At Wolters Kluwer, innovation is driven by solving our customers’ most pressing challenges through applying deep domain expertise and workflow insight—coupled with intelligent technologies.
In the second Wolters Kluwer Executive Insights podcast, Greg Samios, CEO of Legal & Regulatory U.S., speaks with Nancy McKinstry, Wolters Kluwer CEO, to uncover how innovation and customer centricity meet in the company’s strategy of Growing Our Value. While acknowledged as a critical organic growth driver for any business in the digital era, there is neither one single definition of innovation, nor a ‘one size fits all’ approach. To unpack its meaning, we look at the history of innovation, then share highlights from the podcast on innovation at Wolters Kluwer—where the customer is absolutely central. To conclude, we consider the future of innovation: Will it remain as the byword of the digital era, or will something else take its place?
A brief history of innovation
According to Benoît Godin in Innovation Contested, the term ‘novation’ first appeared in thirteenth century law texts, referring to newness in contracts. In society at large, however, novators were treated with suspicion; subject to life imprisonment (or worse)—their ideas seen to undermine existing social, political and religious power structures.
A deep suspicion of innovation remained for centuries to come, philosophers from Machiavelli to Bacon noting people’s fierce resistance to change. Even during the Industrial Revolution, ‘invention’ not innovation (here is the difference) was the byword.
But in 1939, Joseph Schumpeter, one of the most influential economists of the twentieth century, defined innovation as the thing that happens when firms figure out how to transform inventions into constructive changes in their business model: in products, processes and organizational design. Management and Economic theory began to adapt.
Over time, the elements of technology and the consumer were woven into Schumpeter’s definition, Rogers’ Diffusions of Innovations (1962) explaining why some innovations are adopted and spread, while others are not. A milestone case in healthcare helped tie innovation to the adoption of new technologies by consumers. You will recognize the model below.
Image: Consumers adopting new technology (blue) against market share of that technology (yellow).
In 1995, the year the internet opened to commercial use, Clayton Christensen coined the term ‘disruptive innovation’. He posited that while not all innovations are disruptive, those that are, would have significant societal impact. And, those disruptive innovations would come from ‘outsiders and entrepreneurs’ to displace companies in established market positions.
From 2002, as the digital age began in earnest, Christensen’s vision came true. Among the first industries to be disrupted were Music, Photography, Video industries, followed by Retail, Print, TV and Travel. Since 2015, Education, Healthcare, Automotive and many more continue to be impacted.
In 2017, common business sense has it that all industries need to innovate to survive.
Disruptive innovation is the zeitgeist. Technology touches every aspect of a company’s business model and operation.
But there is more …
Customer-centricity and innovation
Image: Sharon Zhang, Data Scientist, with colleagues from the company's Global Platform Organization, which co-creates state-of-the-art digital solutions with customers and company businesses world-wide.
As a recent McKinsey Global Innovation survey found, while 84% of executives believe innovation is important to growth strategy, and 80% believe their business models are at risk, only 6% are satisfied with the outcome of their innovation performance.
In an effort to better manage the inherently high failure rate of innovation across industries, today’s savviest executives are refocusing around a central idea: customer needs should always drive innovation.
This placing of the customer at the heart of innovation over the past couple of years, has led to the recent rise in popularity of terms such as customer experience and customer journey, and empathic customer-focused problem solving approaches such as design thinking. The specific customer ‘problem to be solved’ is always the starting point.
Speaking with Wolters Kluwer, Greg Satell, author of Mapping Innovation: A Playbook for Navigating a Disruptive Age (2017) said, "Most people think that innovation is about ideas. It's not. It's about solving problems. So you don't need to go searching for some fantastically great idea. Just find a good problem and the ideas will come.”
It’s an approach that Nancy McKinstry and Greg Samios clearly echo in the second Executive Insights podcast: Innovation and Customer Centricity. As they explain, a lazer-sharp focus on understanding the customers’ context, challenges and ambitions has long driven innovation at Wolters Kluwer.
Listen to the full conversation below, and read on for highlights, and a closing thought on the future of innovation.
