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Business Innovation or IT Innovation - Video Blog Transcript

In the most recent issue of Sloan Management Review, Sloan introduced a new study they are doing along with IBM called the New Intelligent Enterprise. In the study, they surveyed 3000 executives and asked them for their top priority over the next two years. They didn’t answer cost, or growth, or risk, or agility - they said “to achieve competitive differentiation through innovation.”

Contrast that with the results from our most recent Diamond’s Digital IQ study in which we asked 750 executives to identify their CIOs primary role in innovation. Seventy-five percent asked said that the CIO focuses on internal innovations - business process or IT function innovation. Only 25% said that the CIO’s innovation role was market-facing to help develop new markets, products or customers.

So, we have an expectation gap.

As CIO, we need to understand what our organization’s expect from us from an innovation perspective. I think there’s a lot of opportunity for us to clarify the role of IT in innovation. Are we talking about enterprise innovation using technology or are we talking about IT’s innovation, improving things they have more control of like business processes or the IT function itself? Or both?

I worked with an insurance company a few years ago who was trying to solve this problem. They didn’t quite phrase it this way, but this was essentially their problem. What they did was create a very small IT innovation function that was looking to leverage and capitalize on their vendors’ innovation efforts. What were their vendors - like IBM, HP and Oracle - doing and how could they leverage it? It was more of an outreach and communication function to bring these ideas into IT.

At the same time, they created a product innovation function. It was a business function reporting to the line of business president. In this function, they organized several business people to look at product and service innovation. At first, they didn’t quite understand what IT or information needs they had. Over time, they realized that they needed IT’s help. So, they reached out to the CTO to get the right innovative thinkers from IT who could cover the technology and information dimensions of business functions and products.

So, I think we need to think about what the role of IT innovation is - or maybe I should say IT’s role in innovation. Is it IT as an innovative capability for business innovation? Or, is IT’s innovation role to help IT get better?

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