>> 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 here at the Venetian in Las Vegas. I'm your host, Rebecca Knight. We have two guests for this segment. We have Mike Moore, Senior Principal at Accenture Research, and Andrew Wilson, Chief Information Officer at Accenture. Thank you both so much for returning to theCUBE. >> Good to see you as ever, Rebecca, and to be back in Las Vegas as well. >> Exactly, back in Sin City, right, here we are. So our topic is innovation. A buzzword that is so buzzy it's almost boring. Let's start the conversation with just defining innovation. What does innovation mean? >> An objective, a behavior, a way of working. To me, innovation is what we need to do with modern technology to enable the enterprise and the business world and be creative humans and to use disciplines which we didn't typically bring to work before. >> And is it creativity, or is there sort of logic and rationale too? >> I think there's logic and rationale. But there's also entertainment, fun, modern consumer-like experimentation, risk-taking, things of that nature. >> I think that a big key is actually striking a balance between creativity and logic and rationale and that's the really tricky bit, because you need to give your employees the license to be creative but within a certain set of boundaries as well. >> The rules of work have definitely changed, and behaviors that we encourage, even the clothes we wear, how we work, when we work, those are all characteristic of a more innovative, accepting diverse world, and a world that can keep up with the modern technology and the advancements and the announcements like we're hearing about here at re:Invent. >> It's the ultimate right brain, left brain behavior and activity. So Mike, you've done some research recently about the hallmarks of innovative companies, what they do differently from the ones that are not innovative, that are failing here, so tell our viewers a little bit about what you've found in your research. >> We surveyed 840 executives from a variety of different companies, different industries, different geographies, to understand their approach to innovation, and those who were doing it particularly well, and those maybe not so well. And around about 14 percent of our respondents were turning their investments in innovation into accelerated growth, and there were lots of different reasons for their success but three things really stood out. So first of all their outcome lacked in terms of the way they approach innovation, so they put a clear set of processes around their innovation activities, and then linked those to operational and financial performance metrics. They're also disruption minded, so they're not just pursuing incremental tweaks to their products and services, but their investing in disruptive technologies that could actually create entirely new markets. And then finally they're change orientated. They're not just using innovation to change their products and services, but also to fundamentally change the nature of their own organizations as a whole. >> So 14 percent are knocking it out of the park. Does that mean the rest of them are all laggards or are sort of some in the middle? What is the state of innovation in industry today, would you say, Andrew? >> I would say it's hugely variable by industry, geography, type of company, and individual instance of leader and culture, but I am sure that the most successful companies, those that are pivoting to the new, those that are imaginative, those that have recently arrived, all have that DNA that we're describing, all have that way of working, all have that ability to operate cleverly, intelligently, humorously, and at speed. I think innovation is very much characterized by something that can be fast-failed, do, step, move sideways, do again. The way of working has changed in modern enterprises. We as CIO's have to accept that. We have to speed up. We have to create the environment in where that productivity, where that creation can occur, and I think all of that's key. >> You keep mentioning this, the way of working has changed, and I think we all sort of know what you mean but explain a little bit what you're seeing. >> Experimentation, the ability to get more done with the resources that you have. So here we are at AWS re:Invent, cloud-based operations. Cloud gives you, gives me as a CIO the means to do more, more quickly, more rapidly, on a greater scale, in more places that I ever could have imagined in my old old-fashioned data senses. So the services we can consume, the data we can connect together, the artificial intelligence we can bring to it, the consumer-like experience. All of those things, which by the way, are drawing on innovative behaviors in their own right, are absolutely what the game is about now. >> How does AWS figure into your cloud transformation? >> Well for our cloud transformation at Accenture, AWS is one of the core cloud platform providers who power Accenture. We are nearly 95 percent in cloud. So as an organization that's very pronounced, and typically ahead of most organizations. But we sort of have to be, don't we? I mean, we have to be our own North Star. I can't sit here and explain the virtues of what Accenture can bring to a client's cloud transformation if we haven't already done it to ourselves. And by the way, that drew on innovative approaches, risk-taking approaches because over the last three years we've moved Accenture to the cloud. >> So