Thursday, June 30, 2016

Three Pitfalls in Running a Differentiated Digital IT

IT needs to become more differentiated, integrated, and aware of the organization as a whole.

In the static industrial environment, many IT organizations only focus on the commodity level of services to “keep the lights on.” However, today’s digital business environment is unprecedentedly dynamic, complex and uncertain, the differentiation provided by innovative technology allows companies to reach the "long-tail" customer that previously was impossible or uneconomic. And technologies can push you out of business if you are not agile enough to change your business model or adapt to change timely. Either being different or being irrelevant, what are the pitfalls in running a differentiated digital IT?

Lack of transformative IT leadership: Contemporary IT leaders are not just tactical technology managers, they are business visionaries and strategists, innovators and change agents. To run a differentiated digital IT, CIOs need to be in a continuous learning mode, and discover the new way to solve the old problems or emergent challenges. The CIO must be concerned as to whether the operational ecosystem will function as expected. CIOs also need to become Chief Innovation Officers to run IT as an innovation engine; otherwise, you will become Chiefly Irrelevant Officers. What's missing in many organizations is the CIO's ability to question the business' requirements and justifications used for IT-based projects, or they lack a clear vision and step-wise strategy to drive digital transformation. To lead effectively, CIOs have to advocate for "departmental immersion" and other strategies to help IT become more differentiated, integrated and aware of the organization as a whole. IT needs to be proactive, not reactive. Fortunately, there's a fundamental shift happening with the emergence of converging digital technologies that impact the business through cross-departmental collaboration. When CIOs realize they need more visibility, communication, and better tools to empower that to improve organizational maturity, the IT organization becomes a key differentiator to help the business build a set of unique capabilities to compete for the future.

Excessive IT complexity limits innovation and the enlarges gaps between IT and business: The pitfalls to run a differentiated IT is also due to silo thinking, analysis paralysis, legacy technologies, lack of business/IT understanding, not leveraging the collective brainpower of strategic vendor partnerships, lack of in-depth understanding the business capabilities or resources, lack of business/IT understanding and lack of outside-in customer-centric approaches as well. To run a differentiated digital IT, forward-looking organizations have to empower IT to become the change department of the business, encourage IT and business to try out new ideas, learn from what is working and what doesn't, and improve deliverables in a continuous mode. The bottom-line driven IT thinking cannot move fast enough in the age of the digitalization. Solely focus on quantifiable benefits or short-term result, aside from treating innovation initiatives like typical IT projects that are constrained by quick ROI, will also stifle radical innovation to drive business growth. A differentiated IT, on the other hand, has much more of an opportunity to enable incremental top-line and bottom-line value across the business, not just within IT, but cross-organizational scope.

Lack of open culture in most organizations: As IT is increasingly supportive of the competitive position and the business, in general, careful consideration must be made about which knowledge or skills have to be secured. Mis-judgement in this regard will hamper the long-term ability of the IT department to independently support strategic initiatives from the business. Many of the innovation management challenges are not exclusive to IT yet the symptoms are often more visible in IT due to the fact that IT work touches, serve, and supports virtually every aspect of the enterprise. These challenges are not easily solved and can not be addressed through the use of a tactical project management approach. Hence, it is also critical to build an open culture and a flexible structure to eliminate those innovation pitfalls. From innovation management perspective, to enforce a culture of creativity, the innovative leadership team should well mix the innovator personas: movers and shakers, thought leaders, critical thinkers, experimenters, reframers, set the right tone to inspire the new thinking and encourage the new way to do things and lead enterprise-wide innovation management smoothly.

The ultimate goal to run a differentiated digital IT is to help the organization build a set of unique capabilities, and improve the whole business’s competency. The real differentiation is to create true value, look forward, not backward, avoid those pitfalls discussed above on the way, and present the high-performance results.


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