Industrializing innovation 2018 global CIO survey, chapter 6

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How can CIOs create successful and ongoing digital disruption within an organization? It begins with making innovation a continuous affair, freeing IT teams to test, experiment, and show value.

Newton sits underneath an apple tree. Archimedes soaks in a bath. Einstein daydreams at his patent office desk. History is spiced with Eureka! moments when human understanding leaps forward.

Thomas Edison chose a more deliberate approach: Rather than waiting for lightning to strike, he saw innovation as a replicable, continuous process. His facility in Menlo Park, New Jersey, was the first industrial lab specifically designed to produce a continuous stream of commercially viable technology innovations built on new and emerging technologies.1

IT has to innovate or die. Technology is moving at warp speed while humans move in a more linear fashion, so innovation is key. And to innovate well, we have to think about business through a digital lens. — Sara Mathew, board member, Campbell Soup Company

Of course, the pace of technology innovation today—and its impact on business—is exponentially faster than in Edison’s industrial age. But modern businesses can learn from the spirit of his model by approaching innovation as an ongoing operation designed to learn, prioritize, experiment, and scale technologies that can transform business and society.

Section 3: Look beyond

C-suite executives often focus on the shiny side of digital: new technologies that can transform customer experiences, drive product innovation, and boost business performance. But these likely represent only the tip of the digital iceberg.

CIOs need to consider identifying and understanding what is below the surface. Core technologies serve as a foundation for a business’s digital strategy. And a deliberate, systematic approach to innovation can enable the business to proactively harness disruptive capabilities.

Awaken imagination

Many CIOs are waking up to new digital technologies’ potential impact on the enterprise. In 2016, only 17 percent of CIOs expected emerging technologies to have a major impact on their businesses within three years; that number has more than doubled to 40 percent (see figure 23). They expect to make substantial investments in artificial intelligence (AI), machine learning, Internet of Things, and robotic process automation. CIOs in digital vanguard organizations plan to pursue AI and machine learning far more aggressively than those in baseline organizations, perhaps because they have a solid foundation that allows them to increase the impact of these emerging technologies (see figure 24).

CIOs are focused on emerging technologies as a key to delivering future business impactAI, Internet of Things (IoT), and robotic process automation (RPA) are at the top of CIOs’ emerging technologies wish list

But how can CIOs help ensure that these technology bets will generate the return on investment expected by the business? And how can they stay ahead of the ever-accelerating stream of new technologies?

How to build a better lightbulb

Many organizations are pursuing innovation with a shotgun: dabbling in emerging technologies without thinking through use cases and scalability, spreading investments across multiple startups without a broad strategy, or relying too heavily on their traditional ecosystem of partners and vendors for guidance. Few—if any—have implemented a disciplined, end-to-end innovation program that generates an ongoing stream of new potential technologies and use cases with meaningful business context that can scale across the enterprise.

A formal program that brings in other parties can show real results. “Engaging constructively in a win-win way with ecosystem partners is critical and is going to continue to translate into real competitive advantages for our organization,” says Blackrock Closed-End Mutual Funds board member Catherine Lynch.

Answering the following questions can help CIOs create a deliberate, repeatable, and scalable innovation process across four dimensions:

  • Sense, scout, and scan: What’s happening? Develop a broad awareness of technology advances in the marketplace, and identify important players. Look beyond traditional industry boundaries to identify ideas and perspectives; keep an eye out for potential competition in adjacent domains. Follow current developments in grants and patents, government research, acquisitions, and venture equity.
  • Research: What’s possible? Sort out technologies that could translate into potential business opportunities. Uncover what others are doing, both within and beyond your industry. Discuss ideas—big and small—for applying these technologies to launch new offerings, enhance competitiveness, reduce cost, and/or improve efficiencies for your enterprise. Understand the viability of particular solutions in your business environment, and identify stakeholders that could sponsor an initiative.
  • Explore: What’s valuable? Develop potential business use cases. Prioritize ideas that are worth moving into the experimentation stage and build initial prototypes. If the business case fulfills expectations, you may have found a winning innovation. At this stage, strong governance is needed to weed out ideas that are out of sync with corporate/digital strategy—and to define appropriate stakeholder alignment, accountabilities, and success measures.
  • Experiment: What’s viable? Time to roll up your sleeves. Move beyond concept proving and into real-world prototypes. Rapid iteration can help teams efficiently determine what’s feasible in the real world. What challenges will need to be overcome? What’s the value proposition beyond the original conceit? What will it take to scale at an enterprise level? (See figure 25.)

Few CIOs have implemented a deliberate, end-to-end process to demonstrate the impact of technology-led innovation

Even with a solid business case and encouraging experiments, the innovation likely will need to be thoroughly tested and shown to be scalable. Some companies have established innovation centers separate from the core business and staffed with dedicated talent with incubation and scaling expertise. These centers can reduce enterprise risk by enhancing, testing, and solidifying the concept before moving the innovation into production. Others are using innovation hubs and corporate-backed venture outposts to sense, scan, research, and explore potential ideas. “We are moving to a world where we need to maximize the velocity of responding to emerging changes and trends,” says former Commonwealth Bank of Australia CIO David Whiteing. “And in this world, experiments are more important than expertise. It’s not easy to predict and make bets on emerging technologies, but iterative experimentation, a good model for interpreting market signals, and the ability to anticipate where things are going can help organizations pivot and change.”

As companies embark on building this new capability, a consistent, well-structured process can facilitate the flow of ideas and experimentation while encouraging the applicability, scalability, and alignment with business strategy. Otherwise, allowing innovation and ideas to thrive in ad hoc environments and individual business silos can lead to chaos and make prioritization, funding, and governance more challenging.

Are you prepared to make your mark?

So where do CIOs fit into this vision of deliberate technology-driven innovation?

In many ways, business leaders already hold high expectations for IT to lead the way forward. CIOs of baseline organizations report that business leaders expect IT to understand market trends (72 percent), determine business use cases (62 percent), develop prototypes (48 percent), and identify ecosystem partners and vendors (46 percent). Business expectations for digital vanguards were only slightly higher (see figure 26).

Business leaders have high expectations of IT to explore emerging technologies, particularly with regard to sensing and researching

This is where a well-prepared CIO can step up as a business partner and cocreator to inspire, envision, and rationalize digital innovation. Effective innovation leaders will likely have already done the hard work to prepare for this opportunity by:

  • Developing the personal attributes and capabilities needed to shape the future of the business;
  • Earning credibility with business peers as a technology interpreter, influencer, and visionary;
  • Transforming IT’s delivery model to be agile, responsive, and directly connected to business outcomes;
  • Attracting and developing IT talent with the intellect, interpersonal skills, cognitive flexibility, and drive required to excel in an environment of shifting business demands and an accelerating flow of new technologies; and
  • Investing in core systems that protect, support, and flex to manifest the business’s digital ambitions for years—perhaps decades—to come.

These CIOs are likely ready to initiate—and perhaps lead—the creation of a deliberate approach to bring ongoing innovation into the enterprise and marketplace. Industrializing the innovation process can help CIOs manifest their legacies as business cocreators and change instigators who create hype-free environments where IT teams can test, experiment, and demonstrate value, ultimately enabling enterprises to leverage technology to create business value. Don’t delay; others have already begun looking beyond the current digital era to manifest their CIO legacy.