Monday, August 3, 2015

CIO as "Chief Innovation Officer": Three Aspects of IT Innovation

IT leaders are in the unique position to orchestrate business innovation symphony.

Most of forward-thinking IT organizations are experiencing the digital shift from ‘built to last’ to ‘design to change’; from a back-office support function to a value creator and innovation engine. But how to manage such a digital transformation more seamlessly, what is the primary role of the CIO in harnessing IT innovation and building IT competency and maturity?

IT leaders are in the unique position to orchestrate business innovation symphony: IT leaders need to identify the issues associated with innovation in an enterprise and actually have developed a unique model and platform for open innovation. The challenge is, of course, with most organizations, there's a relentless focus on reducing operational expenses and for services companies, increasing efficiency and utilization. This draws down the availability of resources that can engage with the type of innovation pursuit. The big changes for many large companies are that they are too busy working on the short or medium term goals. Of course, they know innovation is important, but they simply don't know what to do about it, so it's easier to focus on what they already know how to do. Companies which have a great success on their original strategy have more difficulties in changing their path, especially those open capital companies with shareholders asking for more and more dividends for the next quarter. Nowadays, technology is often the innovation disruptive force, therefore, IT leaders are often at the right position to oversight business processes, and identify the critical business issues by working closely with a business partner from a long-term perspective, and leverage technology to manage innovation across the enterprise boundary.

IT leaders need to manage innovation portfolio including both incremental innovation and disruptive innovation in a systematic way. Unfortunately, in most of the organizations, innovation is still a serendipity. An enterprise that depends on doing something, again and again, engaging various teams and groups, have less appetite for change. Incremental innovation can be tolerated to some extent, but disruptive innovation is almost impossible unless the company is going through a crisis. Even in the case of a crisis, most of the time, change of the leadership is required to accept disruptive innovation. Bottom line thinking is one of the great tragedies of modern corporations. The true value is hard to derive from support services since measuring productivity can be elusive and difficult to quantify. The channels of communication are further muddied because of the language barrier associated with IT. Hence, you need CIOs that can translate business-speak and tech-speak fluently. Information now is the lifeblood of any organization, by conveying the vision and communicating effectively, IT leaders can work more collaboratively with business leaders to solve business problems via innovation, and manage innovation portfolio in more systematic way. Leading only with operational considerations is not the way forward. IT success needs to be accomplished by working with business partners to leverage opportunities for changing how the business competes in the marketplace.

Failure is inevitable for innovation, the fact is “fail fast and fail forward.” That said, sometimes more is learned and gained from failing. The key is to fail fast. Opening up a spirit and opportunity for people to stretch and try new things will, in the end, generate many more returns than were ever thought possible! In addition, The business expects ROI. It is true that the majority of IT organizations still cannot articulate their economic value to the board or shareholders in a language they understand and performance metrics will not solve the problem. Costs are part of the solution, but they need to be understood in terms of usage or volume patterns and they need to be distributed across often very complex revenue models, that are in a constant state of flux. There is also a bit of a political battle that goes on where IT claims its proportion of revenue value, even when far more precise mappings exist between costs and revenue. Once it plays that game IT matures beyond being a cost center and acts more like a business partner, or business within a business, because its value proposition can be backed up with something approaching empirical evidence as opposed to gut instinct.

An innovative and value-driven IT needs to understand stakeholders’ expectations and propose an innovation solution portfolio that corresponds to both demand and cost drivers with a focus on business priority, IT develops the professional competencies needed for successful business solution delivery, IT captures organizational knowledge to continuously improve performance, and harness innovation, ultimately improve the organizational level efficiency, effectiveness, agility, and maturity.


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