Tuesday, February 5, 2019

The CIO as “Chief Innovation Officer”: Manage IT-Driven Innovation as a Cautionary Tale

Innovation is a cautionary tale which has to be managed via well-aligning talented people, robust but not overly rigid processes, and the latest technology tools.

Innovation is about transforming novel ideas to achieve their business value. Statistically, innovation has a very low success rate, most innovation management initiatives are not successful and are incredibly wasteful. Innovation fails because there are too many disconnects that occur between the birth of a vision or concept and the process of turning it into a reality. Thus, innovation as a management process needs to be monitored and fine-tuned for making continuous improvement. The CIO as “Chief Innovation Officer” - how to manage IT-driven innovation as a cautionary tale?

A dynamic innovation path brings about variability relating to cost and budget models: Although innovation is the light every organization is pursuing; in reality, most traditional IT organizations spend about two-thirds of their total IT budget to keep the lights on only. Thus, an essential question for IT leaders is whether their IT budgeting matches the level of IT-driven innovation they expect. Are they accepting risks for the potential reward? Can they manage a balanced innovation portfolio which includes all different flavors of innovation? Did you sacrifice the long-term viability of the innovation portfolio for short-term rewards only? A dynamic innovation path brings about variability relating to cost and budget models. It's important to build an innovation governance model that’s participative and proactive. For every need-driven and customer-centric innovation initiative, work closely with clients to articulate their important needs; define the most compelling and novel approach to addressing their needs; analyze the benefits per costs of that approach, and quantify why the chosen approach is better than the competition and alternatives. Take the four-step innovation scenario - needs, approach, benefit per costs, and helps organizations manage innovation in a systematic way to improve its success rate.

Resilience is the critical trait to be innovative and an indicative of a state of interdependence that has desirable characteristics such as self-organizing and self-regulating: The fast growth information and the disruptive nature of technology bring abundant opportunities to innovate business, as well as unprecedented risks to the business’s survival. Therefore, innovation is not just a restless adventure, but also a cautionary tale. IT leaders should look at innovation from the perspective of developing business-wide innovation competencies. It’s a natural evolution as most innovation initiatives involve IT, IT-driven innovation management must get a feeler of the business view and improve the strategic responsiveness of the business. Make the innovation process as visible, company-wide, as possible, but not too rigid. Encourage self-management so that the innovation team has full authority on the practices, processes, tools or methodologies they would like to experiment and build innovative products or services to delight customers. The innovation team has all complementary skills from idea generation to idea implementation, make the right architectural and design decisions; present the strong self-organizing and self-regulating characteristics.

Innovation by its inherent nature comes with a risk. The failure is of crucial importance in the process of achieving innovation: The risk is part of innovation, but you can manage parts of these risks. IT organizations that have their own house in order and have mature risk management can move on to greater, more strategic business needs and improve the innovation success rate. Managing IT-driven innovation as a cautionary tale starts at the mindset level. The successful thinking about risk leads to survival by mitigating risks, and the accumulation of enough resources to thrive by capturing opportunities in it and adapting to the uncertainty and changes. It’s the progressive movement from risk mitigation to risk management to risk intelligence. A good innovation governance standard can provide a common corporate "language" as well as work instructions. In other words, proper standards, appropriate business, and user cases, etc., may not let every idea through, but it will certainly bring the ones forward that makes sense. Technically, the primary focus of the risk management would be to identify and control those risks that can be addressed; financing, market understanding, competitor analysis, identifying the space of opportunity, and defining the scalability of the innovative products or services.

For many companies, innovation is still serendipitous. There are various reasons to cause innovation failure. Fail early and fail forward. Innovation is a cautionary tale which has to be managed via well-aligning talented people, robust but not overly rigid processes, and the latest technology tools from the discovery of a problem or new idea, designing a prototype solution to the ultimate delivery of a commercially astute outcome. Like any business initiative, you should invest wisely and spend to make a return.


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