The Secrets of IT Innovation

Your information technology group is crucial to your organization's ability to innovate. But before you can innovate, you first need to demonstrate your mastery of IT and how it helps your company make profits and cut costs, says innovation consultant James P. Andrew.

By Diann Daniel
Thu, August 30, 2007

CIOThe 2007 Boston Consulting Group’s innovation survey of 2,468 senior executives worldwide found that although companies are spending more on innovation, many are dissatisfied with the return on those investments. And although innovation may seem like a strictly business concern, IT has a crucial role to play. So says James P. Andrew, who leads BCG’s innovation practice. How can IT become a true innovation partner?

True innovation partners, what Andrew calls IT superstars, have secrets that the rest of IT should know. He shared them with CIO.com’s Associate Online Editor Diann Daniel.

CIO: The BCG survey found that many executives were frustrated with their innovation spend. What is the main cause of that frustration?

Andrew: The biggest problem in innovation today has to do with money. In other words, how do I generate return on my innovation spending? In the survey, only 46 percent said they were satisfied with the return. One cause can be traced to this: There’s a lot of fuzzy thinking about innovation.

Problems occur when people confuse invention with innovation. Invention is new and clever; innovation is a process that takes knowledge and uses it to get a payback. Invention without a financial return is just an expense. Ideas are really the sexy part of innovation and there’s rarely a shortage of them. If you look at the biggest problems around innovation, rarely does a lack of ideas come up as one of the top obstacles; instead, it’s things like a risk-averse culture, overly lengthy development times and lack of coordination within the company. Not enough ideas, on the other hand, is an obstacle for only 17 percent. At the end of the day all that creativity and all those ideas have to show on the bottom line. That’s why we called our book Payback [2007, Harvard Business School Press]. The goal of innovation is to make or save money, and IT should never lose sight of that central fact.

CIO: You said innovation is a process. Can you describe in the simplest terms what that process looks like?

Andrew: Innovation is a three-step process: 1. Generate an idea. 2. Commercialize it. 3. Realize the value.

CIO: Why is IT important to innovation?

Andrew: Information is the jet fuel of innovation, and IT is about providing information and making sure it’s in the hands of the people who need it. It is extremely difficult to do innovation well with bad information or no information, so IT is critically important.

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