ADP's Innovation Lab Drives New Ideas | Straighttalk

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By Peter High, President, Metis Strategy

 

This article is by Featured Blogger Peter High from his Forbes.com Column.

 

Automatic Data Processing (ADP) has long had a history of being a conservative company, and that conservatism has served it well since its founding in 1949. As the company grew beyond $10 billion in revenue in recent years, it recognized that it needed to reinvigorate the company with a new sense of purpose relative to innovation.

The result was the establishment of the ADP Innovation Lab in the Chelsea neighborhood of Manhattan. Some 15 miles east of ADP headquarters in Roseland, New Jersey, the Innovation Lab would be staffed differently, encouraged to used different processes, and have a different style of work environment.

 

Keith Fulton is the Chief Technology Officer of ADP, and and a key driver of ADP’s innovation agenda. In this interview, he discusses the mission of the Lab, the results it has garnered, the impact it has had back at ADP headquarters, and a variety of other topics.

 

Peter High: Keith Fulton, I thought we would begin with the charter of the ADP Innovation Lab. If you can take a moment and talk about the genesis of the idea: why was it determined that ADP needed one, and why here in New York City?

 

Keith Fulton: For some time now, we have been focusing on innovation as a company and pushing it in a broad way. But, the management team felt that we needed to accelerate our efforts.  So, we set out to create an environment that fosters creativity, is more collaborative and open, and facilitates us bringing innovative products and features to market faster. We actually started our first lab at our headquarters in Roseland, NJ. In order to attract more top talent, we “doubled down” and built our second lab in an area [Chelsea, in the heart of Midtown] where the right skill sets were in a higher concentration. The top media companies are here; it’s an amazing venture capital and startup scene; and the top visual design and creative firms are a subway ride away.  Recently, we opened another location in the growing tech corridor in Pasadena, CA.

 

High: Let’s talk about those special skill sets, special mindsets and even differences in terms of processes they are using relative to the traditional product development (or IT) organization in Roseland. Can you talk a bit about some of those differences?

 

Fulton: Sure, we will start with skill sets. By interpreting our mission as saying “we want to build consumer-grade applications with best-in-class user experiences,” we are not thinking about building just another ERP [Enterprise Resource Planning] system. Our users are consumers. They expect a high-quality experience, like they get from leading technology companies.  So, we set out to hire a different kind of developer, from the very beginning.

 

For example, data scientists use rich data and machine learning to help us develop algorithms for discovery of data that we can surface to users in better, more beautiful ways.  To do that, we need hardcore back-end experts that are not just SQL administrators, but actual scientists that know how to find golden nuggets in these mountains of decades of data.  Next, we add next gen architects who push the envelope on in-memory databases, container architectures and hardcore continuous deployment technologies. If you combine those people that are technical with designers that come out of television and other media, and you create a tight, cross-functional and diverse team with very different perspectives, insights and strengths and give them hard problems to solve, you get to a whole different kind of answer.

 

High: Sticking with that, how do you tune them or point them in certain directions? To what extent are they focusing on developing the next version of the traditional product versus thinking outside of the box about a completely different way of thinking about serving your customers?

 

Fulton: There certainly is a healthy tension that we feel often. We see a lot of debate and believe that the world is moving toward what we would consider more experimental solutions in our space of Human Capital Management (HCM). On the other hand, we are a large provider. We have over 630,000 clients that are comfortable with the traditional or “proven” way. So our challenge is a balancing act: helping our clients to adopt emerging best practices, while still supporting what they are doing day-to-day.

 

That is where our user experience research comes in.  We have dedicated teams really listening to our clients and differentiating “what are they dissatisfied with”.  Not surprisingly, we’ve found that traditional methods are not well-loved by most companies. Think about it, the “annual performance review” is one of the most basic of talent management processes.  Now, you have big companies, like Microsoft and Accenture (not just the “crazy” start-ups) starting to question its value.   Employers of all sizes are looking toward continuous feedback and continuousmentoring relationships, as opposed to that one day in August when everyone in the company gets their review.

 

So, to your point, it’s important for us to innovate “outside the box”, but we have plenty of room to innovate in traditional spaces, too. Most people, when they see our new designs and experiences, first cannot believe it is ADP. They also cannot believe that the systems they were using before are now intuitive, approachable…and even fun.  It doesn’t feel as much like work as it used to.  I think that’s a direct result of our focus on design, in everything we do here in the Lab.

