Companies are used to concealing important information. Coca Cola was famous for guarding its “secret recipe,” as was KFC. The ingredients of WD-40? Also kept in a bank vault. Figuring out how to game the constantly-being-tweaked, never-fully-revealed algorithms on Facebook and Google has launched an entire cottage industry of SEO and social media consultants.
But in the information age, does this secretive impulse still serve us? Sami Luukkonen, Accenture’s Global Electronics and High Tech Industry Lead, thinks the world has changed, and that today, too much secrecy can stifle innovation — especially in high tech.
What follows is an edited version of our conversation.
Why do you think secrecy is no longer as helpful as it once was? What’s changed?
Luukkonen: I’ve been with Accenture for 25 years, and for 22 of those I’ve been with high tech. Over that time, I’ve seen how high tech firms have been very protective
terms of sharing their information and data, their intellectual property. It’s a very protective and non-sharing culture. If I design a product like a phone or a PC, I may have a network of partners from whom I order components and I’ll open up some specs to them, but innovation is all very, very closely held. So the companies have really walled themselves off.
But funnily enough, the technology itself is now really driving the need to become more open. With digitalization and the Internet of Things, that’s really changing the industry. The convergence of intelligent products, processes, and services, that’s really causing the need for change. So companies need to open up about what kind of products are coming, and that’s really difficult for most companies because of the legacy of protecting intellectual property. Guarding the roadmap, so that competitors are not able to react to it, is seen as really important.
Why would the Internet of Things be changing that?
With the Internet of Things, devices are connected with sensors, networks, data services, applications — it’s a very complex product set-up. Each of these things adds a layer of intelligence and functionality. None of the existing players have all the pieces of the ecosystem on their own, so the companies who make each of these things have to start collaborating and sharing information.
Can you give us an example?
The simplest one is Apple. Think about the Watch and the number of applications that come with that, and the number of accessories that are all around the Watch itself, in terms of the number of parties that need to get involved. The consumer isn’t just buying a watch, they are buying a multipurpose device. And Apple is not a company that’s an expert in, say, wellness, so they have to collaborate with those companies to create an offering to the end consumer. The Watch is an ecosystem product, and these ecosystem products are the driving force that are really forcing companies to collaborate. That’s why I say it’s a technology-driven cultural change. At the same time, Apple is a special case. They’re able to take command of the ecosystem because of their very strong brand. It’s almost a requirement to go and collaborate with Apple.
And yet companies still have to keep some things proprietary, right? How do you balance the need to share with the need to maintain an edge over the competition?
You have to be very selective with the information you open up, and the people with whom you open up. There’s a layered aspect here. You can be pretty open with your core partners, the trustworthy partners you have worked with in the past. The next layer are the newcomers. You need to interact with some companies you really don’t know that well. There you need to be very selective of the information you share, but unless you do some sharing, the co-innovation can’t happen.
Can we clarify what kind of data and information you’re really talking about? Are you talking about sharing customer data, user data? Or something else?
I’m more talking about sharing the product data — new products in your pipeline, new features and functionality, that kind of thing, so that the R&D process is synchronized with the rest of the ecosystem. But there is a need to share other kinds of data as well, in order to develop new services. You need to share data on customer behaviors with your partners, so that they can get an idea of how to improve the interaction for them. But there’s no need to share information on individuals — it’s more like, “you’re a part of pool of users who use the device in this manner.” So there’s multiple levels of sharing that companies need to start to do.
The challenge these companies are facing is that consumers are starting to demand more, easier, and richer services. That’s forcing the players in the ecosystem to rethink the end-offering. A mobile phone, for instance, becomes more of a mothership for the other connected devices around it.
Is there anything you think tech companies should still keep secret?
There are a couple of things. Everybody needs to keep their individual customer information secret. This whole ecosystem is based on trust, so if the consumer loses trust on you, you’re gone. A security breach could be fatal. So you really need to implement strong security and keep that information encrypted.
The other thing is, if you are confident that you are now bringing a product to the market that will be a revolutionary, big hit product, then I think you need to keep the concept secret. If it’s a completely different product, not a newer version of an existing product, that is an area where you should be very thoughtful about which parts you need to share — but you still do need to share. Again, I think of the Apple Watch. You can give parts of the information to the developer community, so they can build apps for it, but still safeguard some of the features until the last possible minute.
What about beyond the tech industry? Are there implications here for other sectors?
The interesting thing is that you look at high tech, and it’s really the industry that enables the rest of the industries to become digital. You look at the added value it brings to any industry, whether that’s banking, oil, or medical — the opportunities are just tremendous. For instance, in the oil industry, if there are sensors embedded all over the pipelines, then they’re able to identify leaks, machine-to-machine. And connect that with mapping information, weather information, and when there’s a leak you can much better plan how to react and how dangerous it is based on factors like wind direction and where people live. But in order for this to happen, the ecosystem has to evolve further and more sharing needs to happen.
Are there specific things leaders can do to bring about this change?
First, executives need to see ecosystem-based products rather than [individual] devices. Second, what’s your company policy in terms of sharing information? Does it need to change?
Then there is the collaborative strategy, which is looking at the strategy in terms of layers of partnering and saying, “We’ll start to collaborate in these areas — and these are the rules.” Who are my partners that I open up completely, who are the ones I open up selectively? It’s about really talking to the partners, to explain to them that we are changing our approach in terms of sharing, and the reason why is we see greater benefits ahead of both of our companies if we start to collaborate and co-innovate.