Every company wants to be innovative. In many instances, information technology plays a crucial role in enabling innovation initiatives. Unfortunately, there’s no standard formula or framework for managing technology-driven innovation within a commercial enterprise. Every company has to establish methods of identifying, vetting, selecting and implementing innovation opportunities that are effective within the context of their business model, management practices and corporate culture.
Commercial enterprises generally have equal access to new technologies. Their ability to exploit new technology is limited only by their financial resources, internal skills and corporate imagination. Companies that achieve competitive advantage through the use of new technology on a continuous basis have overcome these limitations and found effective ways of managing their innovation pipelines.
Drowning in innovation opportunities
Innovation can take many forms. Automating inventory replenishment practices, implementing mobile sales applications for retail customers or leveraging a new tool for scoring sales leads all represent different forms of technology innovation. New processes such as devops, hybrid cloud operations and automated malware isolation can also deliver innovative improvements in the efficiency and effectiveness of internal operations.
Innovation opportunities come from multiple sources. Incumbent vendors barrage their existing customers with new products and services. Venture capital firms showcase their portfolio companies, seeking early adopters who are willing to take a chance on an emerging tool or system. Business executives stumble upon new technologies being employed at other companies and demand that such tools be implemented within their firms. Finally, IT staff members have been known to employ a Trojan Horse strategy in introducing new technologies by discreetly conducting proof-of-concept experiments or pilot projects without the knowledge or approval of their management teams.
In short, commercial enterprises are drowning in innovation opportunities. Successful implementation of technology-driven initiatives is a matchmaking exercise that connects a business opportunity to a technology opportunity.
Don’t be afraid to say no
A company with a specific business opportunity needs to screen a lot of technologies to find the one or two that will enable them to seize the opportunity and capitalize upon it. Too many IT shops run this process in reverse. They fall in love with a new technology and then search for a potential business application within their firms. They are literally looking for a problem to solve. The first step in structuring an effective pipeline process is to be armed with the specific business challenges and opportunities facing your company. Then you need to devise a screening process that is designed to get to “no” as quickly as possible. Stop trying to reconfigure a business opportunity to align it with the capabilities of a technology solution. As Steve Jobs so eloquently put it: “innovation is saying no to 1,000 things”!
The Petri dish
Most readers first encountered Petri dishes in their high school biology labs. Petri dishes are shallow containers filled with the nutrients required to cultivate specific organisms. An effective innovation pipeline has access to multiple Petri dish environments where new ideas can be storyboarded, debated and piloted on an iterative basis. These environments may exist in many different forms. They provide a politically safe place with the necessary resources to validate the feasibility of the potential marriage between a business opportunity and a new technology. One might think of this as the engagement phase in the budding relationship between a true business opportunity and a promising technology.
Diagnosing the investment mentality of your company
Companies typically have a schizophrenic approach to approving innovation initiatives. They routinely oscillate between rigid enforcement of financial investment criteria and intuitive impulsiveness. Think of this as a corporate left brain/right brain dilemma. The logical left brain of the company would like every initiative to guarantee financial returns that meet their ROI and payback timing criteria. The right brain of the company is seized with intuitive passion about prospective innovation opportunities that may be difficult to quantify financially. Business executives infected with right brain passions have been known to construct business cases based upon fanciful assumptions to shepherd their pet projects through their companies’ standard financial approval processes.
As an IT leader, it’s important to understand whether you are living in a right-brain-dominated or left-brain-dominated culture. Even if you think you understand the normative behaviors within your organization, you need to be prepared for the exceptions to standard practices that will inevitably appear.
Managing the pipeline as an investment portfolio
Investment managers constantly counsel their customers to manage their risks by balancing their investments in stocks and bonds, growth and value companies, big cap and small cap firms, etc. Oil companies have learned to balance their investment risks by drilling a balanced portfolio of stripper wells with guaranteed rates of return and much more speculative wildcat wells which could potentially double the size of their reserves.
IT leaders need to adopt similar a similar mentality in managing the opportunities within their innovation pipeline. Most corporations abhor risk. Consequently, their pipeline management practices are largely designed to minimize the risk of investment failure at every possible turn. Approved initiatives that emerge from this type of pipeline are usually pretty tame copycat projects that closely emulate the initiatives of industry-leading competitors. This is not the path to competitive advantage.
IT leaders need to counteract the investment schizophrenia within their companies. If there have been some recent spectacular failures, leaders need to tee up several sure-fire innovation initiatives that restore confidence in the pipeline process. Conversely, if investment approval practices are overly conservative and built around rigid financial criteria, IT leaders need to stimulate some right brain thinking and convince one or more of their business colleagues to “swing for the fences.” Whichever path you choose, the goal is the same: you want to expose your company to a spectrum of technology-enabled business opportunities, some of which are true game-changers. As they say in the oil business, “if you haven’t drilled enough dry holes, you haven’t taken enough risk”!