#CXOTALK: Technology innovation advice from Accenture's CTO

Paul Daugherty, Accenture's Chief Technology Officer, explains how the Fortune 500 consulting firm manages innovation across this $32 billion company.
Written by Michael Krigsman, Contributor

The consulting firm, Accenture, is a member of the Fortune 500 and one of the largest companies in the world, with revenues over $32 billion and approximately 373,000 employees.


Photo credit: iStockphoto

As part of the CXOTALK series of conversations with disruptive business leaders, I spoke at length with Accenture's Chief Technology Officer, Paul Daugherty.

During the 45-minute discussion, we focused on issues surrounding digital transformation and innovation.

You can watch the entire conversation below and read a complete transcript on the CXOTALK site.

Of course, innovation is an important part of digital transformation, and Daugherty explained Accenture's multi-layer process for ensuring the large firm retains a leading position on important new technologies.

Equally, or perhaps more, importantly, he emphasized Accenture's focus on linking technology to business results. For Accenture, technology provides value when it solves business problems and practical use cases.

Bear in mind that Accenture's core business strategy reflects business value based on technology innovation. Therefore, it must address the needs of ongoing, present-day client work while anticipating future business and technology shifts. The combination of present and future underlie Accenture's rich approach to innovation.

Of course, many companies face a similar challenge, but Accenture's large scale is a prime motivator behind the institutionalized approach to innovation presented in our conversation.

Here is an edited transcript of sections where Paul Daugherty discusses innovation at Accenture:

How does Accenture view technology innovation?

Every year we have to add $3 billion of profitable revenue. So, in essence, we have to add 100,000 people every year, and that is what we hire every year with new skills that generate profitable growth equivalent to 3 unicorns of revenue.

To make that happen, we need a lot of innovation mechanisms in our business. Technology moves so fast today that if you are not at the forefront with the important technologies, you'll miss key parts of positioning and growth.

As an example, two years ago blockchain wouldn't have been singled out by many people as an important technology for us. In just two years, it's now important for us to have a blockchain practice. We've invested in a couple of blockchain startups, so we work with them more closely to drive change. And we've got blockchain R&D and we have blockchain work going on with clients across different industry groups.

That's just in a couple of years, and that's the type of speed in which the technology is moving.

How does Accenture drive innovation internally?

We have something we call our innovation path, which is how we make innovation work. It starts with research. We have Accenture research, which generates thought leadership and provocative points of view on the game-changing trends like our technology vision. That's Accenture Research.

Then we have Accenture Labs, a major R&D investment in seven labs that we have around the world, with researchers and Ph.D.'s driving hands-on applied research. We have the hands-on experience to drive those technologies as they take off.

We have Accenture Ventures, which is where we invest, reach out, and work with start-ups, VCs and entrepreneurs through an open innovation approach. We also take investments in companies where we can create a special relationship and create a good way to grow their business and our business, together going forward.

We have something we call Accenture Studios, where we bring our clients to ideate and co-innovate together in an environment that combines everything from design thinking, to experiential, hands-on technology, to new development techniques like extreme programming and agile development, where you can quickly ideate and build solutions.

Then, those skills get into our global delivery network and all of the businesses of Accenture. We are investing increasingly in that, and if you look at our business we're again 30 billion in revenue, and we invest about 3 billion a year in improving our capability, about 10% of our revenue. It's about a billion in internal investment and about a billion in acquisitions and about a billion in people in training. And that for a company of our size in our industry that is a lot of investment to make, but we believe that's what's required to keep moving the organization at pace.

To round out one point that I mentioned -- acquisitions. We have acquired over 40 companies in the last 36 months. Bringing in that new capability to accelerate this kind of rotation is a key part of the strategy as well.

How do you connect innovation to ROI and practical use cases?

That's what gets us excited. You can get anybody excited at Accenture when you talk about innovation and business value. That's exactly the way which we look at it. Even starting on that innovation path and the research stage we're looking the potential.

For example, when we started working with drones some years ago, it was, "What are the applications?" and we started working with oil and gas companies around pipelines inspections using drones. We just deployed an application using drones for a very large agricultural producer in Asia to use drones to improve their agricultural productivity dramatically, etc.

We look for those combinations of technology and use case.

Virtual reality as a great example. One of the exciting things that we did last year was work with a manufacturer to apply augmented reality in the manufacturing setting. An assembly worker using augmented reality, with laser guided precision and machine intelligence and machine learning built into the software, could operate at a far more skilled level using augmented technology. It makes that person a better worker, a safer worker, a more productive worker, and [produces] better quality products. A win-win for the worker and the company.

Those kind of scenarios are exciting and go across many domains.

What is the relationship between innovation and culture?

The days of top-down, multi-year strategies are gone in the same way as the era of very rigid fixed organization structures are gone; people need to work differently. Understanding how the culture of the company changes to become more innovative and more adaptive is essential.

The pace of change is so extreme; you need an organization that can adapt quickly accept change as a new normal rather than something you just do once in a while.

Disclosure: Accenture is CXOTALK partner.

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