Every CIO wants to innovate for the business. But how do you actually do it? Delphi Group Founder and President Thomas Koulopoulos offers some tips.
CIOs seeking business innovation have a friend in Thomas Koulopoulos. For the past 25 years, he has provided insights on the direction and evolution of business and technology. Koulopoulos is the Founder and President of global management and advisory firm Delphi Group; the author of eight books, including Cloud Surfing (Bibliomotion, May 2012), The Innovation Zone (Nicholas Brealey, 2011) and Smartsourcing (Platinum, 2006); and the leader of an international master class on innovation. To learn more about IT innovation for the business, contributing editor Bob Violino spoke recently with Koulopoulos.
Why is IT innovation for the business so important?
Innovation is fundamentally a relative metric of how well you’re able to compete based on your ability to shape a market. If we look at the companies that are most often held up as icons of innovation — be it Apple, Google, P&G or GE — they all share the ability to not only understand their current customers exceptionally well, but also lead their customers and the marketplace at large to new products or services the market did not know it needed.
The key is to create a bond of trust with the marketplace that allows you to conduct regular experiments with new ideas. For example, when Apple introduced the first iPad, few of us really knew what to do with it. For the first year after its introduction, I would ask audiences what they thought the killer app was for the iPad; the consistent response was Angry Birds. We were embracing a technology, and a rather expensive one, with the belief that the value would unveil itself to us. Indeed, it did, but not overnight. This level of trust is the hallmark of a great innovator.
If you apply that same thinking to IT, there’s a striking parallel. Innovative IT organizations lead their companies to both technologies and business models that the businesses would not know to ask for, and for which they may not see immediate value. For instance, moving data and applications to the cloud.
Is there any downside to being innovative?
When it comes to investing in any sort of innovative competitive advantage, there is risk and concern. IT organizations should mitigate risk by developing a similar bond of trust within the organization. If they don’t accomplish this, IT is marginalized, since it is always lagging in its ability to help differentiate the organization, and the organization suffers, since IT is increasingly the basis for differentiation.
Can innovation be learned? If so, what can CIOs and other IT professionals do to be more innovative?
We can all learn to be more innovative. But learning to be more innovative should not be confused with learning to be more creative. Creativity is often touted as the next great area of competency. The fact is, I’ve yet to encounter an even moderately successful organization that lacks an abundance of ideas. So the challenge is not being creative. Rather, it is defining a sustainable process for surfacing, evaluating and executing on these ideas. That’s a process that can be enabled by technology. And more importantly, it’s a process that must be endorsed and embraced by the organization.
So how can CIOs foster a culture of innovation within their IT organizations?
Within any organization that has achieved a culture of innovation, two things are consistently obvious. First, the organization goes to great lengths to encourage experimentation, and it accepts the increased risk of failure as part of that experimentation. This does not mean that failure is encouraged; only that it is accepted and not penalized. I recall one CEO of a multibillion-dollar business who, after the launch of a lengthy innovation initiative, told his senior executives, “As you innovate, keep in mind that while our business has a limited upside, it has an unlimited downside.” You can imagine how eager the executives were to go off and innovate after that pep talk!
The second thing you always find in an innovative culture is a clearly defined process by which ideas are evaluated quickly, fairly and transparently. We are all very attached to our ideas. After all, they are our ideas. So if you do not go to extremes to convince people that their ideas will be treated fairly and not be co-opted or otherwise absconded with, they will simply not hand them over. In my book, The Innovation Zone, I wrote about one of the most successful innovation programs in place at Partners HealthCare in Boston, which generates nearly half a billion dollars yearly in new innovations. The biggest challenge this program faced was convincing doctors, clinicians and researchers that if they brought a new idea to the table, the idea would get a fair and competent evaluation.
How can CIOs more effectively coordinate innovation with their CEOs, CFOs and other business-side colleagues?
CIOs actually have a distinct advantage over almost all of their C-level counterparts: They get to see the entirety of the organization’s capabilities, processes and challenges. IT is essential to the success of every aspect of an organization. This gives the CIO a unique, horizontal view across all silos. Now, that does not mean that a CIO can single-handedly cause a business to change. Great CIOs are adept leaders who can bring unique insight to their C-level counterparts and can act as catalysts for change. But again, this can happen only if they have developed the trust needed to lead the organization.
Aside from this issue of trust, what are the biggest barriers to IT innovation? And how can CIOs get around them?
IT-specific innovation is most often stifled by the pressure to cut IT costs. This is a fact of life in virtually every company I work with. It’s not cyclical cost-cutting due to the state of the economy. Instead, companies simply accept that sourcing and cloud-based alternatives should provide the means by which to do this.
But do any companies stand out as being particularly innovative, from a technology standpoint, and why? We always hear about the poster children of the current generation, such as Google, Amazon and Facebook. But while these companies clearly use technology to build new business models, many more businesses are making great advances in the customer experience and driving their brands to new heights through technology innovation.
For example, fashion retailer Burberry has created a positive customer experience across its entire organization that allows customers to maintain a high-quality experience online, no matter what device they are using. Clothing retailer Lands’ End has developed technology that lets customers create personal avatars that can be used to define their body, and then lets them purchase custom-tailored clothing for a small premium. And General Motors has substantially altered the driver experience with its OnStar in-vehicle security, communications and diagnostics system — in the process creating one of the most powerful automotive brands.
How can CIOs use cloud computing, social media and mobile devices to innovate for the business?
CIOs need to focus on three areas. First, educating the organization as to the true risks of each of these technologies. We tend to measure risk against an illusory metric of what is currently in place. For example, we fear security in the cloud, yet at Los Angeles International Airport alone, some 1,200 laptops are lost or stolen every week. Where is the security in that?
Second, CIOs need to help the organization understand that controlling all three of these technologies is like trying to control their employees’ diets. People will find ways to get around any controls that IT puts in place, simply to get their jobs done. So CIOs need to keep pace with proliferation, rather than trying to stem it.
Third, CIOs should balance tenured and capable operational staff with young, green, uninhibited minds. The behavioral shifts inherent in these new technologies cannot be underestimated. To understand this, you must look through eyes that are untainted by what has been.
"We are at the tail end of an era that has focused almost entirely on the innovation of products and services, and we are at the beginning of a new era that focuses on the innovation of what I like to call ‘behavioral business models."
"The greatest shift in the way we view innovation will be that the innovation surrounding behavior will need to be as continuous a process as the innovation of products has been over the last hundred years."
SOURCE: Cloud Surfing, by Thomas M. Koulopoulos (Bibliomotion, 2012)
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