It is All About the “I”
Six ideas for CIOs in 2015 to put the innovation back in CIO
For most, the “I” in CIO stands for Information. But what about that other “I”, Innovation? For many IT organizations, 60-80% of IT spending continues to be tied up in keeping the IT lights on. But innovation matters more than ever to the business bottom line. According Geoffrey Moore, “without innovation, offerings become more and more like each other. They commoditize.” (“Dealing with Darwin”, Geoffrey Moore, page 1). Geoffrey goes on to say later in “Dealing with Darwin” that commoditization will over time drop business returns to “the cost of capital”. So clearly, this is a place that no CIO would want their enterprises to consciously go.
Given this, what is the role of the CIO in driving enterprise innovation? I believe that it is a significant one. Without question, technology investment has been a major driver of enterprise productivity gains. At the same time, IT investment has had a major role in improving business capabilities and the business value chains. And more recently, IT is even carving out a role in products themselves as part of the IoT. So how can CIOs help drive business innovation?
1) Get closer to your business customers. CIOs have said to me that their number one priority is connecting what the IT is doing to what the business is doing. Given this, CIOs should make it a real priority for their teams to get closer to the business this year. According to Kamalini Ramdas’ Article in Harvard Business Review, “to succeed at innovation, you need to have a culture in which everyone in the company is constantly scanning for ideas”.
2) Develop internal design partners. When I have started new businesses, I have always created a set of design partners to ensure that I built the right products. I tell my design partners to beat me up now rather than after I build the product. You need, as Kamalini Ramdas suggests, to harvest the best ideas of your corporate team just like I did with startups. You can start by focusing your attention upon the areas of distinctive capability—the places that give your firm its right to win.
3) Enabling your IT leaders and individual contributors to innovate. For many businesses, speed to market or speed of business processes can represent a competitive advantage. Foundationally to this are IT capabilities including up time, system performance, speed of project delivery, and the list goes on. Encouraging everyone on your team to drive superior operational capabilities can enable business competitive advantage. And one more thing, make sure to work with your business leaders to pass a portion of the business impact for improvements into a bonus for the entire enabling IT team. At Lincoln Electric, they used bonuses by team to continuously improve their products. This arch welding company shares the money saved from each process improvement with the entire team. They end up getting the best team and highest team longevity as teams work improves product quality and increases cost take out. According Kamalini, “in truly innovative culture, leaders need to imbue every employee with a clear vision and a sense of empowerment that helps them identify synergistic ideas and run with them” (“Build a Company Where Everyone’s Looking for New Ideas”, Harvard Business Review, page 1).
4) Architect for Innovation. As the velocity of change increases, businesses need IT organizations to be able to move more quickly. This requires an enterprise architecture built for agility. According to Jeanne Ross, the more agile companies have a high percentage of their core business processes digitized and they have as well standardized their technology architecture (Enterprise Architecture as Strategy, Jeanne Ross, page 12).
5) Look for disruptive innovations. I remember a professor of mine suggesting that we cannot predict the future when discussing futures research. But I believe that you can instead get closer to your customers than anyone else. CIOs should dedicate a non-trival portion of IT spend to germinating potentially disruptive ideas. They should use their design partners to select what gets early stage funding. Everyone here should act like a seed stage venture capitalist. You need to let people experiment. At the same time, design partners should set reasonable goals and actively measure performance toward goals.
6) Use analytics. Look at business analytics for areas of that could use IT’s help. Open up discussions with design partners for areas needing capability improvement. This is a great place to start. Look as well for where there are gaps in business delivery that could be drive better performance from further or improved digitization/automation. And once an innovation is initiated, analytics should actively ensure the management of the innovation’s delivery.
There is always more that you can do to innovate. The key thing is to get innovation front and center on the IT agenda. Actively sponsor it and most importantly empower the team to do remarkable things. And when this happens, reward the teams that made it happen.