The acronym for chief innovation officer and chief information officer may be the same, but CIOs have strong feelings about how far their role should involve innovation, what form it should take and how their businesses ought to embrace it.
Ben Wishart, IT director at Whitbread believes CIOs should be innovative but there are drawbacks. “Sometimes a CIO has to take personal risks and keep on about an innovative idea that will deliver great business results. It takes persistence to get it on to the agenda – sometimes you can miss opportunities or read the business situation wrong,” he says.
Defining innovation is tricky. It is not just about automating a business process. Ian Dunsire, director of Harley Business Systems says automating processes is not the same thing as business innovation. “Process innovation is different. Technology can change the process or automate it, but that isn’t the same as innovation.”
There are some instances when what looked like a basic process of automation has had a huge innovative effect on a business.
“Sometimes technical advancements take the business forward and things like using an Excel spreadsheet have been some of the most successful in terms of complete business change,” he says. “Measuring business performance using IT has also had a profound effect on some businesses – you can see what is happening and apply a corrective point through innovative use of technology.”
Wishart agrees: “Innovation should be a way of doing something completely differently. It is a step change and logical way of doing something, brought about by technology, while automation is doing the same steps you have always done but automating them,” he says. “However, the innovative use of technology can also be the first time you have used a technology to automate a process. Innovation is a remarkably difficult thing to do – it doesn’t happen every day.”
But CIOs need to think like business innovators. Forrester Research believes that 2006 will see the wholesale change in IT organisations from ‘keeping the lights on to delivering innovation’. “Leading IT organisations in 2006 will work to foster a culture of innovation and a role with business units that extends beyond the ‘necessary but not sufficient’ process innovation to ideas for new products and services,”
according to Forrester.
Martha Bennett, vice-president and research director, financial services Europe at Forrester Research says: “In terms of the CIOs we deal with, as analysts we see a bit of everything – the very innovative to the not at all. We also see some who want to be innovative but are not allowed.”
Fergie Williams, former CIO of HSBC thinks the CIO in the future will have to be a bit of a Jekyll and Hyde character. “The role will vary but the core responsibility is to keep the business running. Marketing and communicating is important but without transactions the business would be dead. IT should help to minimise change but it is also the primary agent of change.
“I think the CIO role could split into two. The responsibilities the CIO has are wider than just the IT process. They know the about people and changing technology, but they also know the whole of the organisation, like the FD and the MD. The traditional CIO role could even be subsumed by them.”
There are still those CIOs who look at technology in too much isolation, according to Bennett. “To be able to innovate you have to have a very good, very close relationship with the business. Change is required but you have to know the success criteria and have the right factors in place. Ideally innovation will not come from one corner of the business or another, but the staff will come up with ideas together and consistently put them into practise.”
"Everyone in an organisation has a duty to be innovative"
John Lister, CIO, BUPA
John Lister, CIO of BUPA also thinks business innovation should be the responsibility of everyone. “I suspect that if someone is responsible for innovation they should be able to notice and nurture it anywhere in the business, not just from IT. I think my CEO would expect me to be making sure that technical innovation is there as a matter of course,” he says. “It is a bit pompous to think of the CIO as the chief innovation officer. Ideas can come from anywhere and everyone in an organisation has a duty to be innovative, whether on a big or small scale. I would hope everyone feels they can do it in their own area.”
Forrester’s Bennett thinks a joint effort is essential. “One of the things that is fundamental is that IT must not run off on its own or be forced into the other extreme where the technology is not really suitable for what the business wants. The IT director is often in a very uncomfortable position,” she comments. So IT directors should not just go on the latest technology trail. “That would be the tail wagging the dog,” says Dunsire. “They must be focused on the business and totally engage with all their colleagues in the company, so that they can really understand and then harness the technology. They need to look at really creative ways of using IT.”
Arguing for innovation
David Burden, CIO at the Royal Mail believes fostering business innovation is a vital function for CIOs. “My personal view is that the most important function of a CIO is to help and facilitate business innovation. Keeping the shop running is the entry price for CIOs. The difficult thing is having enough time to spend on innovation, rather than the ‘price of entry’ stuff,” he says.
“The first principal of innovation is that business is enabled by technology, or by the introduction of technology into the market – and that changes the way people want to do business.”
He believes the CIO has two distinct roles: to make sure the business can take advantage of the technology available; and to make sensible use of new technologies.
“The CIO has to make sure that the company is aware of what is going on outside of its walls and to use technology to get ahead of the game. Some companies are too reactive and leave the adoption of new technologies too late,” he says. “Some of the things we do now would have been unthinkable even five years ago.”
The Royal Mail’s use of handheld PDAs for its Parcelforce service is a good example of technology leading to business innovation, according to Burden. “Couriers can deliver on the fly, get signatures and by coupling it on to the web, customers can track and trace their parcels,” says Burden.
“Mobile technologies have given us the ability to do things that just weren’t possible before and do it cost effectively.” Burden thinks inexperienced CIOs can find it difficult to separate technology hype from reality. “There is a risk when reacting to sales people or hype that you may have misjudged the maturity of the technology,” he says.
Introducing new technologies sensibly to the business is also very important, says Burden. “There is a huge difference between technology for personal and corporate use. The difference between going to Dixons and setting up something at home as opposed to installing something that has to work 99.9 per cent of the time for 6,000 people is a very different thing,” he says. “CIOs have a major role in making sure that things are done properly and sensibly when business identifies a technology it wants. When this isn’t done effectively the IT organisation will have to eventually sort it out. However there is a growing awareness of this. A highly reliable service is essential – nothing puts people off like a website that is slow, unreliable or unsafe.”
