by Esther Shein

Make way for the new CIO: The chief innovation officer

Sep 23, 201913 mins
CIOInnovationIT Leadership

The chief innovation officer role has increased in visibility, thanks to digital transformations, which often include the two flavors of CIO working in tandem.

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Credit: Thinkstock

The IT profession has long been blessed with a surfeit of acronyms, many of which have been coined in sometimes convoluted ways to retain uniqueness. But one of IT’s key, longstanding acronyms is increasingly being used to refer to an upstart, as today you’re apt to find that CIO no longer just stands for chief information officer, but chief innovation officer as well.

And, depending on whom you talk to, some with the word ‘innovation’ in their title posit that they might someday supplant the traditional CIO.

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In the meantime, with the velocity of innovation and disruption increasing as data and technology become more widely leveraged in business, a solid relationship between the chief information officer and chief innovation officer is critical, says Patrick Sells, chief innovation officer at digital bank Quontic. 

“These two roles are symbiotic in nature, and I would posture that over time, the chief information officer may evolve into the chief innovation officer ultimately, in corporate America,’’ Sells says. 

Although chief innovation officers have been around for several years, the role has increased in visibility as enterprises have embarked on digital transformation initiatives, which often include CIOs working in tandem with, well, CIOs.

“I think that title, ‘information,’ could go away and just be the innovation officer and the roles could eventually merge,’’ Sells says. 

Dr. Nils Olaya Fonstad, research scientist for Europe and Latin American, at MIT’s Center for Information Systems Research, says he could also easily see that happening, “because the idea is ultimately to create shared resources” for both individual and team innovation efforts “and then develop a portfolio of those efforts.” Chief information officers have “tremendous experience with that, and now, switching that role to an innovation one, simply emphasizes that innovation is a symbol of positive change,” he says.

Since change is increasingly enabled by digital, making the segue from chief information officer to the innovation title “makes absolute sense,” he says.

Where chief innovation officers can add value

Most of the organizations Fonstad studies and speaks with find it challenging to identify initiatives that will propel the company forward, as well as how to realize the value from both individual and collective efforts to do so.

“As companies are investing in more innovative efforts than ever before, they really, really struggle to guide those teams and realize synergies … and realize value” from portfolios of initiatives, he says.

Fonstad sees the role of chief innovation officer as twofold: first, ensuring that teams have the resources to engage in new ways of innovating by having access to customer data as well as processes, products and services. Their second role is to coordinate the portfolio of innovation efforts a company invests in, he says.

Effective chief innovation officers start off by coaching their teams. That way, “they don’t go off and innovate but take a more disciplined, cross-functional approach,’’ with a business case and a solution, he says. “We argue that instead of learning from failures it’s better to learn from hypotheses, and the role of the chief innovation officer is to instill that discipline and coach teams on what types of insights do they expect to realize from the next iteration?”

Adding to the C-suite

Officials at Kersch Partners, a Los Angeles-based business consultancy, found themselves in need of an innovation leader when they realized that internal and external customers’ needs are ever-changing.

“For us, innovating means we listen to the voice of the customers and provide solutions, which appeal to their needs, while keeping our vision relevant,’’ says Karan Singh, principal and the company’s first chief innovation officer. “The leadership team desired to add a C-level leader who is process-savvy, can drive innovation initiatives and bring cross-industries experience, which will make the whole exercise less prone to error.”

A chief innovation officer is responsible for continuously assessing current business processes and resources to discover and realize opportunities for growth, while the chief information officer makes sure that in the pursuit of growth, an organization is making the right technological infrastructure investments, Singh believes.

“Both have to keep the organization’s vision in mind and build a process to achieve overall strategic goals,’’ he says. “A lot of times, it is collaborative work, as technology proves to be the control for innovative changes.”

Not long ago, a “technology-enabled” business strategy was the norm, observes Nishita Henry, chief innovation officer for Deloitte Consulting. “Now, we’re championing ‘technology-led’ business — where tech is not just a supporting function but an integral part of the enterprise in every function.”

Recognizing that digital transformation has fundamentally changed how businesses can create value and what skills and tasks are needed to support that strategy, she says, Deloitte designated the role of chief innovation officer, which Henry transitioned into nearly a year ago.

Timothy Wenhold views himself as a new age chief innovation officer. Wenhold, chief innovation officer of Power Home Remodeling Group, in Chester, Pa., took the job on two conditions: that there would not be an IT department — but instead a business technology department — and no chief information officer. 

“Information technology is an old term; 60+ years old dating back to the early days of the computer when it was a resource tool,’’ he explains. A business is an ecosystem and uses resources and replenishes them to gain and service customers, he adds.

Today, technology has moved beyond information to being the integral way people communicate and work together and collaborate, Wenhold says. “Calling it the ‘IT department’ is about servers and is disconnected from business. The business tech department says you’re not only connected to the business — you are the business.”

Healthcare systems are also recognizing the importance of having chief innovation officers. Dr. Richard Milani, chief clinical transformation officer at Ochsner Health System, the largest nonprofit healthcare system and private employer in Louisiana, was involved in the creation in 2015 of innovationOchsner (iO), an innovation lab tasked with developing solutions for the most pressing problems in healthcare.

Milani, who also has an IT background, was asked to assume the role of chief medical information officer when Ochsner began using an electronic medical record system in 2014. The CMIO role was the prelude to his current role as an innovator and Milani is tasked with helping prepare the health system for the future.

