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Digital Innovation and the CIO

Digital Innovation and the CIO

Business leaders anticipate dramatic change in all aspects of their operations over the next three years, according to recent research from Harvard BusinessReview Analytic Services (you can download a copy of the report I authored, Business Transformation and the CIO Role, at the HBR website). Some companies are accelerating this change by committing to IT-enabled business innovation as a core strategy. To understand just how massive the changes will be, consider this: 70 percent of these “innovation accelerators" (about a third of respondents) expect the ways in which they engage with customers to be transformed in three years, rating it eight or higher on a 10-point change scale. That's right: 70 percent. Transformed. Sixty-four percent anticipate that same degree of change in their products and services, their business models and the ways employees work.

As we all know, organizational change isn't easy, and it doesn't happen quickly. So what sets these Innovation Accelerators apart? We identified some common characteristics.

  1. Their commitment to digital innovation starts at the top, with the CEO. That's because this is not IT innovation we're talking about, but IT-infused business innovation. It goes to the very heart of the issues that matter most to business leaders today. If you don't have a CEO who believes in the value of IT, it will be tough to get much done.
  2. These companies' CIOs are significantly more likely to spend their time on strategic activities – developing and refining business strategy, driving business innovation and identifying opportunities for competitive differentiation, for example. They have worked hard over the past few years to reposition IT from a group that focuses on supporting operations to one that drives value and actively contributes to the corporate innovation agenda. But make no mistake, this is heavy lifting – simplifying IT infrastructures, shifting out non-value-adding work to external providers, redefining and building new skills and capabilities, resetting expectations – and most CIOs still have a ways to go in this regard.
  3. Innovation accelerators take a structured, managed approach to innovation – 79 percent said so – but they value speed over perfection and cut through bureaucracy. They start with a big funnel, using internal and external crowdsourcing to bring in new ideas. They use social tools to give executives a clear line of sight to the edges of the business, hearing from field employees and even customers themselves. And they are way more likely than others to use cross-functional innovation boards to evaluate and prioritize ideas. These are not ivory-tower, isolated groups; they're made up of stakeholders from marketing, operations, IT and other parts of the business who will look at a challenge or opportunity from multiple perspectives and together figure out how best to operationalize a solution.
  4. They value diversity of thought and experience. This manifests in a number of ways, including job rotations into and out of IT and co-locating IT staff with marketing “creatives" and product developers. Some companies bring together cross-functional teams for scrum-like “innovation challenges" – concentrated short-burst efforts to address a specific opportunity or problem quickly.

So here's the “but" (you knew it was coming). The need for collaboration and higher levels of engagement make communication skills critical. But not even Innovation Accelerators give their IT departments high marks when it comes to communication, with only 38 percent rating their IT colleagues highly in this area (and of course the rest scored even lower). This should be a major concern to CIOs. I've given a lot of thought to this problem, which so often gets dismissed as some inherent quality of introverted geekiness in people who pursue careers in IT. Nonsense. It's actually quite a complex issue, with communication being a component of building credibility, relevance and trust. But that's a topic for another day.

Innovation is not just about being creative and developing new ideas; it's about being able to roll them out and evaluate them quickly against multi-dimensional criteria, then either adopt or discard them and move on to the next thing. This is a team sport, but in too many organizations, the teams are function or LOB centric, pitted against each other rather than working together to out-innovate the competition. Building that capability should be a priority for any organization that hopes to survive the shift to a digital economy.

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