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Innovate or Perish

Innovate or Perish

Business must innovate to compete, but IT has yet to realize .

There's no escaping it. The pendulum of business sentiment is swinging in a different direction. Research from organizations as diverse as The Financial Times, the Conference Board and McKinsey all report the same thing: CEOs around the world identify that their major challenge as sustaining top line growth and increasing profits. Gone, it seems, are the days when the executive board thought they could cost cut themselves to greatness. That avenue to improve the bottom line is nearly exhausted. Now there is recognition that if the business is to compete it must innovate.

Yet I still get the impression that few in IT have signed off on this objective. Very few CIOs cite their priorities as helping the business grow or aiding the organization to innovate. It seems the industry in which we work still has a heavy operational focus about it. The danger is that if we don't wake up to the changing times, IT will soon be seen by the business as an irrelevance.

I'm not saying that the operational work in areas like ITIL, security, benchmarking and server consolidation hasn't been useful. It has. It has moved IT departments closer to operational best practice. However, it is not enough. CIOs can't justify their existence because they keep the wheels running. They need to show how IT can add value.

This isn't an easy task. It means CIOs have to be assertive. The days when the value of IT was a given are long gone. Instead IT has to fight for its place at the table against those who think the value and service it provides could as easily be obtained by offshoring or outsourcing. If IT is passive and acquiescent in this debate it will lose. I believe the way to win is to be proactive in coming up with solutions that can provide competitive advantage to the business.

A good place to start is to look at those workers who are the knowledge workers in the organization. A recent thought-provoking article from McKinsey distinguished between three types of workers; transformational, transactional and tacit. Transformational workers are like factory workers who take something and turn it into something else. They create little value-add and the trend in business is to move this work to low-cost labour countries like China or Mexico. Transactional workers undertake repetitive tasks. Business looks to replace this work with automation such as ATMs in banks and IVR systems in offices. Tacit workers, however, draw on past experiences to address new and unique situations. Examples of such work include nurses, retail buyers or salespeople. McKinsey argues that these are the value creators in a business.

This is where I believe IT innovation is possible. When you look at the challenges these people face, they all have to do with knowledge sharing. The question is: how can organizations leverage past experiences to respond quickly and avoid reinventing the wheel? This requires the development of knowledge repositories that collect data from different parts of the business and help integrate workers who face common problems.

However, don't expect the business to immediately concur. First, CIOs need to get the agreement of the business that innovation is what they want. Then they need to sell what they can deliver. However, it is important to remember that this is not a request for millions of dollars for a big bang project. Instead, what you want is some scope within the IT budget that allows the opportunity to investigate potential solutions that empower knowledge workers.

Yes, there will be some risk because the outcomes are not certain. Nevertheless, if the request is small - for example, 5-10 percent of the IT budget to investigate potential innovation - then the exposure is small. Yet such projects could show the business that IT is in tune with their thinking and awaken them to the real value that IT can bring to the organization.

Peter Hind is a freelance consultant and commentator with nearly 25 years experience in the IT industry. He is co-author of The IT Manager's Survival Guide and ran the InTEP IS executive gatherings in Australia for over 10 years

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