What chief innovation officers bring to the table

The chief innovation officer role will be defined differently depending on the company and industry, but similar traits can be found across the board.

“At its core [it is] about being a catalyst for innovation inside of a company,” says Sells. That means someone who can build a culture for all employees to innovate, find partners to help with that innovation “and to develop the guardrails and tolerance for a culture of taking risks, measuring the results and embracing failure,’’ he says.

In its purest form, Sells adds, “innovation is more than just about technology, it is fundamentally about embracing a different mindset and approach.” 

Henry says she’s responsible for helping to translate what technology change means to Deloitte’s clients and also, how technology changes impact the firm. “I help guide our technology investments and to apply [technology] to our own services as we develop new solutions and assets for the market.”

By virtue of the title, chief innovation officers tend to have a future-focused vision to help an organization realize its strategic objectives by thinking radically about its mission and people and how to change processes to improve business performance.

“It is my job to work with all levels of the organization to find opportunities for improvement, facilitate and incubate innovative thinking and provide resources to realize those opportunities,” says Singh.

Challenges of the position

Often, chief innovation officers report to the CEO. How the CEO and the rest of the C-suite view the role of the CIO versus the chief innovation officer will usually determine who owns digital initiatives.

Singh says he’s seen as a disruptor — in a positive way. “In my organization, owning and driving digital transformation initiatives is my responsibility,’’ says Singh. “We see technology as part of the innovative transformation.”

But sometimes that can ruffle feathers with others in IT.

“I don’t think the CIO and chief innovation officer are two separate roles; it’s an evolved role,’’ says Wenhold. In very large organizations it makes sense to have both titles, he believes, but generally speaking, “if you put a chief information officer and a chief innovation officer at the table, it would be a struggle.”

That’s because ultimately, in large organizations the resources the chief innovation officer should be deploying would be controlled by the CIO, Wenhold adds. “So then you have a split brain going on. Why not have the ‘new age CIO’ … technology is the vehicle that delivers the innovation we come up with.”

One of Singh’s challenges is ensuring the scope of changes needed is clear to everyone involved. “When one team innovates, it affects the other teams. We need to clearly define the scope of innovation projects to make sure there are no surprises or changes other teams are not prepared for,’’ he says.

Another is prioritization, and every area, process and team has room for improvement there, Singh says. “Prioritizing projects based on need and resources is very important to ensure minimal disruption to business performance.”

Change management is an important function for anyone in an innovation role, even when it is hard, says Milani.  “There is always going to be inertia that one has to overcome, and I don’t care what industry you’re in. There’s always going to be resistance to change regardless of the change, and you have to know how to move entities through change — and that requires different processes and speeds.”

Typically, the chief information officer plays a much more specific role with regard to the digital resources the innovation teams draw on, specifically, around access to data and developer talent, says Fonstad.

Sometimes, it is not clear who in the organization owns digital transformation initiatives. “In many organizations that’s the biggest problem — too many people own them,’’ he notes. “In fact, in some cases, digital innovation is limited to revenue generating opportunities and new products and services, and everything else is handed off” to operations or HR, “and they’re going to focus on big-bang transformation efforts.”

The more “sophisticated companies” Fonstad has studied, however, don’t make that distinction and instead, recognize that all change efforts should involve some innovation element. “And that’s precisely why they require cross-functional teams.”

Advice for fellow chief innovation officers

Because many chief innovation officers report to the CEO, it’s important the latter serve as champions of their efforts. “If the CEO isn’t 100 percent behind you and giving you the greenlight to go ahead and carry out change and … take risks and try new things, it’s going to be very difficult for anyone in this role,’’ says Milani.

The impact a CEO has on an organization reverberates with everyone on the executive team, he adds. “My biggest advice would be from a reporting structure, that you’re reporting directly to the top and if not, it will be a miserable job,” Milani says.

Power Home Remodeling Group has co-CEOs, and Wenhold says he works closely with both, because one is charged with the tactical, nuts-and-bolts side of the business and the other is more innovation-focused. “There’s a meeting of the minds, where we understand what we need and I take the technical side, and it’s up to me to turn what we put on the whiteboard into reality,’’ he says.

But first, cultivate a culture for listening before fostering a culture for innovate thinking, advises Singh. “It is important to listen to ideas coming from teams, as they are ones who work the process and might have already thought of innovative ways to improve for the betterment of the team and the company.”

In the past three months, Fonstad says he has been struck by how concerned the entire senior management team is about changing their approach toward innovation from one of test and learn and ensuring individuals have the resources they need, to making their efforts more impactful and organizing a portfolio of those efforts.

“It is evident to the C-suite they need to tackle this,’’ he says. “In some cases, they ask the chief information officer to do this and in others, they try to tackle it as a group or hire a chief digital or chief innovation officer.”

A chief innovation officer should be focused on helping the company become future-ready “and not take hundreds of steps that end up nowhere or worse, backwards,’’ Fonstad says. A chief innovation officer will not add value if they simply focus on doing things like adding to the number of teams doing agile or doubling the number of hackathons or startups the company works with, he says.

“Unless they can help translate those activities into clear business value, either in terms of revenue or operational efficiencies or effectiveness,” Fonstad says, “then they’re simply helping the company innovate for the sake of innovating.”

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