 

High: I wanted to talk a little bit about the user experience lab. How does it work? How do you choose who to engage, and then how do you engage with them? Do you go out and meet with them in their office space? Do you bring them to Chelsea or some other place? And then how do you think about—recognizing that there are probably a variety of differences depending upon who that customer is—how do you think about that engagement? I wonder to what extent you think about the conundrum Steve Jobs addressed: that people do not necessarily know what they want. So to what extent are you trusting them to tell you what they want in a way that is going to direct your activities versus gleaning insights from them to push in a direction they have not even dreamed up yet?

 

Fulton: That is a set of interesting questions. I would say that our researchers divide their research into three basic categories: exploratory research, concept testing, and usability testing. The place where our users struggle the most is with more exploratory, open-ended questions. You mentioned Steve Jobs, but this concept goes back even farther to Henry Ford, who famously said, “If I had asked people what they wanted, they would have said faster horses.” That is probably true. However, my comeback would be: “If you had shown them a Model T before you started selling it, those same people would have made it more comfortable; they would have wanted it in different colors; they would have had a better steering wheel.”  User research shows us where to make our products better.  After the initial shock and excitement of seeing something new and innovative, everyone is a critic—in a good way.  Users can always make us better.

 

You asked about our methods.  We do client site visits, where we are literally sitting in the cube with the payroll administrator for days on end. When you are watching and studying what they are doing, the interesting part becomes what they are not doing. What are the post-it notes stuck around the outside of their monitor? What have they tacked onto their cubicle walls, because the system does not tell them what they need to know at the time?

 

In addition to those on-site visits, we are also big fans of client advisory boards.  We bring 20 – 40 clients to our facility.  Our research group then talks directly to them about their pain points, plans for the future; what they like and do not like about our products, competitor products and products in general. Then we may show concepts and say, “You are not alone. We have heard those pain points before. What if you had something like this, what would you do?”

 

Then, when we get into concept and usability testing, it is even more individualized. The team is quite scientific about making sure we have diverse representation like you would expect: gender, age, background, existing ADP user, or not. But we also compare hourly vs. salaried employees, various industry verticals and differences between large enterprises and small businesses.  We put a system concept in front of them and we ask them to perform a series of tasks to see where they struggle and where they don’t. Then, we listen. Watch. And learn.

The fact that we listen so hard to our customers has established a culture where we do not have that pride of ownership you typically see in a design team. These products and the advancements in them are for our clients, and inspired by our clients.

 

High: I want to talk a little about the space in Chelsea, and the way in which you and the team designed it in anticipation for how people work—especially people like the ones you have been describing here. How they will be most productive. How they will collaborate best. I know a lot of thought went into the space itself, and, in fact, you reviewed organizations like Google, Oakley, Twitter, and MIT Media Labs to see how other organizations have done things.

 

Fulton: There were probably 20 to 30 different “innovation labs” that we reviewed and we learned that most were structured around the individual. There is a lot of individual freedom. You can go sit in a basket. You can take a nap. No assigned seating. But we ended up feeling  that they may have over-indexed on the individual. That level of fluidity was possibly too much. For example, most of these places do not have assigned seating.  However, in practice, everyone here sits in the same seat every day. It turns out that people want a place to put their family photos and their box of tissues. So, in the ADP Innovation Lab, we do have assigned seating. It might not sound very out-of-the-box, but people like it. They want to know where their “home away from home” is.

 

The big breakthrough we had, when we were designing the way the structure would work, was that we were designing around maximizing the productivity and collaboration of the group, rather than that of the individual.  ADP does a lot of agile development, with many scrum teams that are generally 7-10 people.  So the scrum team becomes the productive unit that you want. We spent a lot of time thinking about how to make groups empowered and give them the freedom and structure to do what they needed to be successful.  Orientation around the team became our motto.

 

High: Makes sense. I would love to talk to you just about some of the specific innovations that have come out of this. You talked a bit about the methods, about how you have engaged customers, some of the differences in terms of skill sets, mindset, and process. What has been the fruit of the labor? What are some of the things that have been surprising, new ideas that have emerged from the lab itself?

 

Fulton: In the ADP Innovation Lab, we are coming up with better processes, better ways of visualizing and interacting with the data, better ways of empowering users to get to answers more quickly, with less cognitive load. People are busy, and they want to get the value out of their HCM systems quickly and get back to what they do best. To that end, we filed more patents than ever before. And a lot of them are focused on making HCM systems more usable, more intuitive and more visual.

 

For example, our Pay Lens takes a “dead” pdf paystub and brings it to life, bringing the information to your fingertips and allowing you to control your financial levers directly from there, with just a few clicks.  Modify your 401K deductions by clicking that dollar amount on your pay stub or adjust your Federal withholding by changing your W4 with another click.  If you see your pay and it reminds you that you need to change your direct deposit settings, click the button right there and do it while you’re thinking about it.  Effortless, intuitive and fun control of your financial life, all from a pay stub that hasn’t fundamentally changed in 40 or 50 years.  We built the Pay Lens in record time, with a partner team in Georgia and the Chelsea Lab, and it is now used by more than 3.5 million users each month less than a year after launch.