I love how you said it, we are our own North Star, and other people would say we eat our own dog food, I mean that's just kind of more gross, but in terms of having experienced this transformation yourselves, how do you use what you've learned to help your companies transform as well? And make these moves, take these risks, what would you say to that? >> Well I think we keep an eye on the research with our colleagues there, they're our own North Star. I think we look at the ecosystem, we assess readiness for enterprise, security compliance, scale, availability, and then we also look and say, and what's ready for prime time in terms of Accenture scale, half a million people nearly. You bring all of those things together and it's a recipe, and that's why we consult our business, that's why we guide and educate and experiment and innovate together. And that's very much how we adopted cloud, it's very much how we do a number of other things, and the creative services we have. >> In terms of, let's get back to the research. So how do you, I mean as you said, the research is, as Andrew said, it's something that executive leaders are looking at to figure out what's actually happening in the market as well as what's happening within the organization itself. So how do you set your research agenda in terms of figuring out where you want to focus your time and energy and resources. >> Well I think we do it in a very similar way to in which we consult with clients, we speak to them. We talk to them about some of the key issues that they're facing and we always interview a series of executives and also academics to get their perspective at the start of their project. And that's something that we did in this particular instance and what we heard from many executives was that, to the point that Andrew was making before, the speed and scale of innovation today is happening at a completely different pace than in the past. So product cycle times are just diminishing in every single industry and as a consequence, executives now need to build new innovation units to make sure that they can respond to that changing market. So that's we wanted to explore through the research. >> So in this research, with the 14 percent doing it well, the 86 percent sort of either, somewhere on the spectrum of doing terribly or figuring things out, getting better, what are their pain points, and what's your advice to those companies? >> Well I think, and we take the positive spin on it in terms of what the companies are doing well, one of the points that Andrew was making before was how Accenture works with other partners to become more innovative itself. And that's something that we saw many of the high performing companies doing. So many of them were what we call networks powers. Not just innovating using their own resources, their own people, but their drawing on a broader ecosystem of partners to bring the very best products and services to their customers, and their spending not just on R and D internally but also on accelerators, incubators, technology based M and A, and actually their spending as much on inorganic innovation as they are on organic innovation. >> At Accenture we actually help our clients look for trap value, and what we mean by that is if an organization with a history, with a set of business processes, a set of technologies, and a set of disciplines and employees that have been successful and worked possibly for decades in that model, then they're going to be in some pretty tight guide rails. How do you innovate out of that, to deal with all of the destruction that's now available, good healthy disruption, that actually reveals the next level of efficiency, customer satisfaction, product creativity, and innovation in it's own right, so that's innovation in action, if you like. >> I want to ask, here we are at AWS re:Invent, Andy Jassy on the main stage this morning announcing a dizzying number of new products, services, and AWS, this is Amazon, this is a huge company that really seems to know how to innovate, and do it constantly, but is that is that, can every company be Amazon? You know what I'm saying? I mean, is this really possible and attainable? >> Is such a thing as innovation fatigue perhaps? >> Well, exactly, right! >> My view is that you have to find a way to make innovation a constant and a norm. It doesn't mean that you always will have to operate with the same ridiculous pace, but creativity and pace do go hand in hand to a point, but to be ahead, to stay ahead, and to lead an organization of technologists, who can comprehend all of these announcements, so you have to innovate in both how you lead and operate as well. It's not just your product, it's your behaviors, because there's just so much coming all the time. >> Right, and we've seen a number of large companies, not necessarily technology companies, but I'm thinking of Sears and Toys-R-Us, that have really, you've seen what can happen, the cautionary tales. >> Look at the attrition in the Fortune 500, and you can see how companies have a, a half life now, which perhaps is very different to 20 or 30 years ago. >> Right, right, exactly. Well, Mike and Andrew, thank you so much for coming on theCUBE. This was a really fascinating discussion. >> Thanks. >> Thank you, good to see you again. >> I'm Rebecca Knight, stay tuned for more of theCUBE's live coverage of the AWS Executive Summit. (techno music)

>> 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.