Digital innovator

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Niall Lavery, PwC’s Digital Director in Northern Ireland, talks to Owen McQuade about the importance of innovation in overcoming the challenges facing the Northern Ireland economy and details three innovation paths for business and government to follow.

“We are entering a world in which just about everything will be connected – your phone, your car, your house, your clothes, your workplace and even your personal identity. In addition to making most things happen much more efficiently, it offers people and companies the ability to create amazing value from the data that these interactions will generate…we call it the Internet of Things and it’s on the way.”

That’s a glimpse of tomorrow from Niall Lavery who has spent much of the last 15 years working outside Northern Ireland across a wide range of industries. It is therefore not surprising that we start with a discussion of a number of ‘megatrends’ that he believes will change the business environment dramatically in the coming years.

Lavery points to some key trends. First is rapid global urbanisation as, “people and investment flock to large urban centres, with London being the biggest influencing factor for Northern Ireland.” Other regions of the UK are similarly affected. “The UK Government sees GDP soaring in big urban areas, hence the drive to decentralise powers to new ‘powerhouse clusters’ like Manchester and the north of England where synergies and scale can replicate this GDP growth.”

Climate change and resource depletion is the second trend, which Lavery sees as impacting into the future, with an ageing population a third trend that has now become a reality. Finally, Lavery’s own first-hand experience is the dramatic shift in economic focus to the East and emerging economies.

“These megatrends have now passed the point of no return and as they collide they bring some significant challenges”, he notes. One local example he gives is the growing elderly population, a low-GVA local economy and a lack of internationally-competitive businesses, which collectively pose challenges for health spending and public service delivery.

Innovation:

“Technological breakthroughs offer the best hope for rescuing our economy”

Lavery’s antidote for transcending these challenges is innovation, with a digital edge. He explains: “Technological breakthroughs now offer the best hope for rescuing our economy. These breakthroughs use innovation to solve, or transcend, these problems.”

“I think the term digital is over-used, so it means a lot of different things to a lot of different people. It’s often assumed to just mean technology and systems, but that does it a discredit. I prefer to think of it in terms of innovation.”

Lavery hints of a world where, if you’re not in you can’t win. “There’s a formula called Wright’s Law; it says that every percent increase in cumulative production in a given industry results in a fixed percentage improvement in production efficiency. That means that while the rate of change in technology is increasing exponentially, it’s generally only those parties that contribute to such innovation that tend to get access to the benefits.”

“We’re accelerating towards the world of science fiction, and the challenge for us in this part of the world is: How will we get access to these emerging technologies?” Lavery believes that this will require a fundamental change in our mind-set: “It means changing our DNA. In Northern Ireland we have significant challenges – not working together very well, low productivity, a lot of mediocrely successful micro-businesses and being hugely over dependent on state aid. Perhaps not the ideal starting point,” he adds.

However, Lavery is optimistic and sees the solution as “shaping a new generation of innovators that can help establish three new characteristics as our new regional identity.” He lists the three areas for future innovation as agile education, new modes of engagement and ‘Lego bricking’.

Agile education:

“Disruptive talent brings new perspectives that can disrupt and change markets”

Lavery’s first “innovation mind set” works on a number of levels: individual, institutional and regional/national. It is premised on an acceptance that the rate of technological advancement is so great that it will never be mastered: “We need to take a step back and learn how to cope with incessant change. It never stops, so waiting for the ‘right-time’ is fatal. We must always grasp and exploit new innovations or approaches – in people, processes, business models or technology.”

“Those challenges allow businesses and governments to transform themselves into something better and the only way of doing this is through continual education with a rapidly evolving curriculum.”

He points to how Richard Branson’s description of himself as a ‘disruptive talent’ bringing new perspective to old problems that can disrupt and change markets. “What you learned last year may not be of use this year,” he adds.

Lavery says that there is already innovative good practice emerging in places like California. It includes things like flexible ‘learning tracks’ that can be tailored to meet the needs of individuals and can be ‘self-pacing’ to fit in with the learner’s lifestyle. When supported with digital learning content this can be very scalable and offers an effective framework for education delivery in schools and universities.

By using digital content teachers and lecturers can now deliver direct instruction classes to students anywhere and at any time and instead can spend their contact hours with students on discursive learning. In addition, by incorporating social media into this environment course designers can get immediate feedback on what works and what does not.

One UK university that PwC has been working with over the past two years has seen its ability to attract and convert new applicants grow by 25 per cent using this method. At another University in Australia, PwC helped their marketing team use social media more effectively to increase international student applications by 50 per cent in a single year.

“These new approaches work. Agility lets the education system respond to a changing context more quickly and allows the focus to be on teaching the ability to learn rather than rote learning,” he observes.

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New modes of engagement:

“The world’s biggest hotelier doesn’t own any rooms and the biggest media organisation doesn’t produce any content.”
The second mind-set recognises the fact that we no longer need to do everything ourselves. “It is essentially designing new ways of engaging with other people and organisations.”

Lavery points to the rise of utility computing which has cut the cost of entry into new markets and spawned new business models like Airbnb – the world’s biggest hotelier that doesn’t own any rooms, Facebook – the biggest media organisation that doesn’t produce any content and Google – a gateway to knowledge and the social networks that allows people and organisations to interact with each other.
“This disruptive way of doing business applies equally to both the private and public sectors. PwC has been working with a number of GB local authorities to help redefine the relationship between the council and its tax payers. This includes a wide range of simple innovations, like a text message reminder about bin collection, and reporting a broken street light using Twitter – and then getting a Tweet that it has been fixed less than an hour later.”