 

Moreover, these methods and techniques are “going viral” all over ADP.  80% of our 630,000 clients use products that have upgraded their user experience, just in the past 12 months.  Yes, it started in Chelsea, but it is happening in multiple places all over the world concurrently at this point.

 

High: How do you define innovation? Is there this whole big “I” innovation: something fundamentally new versus those things that are adding new value but perhaps are amendments to something that already exists? Do you have a way of defining what is innovative and what is not?

 

Fulton: First, I think you need to have a sense of dissatisfaction with the status quo.   We cannot presume that the past was good enough. When you can get your head out of the mode of “this problem has already been solved, we just need to duplicate it,” (or something like that), I think that is when real innovation occurs.   Of the 150 people we have in the Lab today, over 90% of them are external hires. These people do not have decades of background in human capital management (HCM). They come from other industries, so they are not highly invested in the past. They saw what we had and they wanted to make it better. They help us push the envelope on what is possible.

 

At our new innovation center in Pasadena, California, we have new talent as well to seed the new approaches, but still a strong mix of the existing base of deep experience in our industry.  So we are able to blend new and traditional in different ways on a situational basis to meet the needs of each of our products.

 

High: One of the things I think is so interesting about this emerging in a company like ADP is that it is legendarily a conservative organization. It is an organization that has been known for some time for being very responsible with the resources that it has. Some might read that as almost anti-innovative. The fact that this user experience work has emerged as a core competency and such an area of focus, I think makes this story that much more interesting in some ways. I know that part of your team’s goal is to inculcate  the broader team to take what is working from this specialized innovation team and draw lessons that the broader team can use as well—kind of the change of mindset that we have referenced a couple times. Can you talk about the way in which you thought of making the ways of thinking and the ways of working in the innovation lab more pervasive across the enterprise?

 

Fulton: It’s true.  ADP’s culture is rooted in compliance, which makes us more conservative. Pushing the envelope can generate concerns like “We have this big installed base. How do we know that people are going to like this? Is it too much?  Too radical? Too soon?”  But, our research actually empowers us to innovate and still be conservative.

 

With good research, we can say, “Well, actually, we have talked to 300 clients about this feature and they love it. They are all saying ‘When can I have it?’ which enables us to show that no one [surveyed] is resisting it.” We have taken the guesswork out of the equation. We do not just throw things over the wall to our clients. We test them—repeatedly—until we know our clients love them, and then we roll them out. It enables us to go farther, faster and with less fear.

 

The good news is, we have a broad recognition at ADP that we need to try new things. Consumers’ expectations of the software they use are high. People have apps on their phones that are beautiful, fast and great. We certainly don’t want them to log into an ADP system and feel like they took a step back in time. Our company feels a high degree of urgency about this consumerization trend. This notion of consumerized enterprise software is something we feel good about being the leader in our industry.

 

High: I know from past conversations, Keith, you have mentioned one of the ways you have had a rapid brainstorming of new ideas is the “hack-a-thon” mentality that other organizations, especially those in Silicon Valley, have made part of the regular process. Can you talk about how you have brought that into ADP as a process of ideation?

 

Fulton: Sure, I can.  You see, we have been working for several years on the ADP Marketplace, which is ADP’s version of the app store, allowing clients or third-party developers to write apps that use ADP data and leverage ADP products. Today, we promote a set of several thousand APIs that developers, all over the world, are now able to use to build applications. As an effort to promote and test the value of the ADP Marketplace, we hosted an internal hack-a-thon.  Outside of regular working hours, our global teams were given 30 days to self-organize and build whatever they wanted to…as long as they were using APIs in the Marketplace.

 

The creativity explosion that happened was unbelievable—unlocking the power of these APIs that leverage ADP employment, salary history and evaluation data, and mashing them up with APIs from other companies (like Google Maps, Fitbit data, Facebook Open Graph Search, etc.). We were inundated with amazing ideas and over 50 full realized entries were submitted.  Seeing the quality of what small teams could accomplish in a short time really validated the power of the Marketplace and the potential of API’s to unlock value for our clients in wholly new ways.

 

The Marketplace represents a new kind of open ADP. And I have heard this reaction from many different partners. Namely, that they cannot believe ADP is opening up the doors to our unique and massive amounts of data and letting people leverage it…all in a secure environment. In the same way that we are heavily emphasizing consumerization and design, I expect this new openness to drive an explosion of innovation in HCM and ultimately even improve the way people work.

 

Originally published on Forbes.com