How CIO’s stoke the fires for the business engine of innovation

Innovation has become the life blood of businesses. And CIOs have a key role to play in stocking the fires for the business engine of innovation. But how should the CIO accomplish this? This was the subject of a recent #CIOChat.

How good is your organization today at nurturing innovation?

I wanted in this question to hear how vanguard CIOs feel their organizations are doing. I, also, want to hear about the criticality their businesses place on innovation. CIOs believe innovation should be baked into the strategic plan and the resulting annual goals. At the same time, they say the innovation mantel cannot just rest on the CIO shoulders. CEOs need to be actively engaged in nurturing innovation throughout the organization as well.

With this said, I heard that many organizations unfortunately do a poor job at nurturing innovation. Others do poorly at implementing innovation. And where companies are good at innovation from a physical product standpoint, they are not always good at innovating business services such as customer service, internal business processes and technology. Yet innovation in these areas is becoming more critical.

At the very same time, CIOs believe more products need to become extended by what Jeanne Ross has labeled digital offerings. It is going to be interesting to watch how legacy companies do at this type of innovation where value moves from the physical offering to digital offering. CIOs suggest that many legacy businesses will try but, unfortunately, not succeeding at adding digital products to the product portfolio.

Establishing a common definition of innovation

It is important that organizations establish a common definition for what is considered innovation. As long as it is tacit and defined differently across the enterprise, it is hard to succeed including launching innovation into what Geoffrey Moore calls the Transformation Zone. CIOs stress importantly that innovation is a very different thing than be an early adopter for new products.

The overarching goal of innovation needs to be about providing customers with exceptional value and for this reason, product innovation needs to permeate throughout the organization including roles within every department.

Organizations that succeed at innovation start by establishing a trial and error culture. Failures should be expected along the journey. The goal is to fail fast. And importantly, innovation can’t occur if you expect perfection and don’t tolerate failure. When Sony was an innovator, three of their executives had dinner with me. I have never forgotten what they told me about Sony innovation. They said they never judge a product team until after the second product release. The opportunity after a first release, they said, is to perfect the team’s understanding of customer requirements.

Clearly, some experiments will yield things that shouldn’t go forward. CIOs, like the Sony Executives, say in this case, you shouldn’t make the team own the failure of an experiment. Obviously, wherever possible there should be study of the market and where something has been tried before an understanding what has been previously missed. This includes what the original innovators didn’t understand the market. A great example is the software collaboration space. There have been many well-funded flame outs in Silicon Valley. Yet Slack has figured out something that the others missed.

What things can CIOs do build a community of innovators and change agents?

Some CIOs considered this a tough question. They asserted that some people are wired for innovation and others are not. Clearly, as well, there are people that are wired as systems thinkers that see around corners while others break systems into pieces. Regardless, it is important to build a culture where it is safe to try new things. This kind of culture does looks to maximize learning. Leaders—especially vanguard CIOs—need to assist innovators by identifying opportunities to plant seeds and facilitating pilot programs for nurture those seedlings and encourage even more people to innovate.

Innovation, at its core, is a mindset. As such, it’s not necessarily about operationalizing something new or disruptive. The improved mouse trap is not designed as a product but rather as a result of a different way of thinking. However, it is important to realize that innovation stalls when roadblocks are put in place–like we considered this before. At the same time, it is critical to avoid Kodak moments where the middle of the company fails to join the innovation parade. Clearly when the edges move, and the middle chooses not to, progress cannot be made. In this case, you get what CIOs call an innovation ice flow.

With innovation, CIOs suggest, it is important to be strategic about innovation efforts that move the organization forward. At the same time, it is good to put guiderails for high risk innovations. It is important as well to make sure that first time innovators are heard when they have good questions. This can include guidance on how to cut through the signal/noise. Or how do you test and use a POC in market relevant timescale? In Jeanne Ross’ new book, she suggests that “although no company has unlimited capacity for experiments, conducting more experiments leads to more learning” (“Design for Digital,” Jeanne Ross, page 31).

Clearly, organizations can decide to be innovative, offer innovation classes and teach people innovation techniques. However, they need to ask themselves what it takes to actually enable innovation. Innovation should start from the ground up. Success requires culture and support. As well it involves enabling all voices to be heard to avoid what VCs call the avoidable mistakes. And at times, it requires pivoting to a better idea. This is why VCs prefer an A team to an A idea. In the innovation process, it is important to ensure people are heard. When this occurs, they will be more willing to speak up.

CIOs believe that IT is perfectly suited to facilitate innovation. Many business processes touch IT, and each represents a touchpoint with an opportunity for innovation. It is important to set aside time for facilitated ideation. At the same it is important for CIOs to encourage risk taking in order to help the business set up a pipeline and reservoir of innovative ideas.

Part of this can involve putting the best and brightest together. CIOs need to, as well, recruit creative build people to enable innovation. When they are in place, CIOs need to do the following:

Give people permission to fail.
Encourage experimentation.
Repeat steps 1 and 2.

By doing this, CIOs can remove the fear of failure from the extended team. The inability to innovate/change comes from the fear to fail and learn. CIOs need to quell this. And having done this, change agents will emerge like magic.

Do you see more and more business innovation coming through digital products?

CIOs feel that pockets of digital innovation are starting to take place, but they believe there is far more education needed on what is possible with digital. CIOs, also, believe there isn’t a lot of innovation left from physical products. Given this, it is important that CIOs enable digital, and remove the potential sources of friction.

With this said, CIOs shouldn’t allow themselves to become the only source of digital innovation. To work, IT organizations need to provide a foundation including collaboration tools. With these, IT organizations should enable change agents to do what ifs across a wide spectrum of areas. This along with various frameworks like IoT, Low/No code, etc. provide the ability to dramatically extend and experiment. It is amazing that GE, for example, runs hackathons three times a year to spur business innovation.

In Jeanne Ross’ book “Designed Digital”, she suggests command and control innovation no longer works.

CIOs think this is the truth. However, often they say IT organizations need to give a push to get things moving. We’re never ready, and that’s okay. Much like jobs, if you’re entirely ready for and qualified for the job, most of us wouldn’t take it because it’s not interesting or exciting.

Accountability frameworks were seen as really interesting to CIOs. One CIO shared a tree model for decision levels. First, they said know how empowered you are. When an organization has a command and control approach, CIOs believe it is hard to deliver innovation. One needs an achievements framework. As well, it is important to not be so rigid as to stifle innovation.

How often do CIOs need to drag the organization along the innovation journey?

Clearly, the CIO role today is more about change management then it is about technology. As part of this, CIOs need to work with other business leaders to foster a culture of innovation if one doesn’t already exist.

CIOs, however, stress that IT organizations need to first make sure the trains run on time. With this established, CIOs can become champions of innovation with their peers. In this case, the CIO can confidently hold the flashlight while everyone progresses down the chosen path together, in a nervously excited huddle. However, If CIOs have to drag the organization to the innovation journey, then they have built/hired the wrong organization.

One CIO suggested here that running IT is like running small to mid-size city. You need to be bold, but also provide stability and reliability. It’s a constant effort to balance everything. A problem clearly occurs when amazing innovators deliver massively impactful innovations that the rest of the organization isn’t ready for or isn’t ready to support. Sometimes a quick-win tactical approach is the best first step.

In the “Innovators Hypothesis,” Michael Schrage argues for simple, fast and frugal experimentation. CIOs, clearly, agree with this premise. It seems clear that the CIO job today is more and more as the Chief Innovation Officer. But CIOs need to facilitate this rather drag the organization along. And it seems clear that command and control innovation is dead as more and more innovation is about digital.