“The mantra I preach to clients is ‘challenge everything’. It is not just about your organisation or your website… it is about everything,” stresses Lavery. These new modes of engagement offer businesses and governments “huge transformation opportunities” by using an ecosystem of technologies and collaborators to deliver innovation quickly.

Lego bricking:

“Building blocks that run outwards from the core business.”

The third innovation mind-set is “an architectural approach to things while retaining agility and flexibility”, says Lavery.

“It is about recognising that a lot of the ‘bricks’ that make up what you want to do already exist out there – you don’t want to remake those but you want to put them together in a clever way that allows you to continually change and plug in new pieces and seek out those value adding components you are going to differentiate yourself with.

Organisations have to ask themselves with which blocks do they add value? This approach has seen the resurgence of the concept of ‘core businesses’. It has also meant that many organisations have become smaller and are focusing on those bricks.

It has also allowed organisations to swap out some bricks. For example, GlaxoSmithKline’s decision to divest its Lucozade and Ribena brands – both profitable businesses but they did not line up with GSK’s stated ambition of focusing on healthcare and well-being.
“We are also seeing a lot more ‘pop-up’ businesses. We see this in organisations we help in deal making where a particular investor puts together a fund and different building blocks to create a viable business which is often then offered as an IPO.”

Lavery sees the ‘Lego bricking’ approach as relevant for reshaping the Northern Ireland economy: “We need to think about what we want the make-up of our economy to be in two, five and 10 years’ time and then figure out how to construct this from a series of semi-independent components.”

Northern Ireland:

Lavery has just met a senior civil servant, discussing innovation and emerging technologies. PwC tracks around 250 emerging technologies across the world and his team at PwC focuses on opportunities to deploy these technologies with their client organisations.

“Innovation is happening here as well. For example, the Tricorder X Prize (a global technology competition with a $10 million prize) has UU’s Jim McLaughlin as a finalist.”

Our local start up environment contains many other great examples of innovation – notably the spinouts from specialist research centres like the Centre for Secure IT at Queen’s University Belfast.

“What we need to do is create the environment for that to flourish and grow and to harness it for both the public and private sectors to improve the added value to our economy.”

However, Lavery says that there are still barriers, particularly in the public sector, in areas like procurement, as the way the public sector buys projects is outmoded. In the age of the pop-up organisation you have to be much more flexible and invest in forward thinking.
PwC research shows that successful companies and regions are those that make breakthrough innovations rather than incremental gains.

“Firstly, I would pick a relatively small number of ‘Lego bricks’ such as advanced manufacturing, which builds on our manufacturing heritage, Fintech, where we already have a lot of skilled people and cyber security. I would place a few big bets to get companies, facilitated by government, to work together in these areas,” advises Lavery.

“It is really the economic accelerator group concept. We have the great minds, the corporate presence and the educational institutions to make this work. The big challenge is for us to work across organisational boundaries.”

PwC’s Ignite programme joins up big companies who have the leg power to take innovation forward with the small start-ups who often have the innovative ideas. In addition, PwC is building an Ignite Campus in Belfast, which will include a Google innovation zone (PwC are the only advisory firm to have a formal link with the technology company).

Much of Lavery’s focus will be on developing the Campus initiative but it is worth noting that the firm’s approach to digital will see no dedicated digital team as such. “In PwC our approach is working across the business bringing a wide range of people together to work in the digital space – we must all be digital, not just some of us,” he adds. Looking to the future he says that it is both an exciting time but also a pivotal moment if Northern Ireland is going to redress the decline in its productivity. Digital innovation offers a pathway to a better future for both the public and private sectors.

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Profile: Niall Lavery

Dungannon born Niall Lavery is Digital Director for PwC in Northern Ireland. “I had a very traditional upbringing. Both my parents were teachers and we had meat and two veg every day at 5 o’clock. But at 16, I won a scholarship to live and study in Japan for a year. I left school at 17 – two months before my A levels. I didn’t look back and it was by far the best experience I have had. It was quite a culture shock to say the least. I lost about 10 kg as I struggled to adapt during the first three months, but I then began to master the language and began to appreciate the culture and especially the food.” Before this Niall had been destined to study medicine at Cambridge but Japan opened his eyes to the technology sector as the father of the family he lived with worked for Fujitsu. He then came back and studied computing and Japanese for four years at the University of Ulster at Coleraine which included a year in Japan. In his final year, together with three friends, he was involved in a start-up company, outin.com, which was an early stage social media and daily deals website. Although the company eventually failed – “we were ahead of the dot com bust!” – it was a valuable learning experience. After working for a number of start-ups he decided he needed a more secure job and joined Arthur Anderson. “But after a year, Enron happened and the firm went bust.” Niall then joined another advisory firm where for the last six years he has been building businesses inside big businesses.
He has been with PwC for five months and is “excited by the conversations which are the most ambitious I have had with clients. There is also a civic minded approach in PwC which I like.”

Outside work Niall’s interests revolve around family life. He is married to Una who he met at university and they have three young boys Joseph, James and Patrick. He is involved in coaching soccer and Gaelic football.

Niall Lavery is Digital Director with PwC in Northern Ireland. He can be contacted at: niall.lavery@uk.pwc.com or on 07802 659 285

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