There are additional elements of innovation a CIO and the IT department can bring to the business, he believes. “IT people are one of the few groups in a business who work across the whole organisation. They cut across silos and IT pulls it all together. IT people are interested in getting innovations to work and really enjoy doing it. CIOs should encourage them, get support where necessary and direct them.”
He concludes: “Innovation works well when the business is leading the technology – so that a clear business need really drives it. Sometimes technologies do lead the business, but technology shouldn’t try to push business innovation – that is like trying to push on a rope.”
The trying game
Creativity is key to innovation but it is often difficult to get the right balance of creativity in an IT department, according to Steve Tiley, head of information services at McDonald’s restaurants. “In the IT department we encourage day-to-day innovation. I look carefully at who we are hiring, getting creative people in IT is not that easy. They are there to do the work and the natural tendency for many in IT is not to move out of the box, so it can be a bit stifled,” he says.
“We use profiling to fit people to different roles, some are more creative, some are finishers, or shapers (leaders), so we see how they fit together into teams. You don’t want like-minded people together as they don’t complement each other well. Out of a team of 10 people I would like at least two to three creative ones, the ideal for me is four.”
There is no doubt it will be a very difficult balancing act for CIOs and IT directors as Paul Coby, CIO British Airways explains. “It is difficult to encourage innovation in a company about to go bust,” he says, referring to the state of BA when he first took over the CIO role. “But we have tried to continue to innovate, both in the operational and organisational arenas, in terms of true technological innovation. BA has a very small unit that works on IT innovation, which comes up with totally different uses for emerging technologies.
“It is really important to have innovation within a company, because of the business advantage it can offer, but also partly for the excitement and the challenges it offers. We have been concentrating on simplifying and standardising operations, but our innovation chap has been working hard too. If you can get one in five hits from truly innovative research that is really good. One we had was putting wireless capability into lounges early on. We did a good deal with BT Openzone before anyone else, and that came straight from the innovation team.”
But Coby has also encouraged innovation from an IT operation and business change stance, using technology to simplify what BA does. “You need totally mainstream innovation as well as from left field.
It is interesting and allows us to challenge the business model and makes for a cheaper, happier situation,” he says. “A lot of people in the airline are doing business change. I would love to think the change in the IT department directly affects the airline. Smart changes are being seen across the business and across connections with the business. We have a lot of very bright people.”
Coby is part of, and has support from the BA senior management team, which Bennett believes is critical to allowing the CIO to foster business innovation.
“Of course they must have total board support, because some of the most successful IT goes right across the whole company. A good example is an airline company that has a business model where it sells through travel agents, but then starts selling direct through websites. IT has changed the whole business model and this is very innovative. The Dell model − versus Compaq/HP − is another example of how technology innovation can affect the business model and have implications for the entire business.”
Wishart believes having a total understanding about how the business operates on a daily basis and how bits of technology can make a difference can lead to innovations in the business. “Sometimes new or old technology can do it for the business, and CIOs can show a CEO what a great idea it is,” he says. “The increasing availability of technology and lowering of costs for things like handheld devices can be very innovative – they are much more efficient and help people stay mobile. They use simple technology, where they have the minimum data to do their jobs, look at the information and then get on with it.”
"Sometimes new or old technology can do it for the business and CIOs can show CEOs what a great idea it is"
– Ben Wishart, IT director, Whitbread
Whitbread has about 300 people on the road with laptops and GPRS or 3G cards, and some Blackberries as well. “The costs of running a Blackberry against a laptop are hugely different, and they can change the way a business works,” says Wishart. “Simplifying lives and getting area managers into shops and delivering a lower cost at the same time is business innovation driven by the IT department.”
Kevan Moorcroft, vice-president of regional IT services, EMEA Avon agrees. “I feel business innovation enables the business. Sexy technological innovation is not in order. A lot of work is back office, developing products, planning and ensuring the right volumes, and that isn’t a sexy thing innovation-wise. We look for innovations in running an efficient business model. For example if you look at Proctor and Gamble or Unilever, they just deliver the products straight into retail. Avon does the ‘soup to nuts’ approach, handling production and delivering the product, we look for innovations there.”
Behind the scenes
McDonald’s has been going through massive changes in the last couple of years, but this has mainly been driven by customer demands. “The innovation is not necessarily happening in technical arenas,” says Tiley. “Two years ago there was a lot of pure technical innovation going on in different elements of the restaurants. We put in wi-fi and internet stations, phone top-ups, TV and music channels to encourage adult customers. But the core business is the operations side – the food. We support that.”
So the CIO has to understand the business benefits, be innovation driven and be able to communicate this throughout the organisation. A tall order indeed.
Wishart says good communications are crucial: “The communications have to be right, and you have to work together with the rest of the organisation, listening to lots of other ideas as well. If the communications are good you are half way there.”
But there is no point in having the most innovative team in town if the implications do not make it through to the rest of the business. “To disseminate innovation throughout the business could be a role for the CIO,” says BUPA’s Lister. “Yet how many CIOs exploit the information we already hold. Lots of our focus should be on that as well and the innovation shouldn’t be fixed purely on CIOs.”
BA uses a very practical method to explain technological innovations to the rest of the company. It runs ‘technology days’ annually for its staff. These are to show the rest of the company what is going on in the way of technological advances and how they might use them across the business. Half of the stands are run by different BA sectors, with suppliers running the others. “The idea is to demystify technology for staff, who can often be very frightened. It is very grounding for all of us and we have a lot of confidence in it. It gets the staff to use the technology, which helps the whole company.”
If the analysts are right and future IT management splits into distinct sections for running operations, delivering projects, and offering real business benefits, it will be up to IT directors and CIOs to decide which arena they want to operate in. Given that most CIOs like a challenge and driving change, it looks likely that innovation will become the by-word for future.