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Opinion: Innovate from the inside

Why strong internal innovation will help your organisation increase staff retention, build leaner structures and create positive momentum

Successful organisations do two things well. Firstly, they innovate externally by, for instance, producing better products than their competitors. Secondly and just as importantly, they innovate inside their businesses.

While external innovation offers obvious rewards such as increasing sales and improving reputations, internal innovation has emerged as a key focus for many organisations. But strong internal innovation will result in future business success including increased staff retention, leaner structures and positive, forward momentum.

As IT headhunters, we have seen organisations trying to spark internal innovation in a variety of ways, typically one-off approaches that have little success in instilling innovative behaviours for the long term.

Over the past two years, we have seen an emerging trend: organisations targeting ‘intrapreneurialism’ as a way to successfully initiate and embed internal innovation. A so-called ‘intrapreneur’ is a person “employed to work independently within a company in order to introduce innovation and to revitalise and diversify its business, according to Australian business consultant, Daniel Ringrose.

Ten years ago, innovating wasn’t much different to experimenting and often sat on the fringes of an IT department; perhaps as an hour-a-week project of enthusiasts. We certainly didn’t see much formal need for innovation in the job requirements we gathered from clients when recruiting CIOs and digital leaders.

However, as the years progressed, innovation has come to mean more to companies and their technology departments. More organisations every day are realising that the accelerating pace of change means that they have to innovate or face questions about their business model very soon.

It is all part of the continually evolving role of the CIO: moving from a risk minimisation strategy to a nimble, ‘intrapreneurial’ mentality.

According to the 2012 Harvey Nash CIO Survey, only 3 per cent of Australian CIOs believe that the innovation potential of their organisation has been fully achieved, and 22 per cent say it has been partially successful.

Australian CIOs seem hungry for innovation: technology, digital media and social networking tools present opportunities for innovation which Australian CIOs are taking a leadership role in exploring.

In 2012, only 27 per cent of Australian CIOs saw ‘great potential’ in their organisation’s ability to innovate. For the majority of organisations that are not deemed to have this ‘great potential’, the CIO is in a unique position to change this, especially in Australia.

Australian CIOs have more direct access to their CEO with 41 per cent reporting to the CEO, compared to 32 per cent globally. 59 per cent of Australian CIOs sit on the operational board or management team of their organisation, 7 per cent higher than the global average.

As the leading technologist, the CIO can change the face of an organisation through the enablement of ‘intrapreneurial’ thinking, which in itself can bring some significant advantages.

Startup entrepreneurs use new business models, like ‘The Lean Startup’, which promotes building extremely lightweight “minimum viable products” for a sole purpose of testing business model assumptions with real customers.

Unlike Agile, which can sometimes be seen by other business employees as an IT practice, Lean Startup requires business product owners to identify assumptions in their own business model (new or evolving), and define a metric to test it. The product only progresses if the data proves the assumption correct or a better model is found.

If business product stakeholders are able to identify the right kind of metrics they need to validate, it’s important to test this as quickly and cheaply as possible. Existing platforms used by IT teams may not be suitable due to workload complexity and configuration management challenges.

Startups use a wide range of tools which are cloud hosted, and in small volumes, free. They are very quick to set up and often need no IT support. By adopting new products for experiments, products can be tested publicly in hours. Enabling business and IT teams to use these tools will become a key empowering responsibility for an intrapreneurial organisation.

Finally, the very core of corporate structures can block innovative thinking. Pre-determined project roadmaps, capital allocations, business case forecasts, and bonus structures all discourage any change from assumptions. Consequently, any learning that says an idea is ‘bad’ will be hidden, which enables staff to protect their budgets, bonuses and reputations.

Structure changes must be made so staff are given permission to act on learnings and change direction, when experimenting with uncertain business models.

By starting to apply these ways of working in a small protected labs team, and focusing on testing assumptions, confidence can build through evidence. Once proven as a better way of working, this way of thinking can be rolled out across an organisation to build a clear culture of innovation.

When market share is coming under increasing attack by disruptors, there’s some truth in the saying “if you can’t beat them, join them”.

Bridget Gray is managing director at recruitment firm Harvey Nash Australia.

Tags managementHarvey NashinnovationBridget Gray

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