>> Live from Las Vegas, it's theCUBE, covering the AWS Accenture executive summit. Brought to you by Accenture. >> Welcome back everyone to theCUBE's live coverage of the AWS executive summit, I'm Rebecca Knight, your host, we're here at the Venetian in Las Vegas. We have two guests for this segment, we have Mike Moore, Senior Principal Accenture Research, and Chris Wegmann, Managing Director Accenture AWS business group, thank both you so much for coming on theCUBE, and you for returning to theCUBE. >> Thanks for having me back, it's good to be back. >> So Mike I want to start with you and talk about your recent research which is entitled Discover Where the Value's Hiding: How to Unlock the Value of Your Innovation Investments. I like it, 'cause it just makes me think that innovation's just hiding somewhere in the corner, maybe underneath this desk. So talk a little bit about why companies can't find the innovation, and how they're failing at this. We'll get to the rays of hope later, but talk a little bit about what the problem is as you see it. >> Well, it certainly seems to be hiding for a lot of companies. Based on the research that we did, we found that over the course of the past five years large income companies like our own, and then also start-ups, have spent a combined 3.2 trillion dollars on innovation, which is obviously a huge sum. But when we looked at the rate of return on that investment, incumbent companies, we found it was actually declining by 27% over the course of that five year period. So there's a clear disconnect there in terms of what companies are doing. >> So, why are companies, why are so many companies not good at this? >> Well, we asked 840 executives from around the world exactly that question. And what we found is that for the vast majority of them who have been increasing their investments in innovation, they weren't seeing a great return, and what we found is that many of them were focused on incremental innovation, just small tweaks and adjustments to their products and services. But that's really not enough to get new customers in this day and age. But there was some reason for optimism, around about 14% of our respondents said that actually they were translating their investments in innovation into accelerated growth, they were outperforming their peers in terms of profitability, in terms of their market growth and they actually expected to continue to do that over the course of the next four to five years. >> So, I want to talk about that 14%, that rarefied group, but I want to bring you into the conversation Chris and just talk a little bit about the relationship between Accenture and AWS, and how you approach innovation, and how you help clients think about their innovation and driving ingenuity and creativity in their businesses. >> So Accenture and AWS have been partners for over twelve years, even before the first AWS service hit the market, Accenture was starting to use it in our labs at that point, and looking at how we could leverage S3 to really innovate on, and we've carried that tradition on for a while now. A couple years ago we sat down and really looked at what our enterprise customers were struggling with as they moved to the Cloud, and at that point innovation wasn't quite the topic yet, it was really how do we use Cloud to get better returns on our investment, better TCOs, things like that, and now we've seen that turn, as AWS has created more and more capabilities and solutions and offerings, our customers are really wanting to figure out how they innovate. They go and ask AWS "How do you innovate?" And that's their number one, one of their biggest EBCs is how do they innovate. So, we looked at it and said, that's great, how do we take that to the next level? How do we fix these failures that're happening and what we've seen is most customers are in this stop and go innovation traffic, I like to call it. There's people that're whizzing by them, the 14% are whizzing by them in the fast lane, so the question is how do you get them out of that stop and go traffic, into that fast lane, and, There's no lack of ideas, they have tons of ideas on how they can innovate, how they can use drones, how they can use all this. The ideas are out there, but taking those and turning those into operationalized assets that're continuously working, continuously growing, continuously maturing is where they struggle. >> And the question, when companies would ask you how do you innovate, I mean it is this question, but as you're implying it sounds as though it's a very, you have to have some discipline around it, there has to be real processes around the innovation, it's not just throw a bunch of creative people in a room together. >> No, that's great, you can do the creative people and they come up with the great ideas and there's no lack of those, but then you've got to operationalize those and go through the disciplining to take those, pick which ones are going to drive value, invest in those, operationalize those, and take them from a proof of concept or a pilot or whatever you want to call it and actually turn it into something that gets used every day, and what we've been focusing on with AWS is how do you get out of that, take what's out of that ideation stage, operationalize it using the full set of AWS services, and then how do you continue to run that and prove it going forward. >> So Mike, the 14%, what are they doing? What makes them different? >> Well I think there's lots of things that stand out, but there are really three things that came of the research, so firstly that group of companies is outcome led, as you were just saying, they're not just relying on the method, the genius in the garage tinkering away, but they're putting a real set of processes around the innovation activities that they're pursuing. Then they're linking those activities to clear operational and financial metrics. And then secondly they're disruption minded, so unlike the other companies that aren't