Understanding the customer
“Our customers are very committed to us, and have a lot of trust in us as a company. But the level of demanding and requirements is more than it was five or six years ago. And the competition is more intense”—Greg Samios, CEO, Legal & Regulatory US.
Empathy is key to customer centricity. As Nancy acknowledges in the podcast; as the demands on our customers have been exacerbated over the years, so the company has responded. “It’s one of the core missions I have as CEO, to really keep track of not only what customers need … but also what's happening in the market, particularly how our customers are dealing with technology, and other trends”, she says.
With millions of customers in more than 180 countries, and spanning students, professionals and C-suites across Health, Tax & Accounting, Governance, Risk & Compliance and Legal & Regulatory, this is no small task.
Still, as explored in the first podcast on Global Trends in Technology, Nancy and the company’s deep research reveals that customers are facing common challenges including huge pressures on productivity and being overwhelmed with information and regulatory complexity.
There has also been a major shift over the years in the type of expectations the company’s customers have. As Nancy observes, in the past, customers prided themselves on their own domain knowledge and doing research and spending the time to get the right answers. Now, however, they are looking for answers up front. Most importantly, they are looking to shift their own value proposition from, “Doing the work, to advising their clients.”
Don’t look for a great idea, look for a problem
As Greg Samios notes, helping customers achieve their ambition depends on unlocking deep insights into their specific pain points. Nancy concurs, explaining that uncovering—and solving—customer problems is possible at Wolters Kluwer thanks to four main elements:
- Employee expertise The company employs practitioners across every division: doctors, nurses, health professionals, tax & accounting professionals, finance practitioners, and more. In addition, the company’s business units have advisory boards of practitioners, or work directly with practitioners themselves. This allows the company to uncover;
- Deep workflow insights More and more in direct co-operation with customers, the company maps workflows in detail to identify pain points down at task level. As Nancy notes, there is almost no substitute for this approach. Gaining these workflow insights allows the company to identify specific use cases for;
- Intelligent technology Through applying any number of specialized technologies to specific tasks, those tasks can be automated. By taking steps out of the workflow the company improves customers’ productivity. This helps customers move from ‘doing the work, to advising their clients’, so strengthening their own value proposition. Plus, often these technologies are applied through close cooperation with;
- External partnerships In health markets, for example, Wolters Kluwer partners with electronic medical records companies and other players in the health ecosystem. The same trend is happening in tax and accounting too. Over time, these partnerships are becoming more important as they unlock value not only for Wolters Kluwer, but also our customers, their clients—and other partners too. The full innovation ecosystem benefits.
This ‘outside-in’ approach, focusing first on clearly defining the customer problem, is critical to innovation at Wolters Kluwer. As Nancy says, “I believe more and more that the way to bring in new technologies such as artificial intelligence or machine learning, is to focus on a very small pain point first. Get that right, and then build out from there.”
Evolution not revolution
From Google’s Moonshots to IBM’s Watson, ‘disruptive innovation’ is still the form of innovation currently capturing popular business imagination. However, Wolters Kluwer’s approach—through its long-standing innovation labs, code games, global innovation awards, minimal viable product development and more—is geared significantly towards a ‘sustaining’ form of innovation that keeps the customer close.
“If you look at every transformation we've been through as a company, from print to digital, from digital to workflow solutions, from on-premise to cloud, each of those migrations has taken many years. And I think that speaks to how our customers like to adapt their workflow, so it's more an evolution than a revolution” says Nancy.
In other words, managing the speed of innovation in line with adoption needs is key—once again underlining the pivotal role of the customer in innovation at Wolters Kluwer.
What is the future of innovation?
As Nancy says, the future of innovation at Wolters Kluwer lies in becoming ever-more customer centric, “The closer we move to our customers, the more innovative I believe we will become”. This is how the company aims to grow its value.
In society at large, a similar trend may be emerging. Critics are speaking out that the pursuit of disruptive innovation alone may be radically overvaluing its value to society. Looking at the tangible end impacts of innovation may offer a clue. In the case of Wolters Kluwer’s professional customers include doctors, nurses, lawyers and more. Their daily decisions help save lives, improve the way we do business, and build more just judicial and regulatory systems. Put in this context, the value of innovation to society at large for Wolters Kluwer is clear.