Corporate Innovation and the CIO

"Although IT spending and IT innovation aren't the same thing, they clearly have a strong correlation, and there has rarely been significant IT innovation without additional spending - even if the converse isn't necessarily true," says David Moschella, the global research director at CSC Research & Advisory Services and co-author along with Bettina von Stamm of the research paper "The CIO's Role in Accelerating Business Innovation". "Despite the bruises of recent years, most companies know that in order to grow, at some point they must start doing some things differently. And it's increasingly true that there are few major business changes or innovations that don't have a significant IT component.

"For these reasons, the CIO should typically be at the heart of corporate innovation. But in recent years, many IT organizations have lost their image as business innovators, and in many companies, the internal IT systems and infrastructure are seen as barriers to innovation, not enablers."

Moschella says actual and would-be IT leaders might want to continually ask themselves the following basic questions:

• Does your company have a specific and widely understood business-innovation strategy?

• How does IT fit into this strategy?

• Does your IT organization have a culture that supports and rewards business collaboration and innovation?

• Do your customers and suppliers play an important role in any such processes?

• Does your company's executive team look to IT management as a major resource for potential ideas?

If your answers to these questions are mostly positive," Moschella says, "then congratulations. If not, some sort of remedial action is probably recommended. IT management now has the opportunity to repair much of the damage of recent years. How well it responds will likely have significant ramifications for many years to come."

SIDEBAR: A New Look

Innovation - a topic that's been mothballed since the dotcom bust and the economic downturn - is coming out of storage.

Harvard Business School professor Clayton Christensen is a prolific and respected theorist on the subject. In Seeing What's Next he builds on the theories he originally put forth in The Innovator's Dilemma and The Innovator's Solution. In this latest book, he outlines a process whereby decision-makers can use innovation theory to predict industry change. Theory trumps data or best-practice comparisons as a basis for prediction, he claims, because data becomes conclusive only when it is too late to take action based on its conclusions. Executives who know how to make their own predictions will be immune to the "hucksters and augurs" who make a living selling advice.

Hucksters and augurs are also the primary targets of marketing and branding expert Sergio Zyman's scorn in Renovate Before You Innovate. Zyman, however, tars all advocates of innovation (don't ask if that includes the other authors here) as "fadmeisters" pitching unsuspecting companies a quick fix. Renovation, on the other hand, is a far wiser choice and leads to organic company growth without undue risk. Renovate, and you won't be enticed off course by innovation's siren song.

Unlike Zyman, inventor and researcher Mark Stefik and psychologist Barbara Stefik, the co-authors of Breakthrough, are people who move comfortably in the milieu of the new. In their opinion, companies that optimize the routine, pursue only incremental product improvements and resist the truly innovative are headed for trouble. The Stefiks focus on technological innovation and invention, but the book targets the issues that hinder innovation in any organization.

Consultant and entrepreneur Frans Johansson places one of the Stefiks' ideas front and centre in The Medici Effect, namely that a critical requirement for innovation is the mixing of ideas from many fields. Johansson's term for this mixing is "the Intersection". And it's only in the Intersection, he says, where the explosion of creativity he calls "the Medici Effect" can occur. Three forces, he says, are multiplying the number of intersections in today's world: the convergence of disciplines, the increasing movement of people across cultures and advances in computation. Like Christensen, the Stefiks and even Zyman, Johansson acknowledges that there are many obstacles to innovation - most importantly, the hardwired tendency of individuals and organizations to retreat from the unknown and the different. The innovative advantage, he writes, goes to those who have an open mind, who can break down barriers and who stay motivated through failures.

SIDEBAR: Organize for Innovation

Organizational restructuring is one of the most frequently used tools at an IT leader's fingertips. Sadly, most reorganization efforts fail to significantly improve a department's performance. The search continues for IT organizational structures that are able to do a better job delivering the full value inherent in the department's powerful technologies.

In workshops I conducted last year at the Cisco CIO Summit and the inaugural meeting of the Executive 10 of Oregon (the CIOs of the 10 largest organizations in the rain state), deep-thinking IT leaders grappled with how they might better structure their IT shops. We focused on three issues:

• What is driving IT organizational change?

• What is wrong with the current structure?

• What are some principles for designing effective IT shops?

And here's what we learned. Organizational change is driven by a combination of these five stimuli:

• New guy/new strategy - a new C-level executive shows up and starts rearranging the furniture.

• A catastrophic faux pas - something goes terribly wrong and the enterprise responds structurally to fix it.

• Merger/acquisition/industry consolidation.

• Regulatory requirements.

• Mind-set change - somebody high up in the organization believes there is a more rational way to organize IT resources.

Our industry bulges with examples of IT reorgs gone wrong. At the Centre for Advancing Business Through Information Technology, we're examining the structural pathologies that get in the way of IT reorganizations being successful. The biggest reason IT restructurings fail is that they don't address the entire technology life cycle. Full-circle IT involves the following nine critical steps:

1. Conceiving an opportunity: What do we want technology to do for us?

2. Contextualizing IT opportunities: Examine IT projects in the context of organizational mission and resources and compare them against other projects.

3. Simulating: What will our workplace be like when the project is done? How will workplace behaviours change?

4. Choosing: The process whereby executives allocate IT resources.

5. Designing: The blueprint of what the system will deliver and how the system will work.

6. Building: Moving from drawing board to desktop.

7. Deploying: Getting the technology into the workplace.

8. Operating/maintaining: Making sure it works.

9. Retiring: Making sure that technology that's no longer relevant or no longer optimal is removed.