Friday, May 19, 2006
We have all heard how IT is becoming a commodity and being outsourced to areas in the world such as India. A new report out from Gartner highlights the seriousness of the problem for CIO (in this case Chief Information Officer) and recommends that how they need to focus more energy on innovation and becoming better aligned with other business teams outside of IT as sources of ideas and inspiration. I couldn't agree more.
One of the key point the report highlights is that people outside of IT's inner circle don't have any preconceived notions about its limits. Diversity is such a key ingredient in innovation. Ask the same people the same questions to solving a problem and you will end-up with the same answers. If you can tap into a diverse employee base of people who have different relationships with customers, a company's products/services and ask them the same question the results are very different, and will produce new and innovative solutions.
Gloomy predictions are ahead for any CIOs who do not take this seriously. However all is not lost, CIOs can tap into these relationships. Imaginatik Research has produced a white paper on this very topic "A new approach to idea management". This makes good reading for any CIO's and others who need to understand how they can tackle innovation and tap into this rich resource of diversity within their company.
Wednesday, May 10, 2006
It's always interesting to see how despite all the talk and bravado that so many CEOs are giving on how innovation is of "top importance" to their innovation (you only have to watch any CEO interview on CNBC, or read one of the by now hundreds of surveys written by every consulting company imaginable to see this in action) - very few CEOs are actually doing innovation.
The reason for this is several fold - but mainly various forms of Fear - especially the Fear of Change and the Fear of Risk.
For the longest time now, we , as business people, have known about the effect of change on an organization - we've even come up with entire books, divisions, and consulting practices designed to manage the effects of change. But innovation as a topic goes beyond that - for the real promise of what innovation is trying to achieve is to institutionalize regular and sustainable change.
Embracing Innovation means embracing and enforcing a commitment to be constantly changing and adapting to stay ahead of the game - and that can be a scary proposition for lesser CEOs. Not only that, but Innovation has the power to change not just what you sell and how you sell it, but also the power to change the very business itself. How hard must it be running a Forestry company that innovates itself into the cellphone business? Or how about the change from making typewriters to outsourced business services?
Not all companies are facing the same levels of change that Nokia and IBM (the two examples above) have gone through to be where they are now - but they will do. Almost every large company in existence that has been around for more than 100 years is no longer doing what they originally started off doing. Embracing innovation is more than a short term strategy for the wise CEO - it's a long term recipe to leaving a legacy.
Innovation can be a a risky exercise (especially if you don't choose your partners wisely!) that requires substantial investment and experimentation and that doesn't always guarantee the immediate payback that more risk adverse managers look for. However - as many CEOs are finding out - the risk of not innovating is far greater than any other alternative - the market needs change, the market demands change, the market rewards change.
You simply cannot deliver the ambitious growth targets that the markets demand by doing business as usual, by looking for incremental changes and mere line extensions, by hoping that innovations just rise to the top. Innovation by accident is not a strategy - it's a recipe for demise.
As the market gains speed and the pace of Innovation and change increases, the necessary complexity of change needed to gain traction in the market is also increasing (get the recent Innovation Dimensions Research Report from firstname.lastname@example.org for more). Lazy and inefficient innovators are punished by short innovation advantage times (ie the time for which any particular innovation provides a unique and substantial advantage in your competitive landscape) and the discipline and effort required by companies to enter the Innovation Arms Race gets higher.
So the question really is - can you afford to let these fears dominate your business? The longer you wait to take on the innovation challenge your company faces, the harder it will be for you to catch up to your competitors who move now.
An interesting article from Optimize's Bob Violino that looks at what potential barriers CEOs need to overcome to push the innovation agenda in their companies.
Some of the most interesting findings are from the recent IBM Consulting
survey of 765 CEOs that found out that "Without a supportive corporate culture, proper funding for investment, and a cooperative workforce, even the best plans for innovation will
The article as a whole has some very interesting insights, albeit with a bit
of a heavy technology bend on it (not surprising considering the bulk of
Optimize's readers are in IT), but the three charts provided by IBM were of
I frequently see culture continuously blamed for a lack of innovation within
a company, yet in reality culture is rarely ever the real culprit. In the
triumvate of key innovation factors (Leadership, Culture, Processes) - the
cultural differences between the top and bottom companies is not that great. I
don't know if that's a residue from the knowledge management days when everyone
was hell-bent on improving knowledge flow, increasing collaborative work
practices, and dissuading knowledge hoarding - but the simple fact of the matter
is that most companies have employees who have absolutely no problem or lack of
desire to contribute ideas to help the business. (see the chart below to see the
proof of that!) - rather the problem is almost always that they lack the
necessary processes to allow them to contribute in meaningful and effective
manners - or they lack leadership that truly encourages and supports innovation activities.
In addition to inadvertently laying to rest the "culture issue" - I
also found the above chart interesting to see the increasing importance of Open
Innovation - especially the somewhat controversial recent idea of collaborating
It was also very interesting to see an increasing number of CEOs now focusing
on Business Model Innovation - which would suggest that as innovation is
becoming more ingrained in the organisation, companies are beginning to look for
innovations that will have a longer lasting impact on the business.