Business Innovation or IT Innovation?

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Business Innovation or IT Innovation – Video Blog Transcript

In the most recent issue of Sloan Management Review, Sloan introduced a new study they are doing along with IBM called the New Intelligent Enterprise. In the study, they surveyed 3000 executives and asked them for their top priority over the next two years. They didn’t answer cost, or growth, or risk, or agility – they said “to achieve competitive differentiation through innovation.”

Contrast that with the results from our most recent Diamond’s Digital IQ study in which we asked 750 executives to identify their CIOs primary role in innovation. Seventy-five percent asked said that the CIO focuses on internal innovations – business process or IT function innovation. Only 25% said that the CIO’s innovation role was market-facing to help develop new markets, products or customers.

So, we have an expectation gap.

As CIO, we need to understand what our organization’s expect from us from an innovation perspective. I think there’s a lot of opportunity for us to clarify the role of IT in innovation. Are we talking about enterprise innovation using technology or are we talking about IT’s innovation, improving things they have more control of like business processes or the IT function itself? Or both?

I worked with an insurance company a few years ago who was trying to solve this problem. They didn’t quite phrase it this way, but this was essentially their problem. What they did was create a very small IT innovation function that was looking to leverage and capitalize on their vendors’ innovation efforts. What were their vendors – like IBM, HP and Oracle – doing and how could they leverage it? It was more of an outreach and communication function to bring these ideas into IT.

At the same time, they created a product innovation function. It was a business function reporting to the line of business president. In this function, they organized several business people to look at product and service innovation. At first, they didn’t quite understand what IT or information needs they had. Over time, they realized that they needed IT’s help. So, they reached out to the CTO to get the right innovative thinkers from IT who could cover the technology and information dimensions of business functions and products.

So, I think we need to think about what the role of IT innovation is – or maybe I should say IT’s role in innovation. Is it IT as an innovative capability for business innovation? Or, is IT’s innovation role to help IT get better?

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  • From Tim Pacielo on the LinkedIn Global Consulting Forum:

    The first question we need to ask is the company a technology company that provides a product or service or are they a manufacturer or services provider that uses technology to enable the business. If they are a technology focused company the CIO needs to focus on leveraging new technology solutions to drive revenue, for example working with the marketing department to show how CRM and customer targeting can increase sales without increasing costs. If the CIO works for a company that is using technology to support the business processes then he/she is very limited in what they can achieve as the business perceives IT as a cost not a benefit. In this situation the best they can do is focus on cost savings and reduction by introducing more efficient technology solutions with a well developed business benefits case.

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  • Thanks Chris for sharing your experience. I found the insurance company case quiet interesting. It shows a perfect example of the necessity to cross over silo functions to capture value from innovation. I would be curious to know if there has been any tangible benefits from the partnering with HP and IBM, and why according to you this benefits occurred or not?

    Thanks again for this post.

    Yannick know as well as Fibol

  • Mike Stull

    I think overall the bigger question or issue is how to find and diffuse innovations across a large enterprise.  That’s where inculcating a culture of innovation comes from since there are always, or almost always pockets of innovation within business units.  Once that starts, the culture side of things catches up with a little help.

  • Mike Stull

    I think overall the bigger question or issue is how to find and diffuse innovations across a large enterprise.  That’s where inculcating a culture of innovation comes from since there are always, or almost always pockets of innovation within business units.  Once that starts, the culture side of things catches up with a little help.

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