IT leaders are being challenged to innovate. No longer is it sufficient just to cut costs. Enterprise leadership teams are demanding increases to the top line through innovation. So how can information leaders rise to this challenge? What skills are needed to do this? Can this be done with outsource partners?
Continual cuts in 'business as usual' budgets are forcing IT organisations to re-examine their own operations and seek alternative methods of achieving the same level of quality, which can be donethrough outsourcing, cloud, or virtualisation, for example. This inevitably involves business innovation as the 'low hanging fruit' is already plucked and IT organisations have to look at their own processes. Herein lies the key to innovation, transformation and change impacting the revenue line.
You or colleagues in other business functions have probably already made obvious changes from automating current processes. These are the easiest changes to implement and justify as they do not basically change the business processes or dynamics of the enterprise. Continual automation of current processes will eventually run out of steam and it will become harder to find worthwhile projects.
Increasing the revenue line will probably require the enterprise to change its business processes, the interactions between its internal departments and also its relationship with its customers. This is much harder than implementing changes within one function and thus requires a different set of management skills. Many think that the key to innovation is to find the right ideas. I argue that this is not so. Ideas for innovation and change abound; from employees, from vendors and even from customers. The difficulty is deciding which ones to exploit and marshalling commitment from the enterprise to implement those ideas.
Organisations can be viewed as Newtonian or Darwinian. A Newtonian organisation is one that functions like a well-oiled machine where individual parts interact in fixed ways. In contrast a Darwin organisation is one where the individual parts interact in flexible ways to adapt to the needs of the environment. An oil refinery or a power station would tend to be Newtonian where roles, processes and structures are fixed. A team on a consulting or creative project is likely to be Darwinian as much flexibility is required from team members to deliver.
Newtonian organisations tend to be power hierarchies organised in functional silos. Innovation and change in a Newton organisation is difficult because the culture, processes and power dynamics have been set up to preserve the status quo and its very nature is to resist change. Most of us are 'hard-wired' to think of organisations as Newtonian. We expect the boss to make all the calls. We work to a job specification. We expect the world of work to be controlled through policies and authorisations. We tend to think department, organisation and customer in that order.
Business innovation and change in Newtonian organisations require permission from the boss and acquiescence from other functional silo leaders. In such organisations, the executive team tends to be overworked as all changes must go through this small group of leaders.
Given this is the current zeitgeist; the business' innovation leader needs different skills to the traditional functional director. In addition to the management skills of budgeting, operational/programme management and leading the IT staff, the information leader as the innovation lead must have:
- Sound understanding of the organisation's interaction with its customers and its business processes.
- Commercial orientation to assess new opportunities and identify likely business benefits.
- Political skills in creating commitment and forging consensus with colleagues.
- Superb communications and influencing skills.
- Sound understanding of the enterprise's market.
- Sound understanding of the IT supply chain and possible IT strategic partners.
As a CIO's 'budget as usual' budgets are squeezed, enterprises have outsourced much of their operational IT. While most Systems Integrators are good at running 'budget as usual', few are able to innovate effectively. Furthermore contractual complexities may block innovation from outsource partners. It is possible to have innovation partners in the IT space but this requires careful management and the selection of strategic innovation partners requiring more than the traditional tendering processes. What is required is more akin to the procurement requirements of mergers and acquisitions (M&A) - this goes way beyond the standard procedures.
There is an opportunity for those in an information leadership position to be the innovation champion within the enterprise. Few functional leaders have the scope and span of the CIO since most aspects of an organisation's business are enabled by information flows supported by IT systems. Are you ready to step up to the mark?
David Chan is Director of the Information Leadership Network at Cass Business School and leads the school's executive programme 'Leading Innovation, Transformation and Change'.