The digital imperative is driving companies to seek new sources of value for their customers, but this mission is difficult within the often cloistered confines and bureaucracy of their headquarters. Seeking to foster a culture that is more akin to startups than the corporate motherships, many large enterprises are cultivating innovation in digital labs and incubators.
United Technologies Corp. (UTC), for one, is investing $300 million in a digital accelerator, essentially a technology startup nestled in the DUMBO section of Brooklyn, N.Y. UTC, whose businesses make such machines as jet engines and elevators, aims to woo 250 people with expertise in key technology areas, including product management, user experience design, software development, data science, analytics and cybersecurity, according to CIO Vince Campisi, who joined the company from General Electric last year.
United Technologies Corp.
"This is a talent play and effort to scale our digital skills and capabilities and accelerate each of our divisions' journey on their digital transformation," Campisi says. Stockpiling such talent is table stakes for Campisi's efforts to drive operational efficiency and grow revenues. It's a notable change for UTC, which like other industrial manufacturers has traditionally treated IT as a vehicle for cost savings, says Campisi.
Campisi's story is a familiar one playing out across most industries. Technical talent, often averse to joining large corporations whose rigid operational structures and deliberate decision-making threaten to strangle innovation, have been lured by the likes of Google, Apple and Facebook with their can-do cultures. Some employees, particularly millennials, prefer companies that prize agile methodologies, design thinking and the ability to pump out minimally viable products.
But startup culture is hard to incubate in a large enterprise, says Forrester Research analyst Nigel Fenwick. Companies realize that they need to create separate labs with which to lure talent and promise them the opportunity to work on cutting edge technologies. "Digital innovation is very much one of the new rules of business," Fenwick says. "An innovation hub gives them an opportunity to describe something different."
This digital startup blueprint has worked for companies such as General Electric, which launched a software center in San Ramon, Calif. in 2011. Today it's ground zero for GE's Digital business unit, which CEO Jeff Immelt says will become a top software company by 2020.
Rival UTC has similar challenges in trying to use data analytics to generate the kind of efficiency gains that will help jet engines built by its Pratt & Whitney unit last longer. Or using a field service mobile application to make workflow easier for the 31,000 mechanics tasked with maintaining the company's two million in-service Otis elevators.
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