CIOs are under growing pressure to innovate, with some commentators even suggesting they rebrand themselves as chief innovation officers.
While IT can undoubtedly play an important innovation role, many IT teams are going about it the wrong way.
We hear many CIOs aspire for IT to be proactive in proposing new ideas for using technology, but this aspiration misses a major shift in technology innovation.
Why the best ideas come from the business, not from IT
Business leaders and even frontline employees enjoy a couple of advantages over IT, which means chief marketing officers (CMOs) and employees are innovating by themselves.
First, it is much easier to generate innovative ideas by starting with a business problem or opportunity, rather than starting with the technology and looking for business problems to solve.
While IT may have its finger on the pulse of emerging technologies, it cannot compete with business leaders’ understanding of customers, operations and competitors.
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Second, business leaders have money. After years of effort, CIOs still struggle to shift funds from IT operations and maintenance towards innovation.
Only 7% of the average IT budget is devoted to innovation, while business leaders are spending three times as much on technology innovation outside the IT budget, CEB’s IT budget benchmark revealed.
CIOs should focus on exploiting innovative ideas
Regardless of where the ideas or funding comes from, innovations have to be developed, tested, integrated and sustained before they deliver value – many stumble along the way.
This points to IT’s real innovation role – implementing innovative ideas to increase the volume and speed of ideas that make it to market.
We see progressive CIOs taking three steps to embrace this idea exploitation role.
1. Redefine divisions of labour
While it is normally helpful for the business to take the lead in innovation, there are exceptions.
For example, IT should be involved from the start in any attempt to innovate in a core enterprise system such as enterprise resource planning (ERP).
One CIO the CEB works with has defined a set of ground rules to establish the levels of technology experimentation that business leaders can undertake autonomously.
To define where IT should take the lead or step back, his company segments business capabilities by the risk and value of making a change.
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2. Flex IT to engage at different starting points
Increasingly, other parts of a business may conduct initial technology experiments without IT’s active contribution.
The challenge is that IT’s traditional delivery processes, even when using an agile methodology, assume that IT will “begin at the beginning” and IT teams are much less comfortable getting involved later.
To make matters worse, the assistance IT provides involves so many different tasks – prototyping, integration, supplier management, at-scale delivery and so on – that CIOs cannot easily establish a dedicated innovation team or incubator.
The IT team as a whole must be ready to work in new ways. One technology company the CEB works with uses a service-based model where service managers track business-led innovations that are relevant to their services and step in to help as required.
The same model allows IT to define services to help the business implement innovative ideas, for example, for risk assessment or project management.
3. Create a new climate in IT
The entire IT team plays a role in idea exploitation, so it needs a more collaborative and flexible mentality.
A recent CEB survey, however, found that 94% of IT employees are risk-averse, siloed, or reluctant to adapt.
To counter these mentalities, CIOs must change IT’s organisational climate, ensuring that decisions related to IT performance measures, attitudes towards failure and IT team structures send the right messages about what is expected of the IT team.
For example, one media company CIO runs a failure learning campaign where IT employees are encouraged to share examples of failure. This is so they become less worried about taking risks and learn from each other when things don’t work out as planned.
With these three steps, CIOs can make an invaluable contribution to turning innovative ideas into reality. Regardless of where the idea came from, that’s where the real value lies.