness of our People.
Q: Having a highly diversified group with different growth trajectories, how are you going to ensure that you can leverage these innovations at the business unit level – synergize them – so that the whole is greater than the sum of its parts?
SMA: I think the only way is to make this group truly believe that this [building a culture of innovation] is needed to be truly successful in the future. And if you don’t, come to us and ask us why you don’t believe in that process.
EIA: Sometimes there are and sometimes there aren’t synergies but I think what’s important as we take this journey of innovation is, instead of always trying to tell ourselves “yeah, we’re doing that already”, it’s really being open about learning from each other.
TRA: I think Montxu made a really good point. My answer to the question would have been dialogue. That’s actually what’s been happening as far as my experience is concerned. When I was talking about that portal earlier, that idea actually came from another business unit. At the time, Danel and Noemi of APRI were using that portal for another purpose. They presented it to us and we packaged that for another purpose. We also had many conversations with Dennis of UnionBank — and UnionBank is way ahead of everyone else in Group in terms of what they’ve been able to do and how they’ve been able to execute it. And so, we recognize that we have a lot of things that we can learn from them and we are making an effort to do that. Dialogue has to continue and as people begin to either be more successful or even fail, the sharing of those experiences has to become a norm.
Q: [For Henry] Have you learned anything from the other business units that you’ve adopted for your growth?
HRA: Yeah, definitely. Office automation and collaboration, we’re copying that. We’re going to do work-from-home, we’ve always had that in the backburner but seeing it being done already by AEV gives us impetus to move faster. It’s nice that other business units have experimented and there have been successes. We now have a higher level of confidence that this is the right way to go.
EIA: On sharing success and failures, I think we always like talking about successes, not failures. It’s important that we learn from our failures, too, so we don’t fail again or the chances of us failing become less or we don’t fail in the same way. I guess, for us, it’s important to be open-minded and not be concerned or ashamed of sharing our failures.
Q: When you think about a higher perspective with Aboitiz, is that going to be a ‘center of excellence’ for you – to aggregate all these different learnings, test and use that as a center for disciplined experimentation and then passing it to the BUs in the future?
EIA: It’s something to talk about and decide. I don’t necessarily think we have to find a way of centralizing all these ideas and learnings and make them into a center of excellence. We can do the same thing by basically making sure there is collaboration, that conversation that Tristan talked about, and sharing. I think that, for me, is probably more important.
Q: How do we make sure that resources are made available in creating that culture of collaboration and innovation?
EIA: I guess this is always the tricky part, how much not only financial resources but how much time we will make available for innovation. That’s why we talked about innovating smartly and the ability to focus more on what we’re trying to do. I’d like to for people to keep thinking about it, understanding why we’re doing things, what our goals are, and justify the resources needed to achieve that. The message I want to convey is it’s really the mindset, open up our minds and let’s see what ideas there are in the whole organization because there are great ideas, we just have to flesh them out.
SMA: Once people believe in it, you have to be on the same level on why you’re doing it. It’s about bringing people on the same page.
HRA: Beyond money, I think knowledge resource is also important. People are now exposed to world-class innovation experiences and they come back and experiment and then, whatever they do with that experiment, feeds into that knowledge resource as well. I guess two to three years from now, innovation will be second nature to them already.
Q: [For Henry] How did you go about overcoming challenges in the customer journey, especially for those who are resistant to technology?
HRA: It’s not that they’re averse to technology. They’re still not familiar with it. So, it’s a mindset. We feel that the customer won’t really bank with us just because we’re online. Secondly, with the things that we build, like the online app, The Ark, and the other online systems, we always bear in mind the journey of the traditional customer and The Ark customer – the millennial and the non-millennials…we don’t stereotype, we just make sure that we make it easy for them to understand. Same with The Ark, it’s also a bridge. It bridges what is familiar to what is avant-garde.
Q: Innovation can be costly. Should we introduce a framework so that we can measure ROI?
EIA: Many times, it’s not that clear nor can we really always translate results into figures. It depends on what we’re working on, but what’s important is to have the mindset of knowing why we’re doing things and what your end goal is. I think we should probably be a little bit more flexible and avoid being hard-nosed about ROIs. At least be a little bit more disciplined about establishing — from the onset — why we’re doing it and what we intend to achieve.
HRA: There’s a misconception about innovation, it’s not about throwing money at the problem. Otherwise, it wouldn’t be innovative. Innovation is always harmonizing directly opposed concepts. You want to service your customers better but then you don’t want to spend that much — and I think the Group has seen it. If you focus on the items as a paradox and you’re able to harmonize, you’ll be able to implement cheaper than what you originally thought and the gains would really outweigh whatever you spend in the initial investment.
SMA: A lot of innovation doesn’t cost anything and are measured quite precisely. Most of them, when you have the belief and the attitude, won’t cost you any money.
TRA: I think more than ROI or return on effort, it’s really just let the person implement, whatever innovation it is, always has an objective. What’s important is have an objective you want to achieve.
10 Takeaways in ‘Creating an Innovation Culture in a World of Digital Transformation’
Prof. Greg LaBlanc
Haas School of Business, University of California – Berkely
1. Innovation was ingrained in societies when we started changing how we worked. From the first industrial revolution through the fourth one, leaders have always been at the forefront of change, not technology.
2. Instances of innovation will increase if we break up monolithic structures, which are resistant to change, into smaller segments.
3. 87% of big-data initiatives fail because organizations don’t know how to respond to the information they’re receiving.
4. Innovation and digital transformation aren’t just about technology, it’s about adopting new styles of management to be organizationally prepared for change.
5. Walmart’s accelerated pace of change in how they do business reclassified it as a tech company, not a retail organization. The same is true in comparing GAP and ZARA in the implementation of their respective inventory strategy, and in Amazon and GE’s case, where the idea of selling services instead of goods changed how they operated.
6. Soon, every company will become a software and data company, where technology is used in every underlying process behind the business.
7. The process of innovation follows three steps: Idea origination, where ideas should always have a place to go; idea evaluation, where ideas that are viable are considered and assessed; and idea experimentation, where only the best ideas are tested, implemented and executed.
8. We should always be thinking like a VC (venture capitalist) instead of a CFO. The idea of an idea funnel and incremental/staged funding should be adopted so companies can eliminate risks early on, nipping problems at the bud before they cost too much pain.
9. Innovation is everybody’s job, not just R&Ds! In our daily work life, we often do planned work, take on unplanned tasks, optimize processes, and strategize and explore. Organizations should find a way to spend more time exploring and strategizing.
10. Companies should turn a complaints culture into an idea culture. Leaders should view feedback as a gift and become active listeners. They should promote constructive conflicts and foster more disagreements while creating systems to resolve them through data and information.
In today’s world, every good is a perishable good, every project is a perishable project, every skill is a perishable skill. You could no longer distinguish between durables and non-durables. Everything decays from the moment you make it because the information that was used to produce that good or service starts to go stale.
• The more creative we are, the less reactive we become, and the more effective we are as leaders.
• We still have a long way to go in terms of reaching our goal of improving our overall leadership effectiveness quotient.
• The learnings we have from the scores of our leaders have been shared with everyone so that we can embed mindfulness, practice self- awareness and self-improvement, include in IDP discussions with team leader and peers, and having a deliberate plan to improve.