performing well, they're really focused on investing in disruptive technologies that have the potential to create entirely new markets. And then finally, they're change orientated, so they're not just using innovation to develop new products and services, but they're also using it to drive more fundamental change across their organizations. And one of the principle changes that they're making is that they're becoming what we call network powered, so they're not just relying on their own internal innovation but they're drawing on a wide ecosystem of partners, like AWS, to really supercharge the rate at which they innovate. >> So those are the characteristics, what are you seeing on their ground, can you give us some specific examples of how they're taking those characteristics and what they're actually doing? >> I think you see companies set up and grow these innovation pods, so what we see customers doing is expanding those beyond just one pod. So, not just focusing on one part of their organization to do this, bringing that into a central location, creating a hub of pods and capabilities using everything, AWS services, using DevOps, doing all the cool stuff that's out there, but operationalizing that and getting to that center of excellence where they're actually seeing it end to end and they're not just jumping from one problem to then next. And once that graduates out, they have an organization waiting to take that on and continuing that journey while the next set comes in. So it's this process, it's this ongoing kind of chain of different problems coming in, being solved, and graduating out the other end. >> Is this a technology issue or is it a culture issue? >> The technology is there, I don't see it as a technology issue, I see it as a cultural issue, a change issue, a organizational issue, a resource issue, you got to find the talent that does that, you got to have the operational discipline to lead this stuff, and you have to go through that change. And we're seeing I think a lot of our customers struggle with that, and they want to learn how Accenture's done it, they want to learn how AWS has done it because obviously they've been very successful at it. >> And in terms of the cultural, the change management challenges that you're talking about, those are harder to overcome. So, do you have any best practices from your own experiences with it? >> We've obviously, Accenture's been in this game for a long time, whether it's innovation or whether we called it solution integration, whatever we called it, change was always a big part of that. So, a lot of those same change principles that we've used for twenty, thirty years still apply here. We see, you need very top down ownership and sponsorship, so from the very top down, whether that's the CEO, the CDO, the CIO, whoever it is they have to be 100% behind this, and have to be the cheerleaders. They have to be the people that're going to go get on stage, at re:Invent or other conferences and be that, this is how we're going, so you need that lead, and then you need very strong leadership underneath it that have gone through the journey before, this isn't the first time they've done it, they know where the potholes are in that road, they know what the signs are when they're going down the wrong way and how to get out of that. So you got to have those two key levels of experience. >> And to bring the others on-board. >> Absolutely, and they have to be the visionaries, they have to be the people guiding them through that, and you know, if you've got those people, if they're very strong-willed, very luminaries, those people will follow, and they'll follow them through that journey. And then they also got to go sell that to the rest of the organization, 'cause it's a change for the rest of the organization, the business is now much more engaged in that process, they're not just sending the requirements over the fence, they're very much engaged, they've got to understand and go through that agile transformation and understand when they're getting capabilities, what those capabilities are, so they need to go through that new operational paradigm that we're running in. >> So, finally, we're talking about innovation and then in particular AWS and Accenture, almost as the use cases here, how would you describe the innovation engine at AWS, Accenture in terms of the report that you've just published? It's obviously, I mean AWS is the biggest part of Amazon, I mean the high-growth engine of Amazon, and obviously a huge growth engine for Accenture too, so how would you characterize it Mike? >> Well, I think if we look at the three factors I was talking about before, being outcome led, being disruption minded, and being change orientated, then the relationship between Accenture and AWS really exhibits all of those three things, so in terms of being outcome led, Accenture has always been an organization that's laser focused on delivering results, delivering high performance, delivering value for our clients, and so is AWS. In terms of being disruption minded, we're innovating on the Cloud, using AWS to bring genuinely new and groundbreaking products and services to our clients. One of my favorite ones of those that we worked on in the UK, is our partnership with AWS and Age UK, which is a charity that helps the elderly and we're developing products and services for the elderly that helps them feel more connected to their family, and that's really opening up a brand new market. And then finally in terms of being change orientated, well, it's a relationship that really personifies being network powered and bringing the power there to multiple organizations that we can develop great products and services for our clients. >> Great, well Mike, Chris, thank you both so much for coming on theCUBE, it was a really fun conversation. >> Thanks for having us. >> Thanks. >> I'm Rebecca Knight, we will have more of theCUBE's live coverage of the AWS executive summit coming up in just a little bit.