How Enterprise IT Gets Creative

IT innovation -- once a nice-to-have -- is now considered a necessity for gaining competitive edge. With globalization, changing customer behavior, the spread of consumer technologies and cloud capabilities lowering the barrier of entry to new competitors, organizations are increasingly looking to technology-induced innovations to distinguish themselves in the market.

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" Grange Insurance: During monthly meetings, the innovation group discusses opportunities, uses a heat map to rate ideas with the lowest risk, lowest cost and highest value and assigns skunk works groups to investigate applicable technologies and idea feasibility. Individual teams do some prototyping and provide updates at the next meeting. Once they have something to show, they share the prototype with business leaders. "When you have something that someone can visualize, you gain support more quickly," Fergang says. When approved, projects get funded and enter a formal project management process.

The key is speed: Prototype fast, and fail fast. "We don't choose 30 things to pursue," Fergang says. "We scale back to just a few and then do them as fast as possible." About twice a year, the group conducts a show-and-tell, inviting business leaders to see a range of prototyped ideas.

" Equinix: It's crucial to recognize that some ideas don't pan out. At Equinix, "no one is penalized" for failures, because failing is part of learning, Lillie says. In fact, one engineer learned so much about hybrid clouds through a stalled innovation initiative that he now helps educate customers on the topic. "Not everything is going to work out, but it's all great learning," Lillie says.

What are some tips for getting executive buy-in and funding?

" CapitalOne: Early in her tenure, Shivanandan organized a "scan trip," which involved taking a group of business and technology executives to visit with innovators and startups, including Google, Facebook and Square, to answer the question, "What is innovation in the banking industry?" "I wish I could say I did it intentionally to get everyone jazzed up, but that was the ultimate result," she says. "It was an 'aha moment' that really showed us there's a lot happening and that technology is a key enabler to banking in the future." Nine months later, the company secured a physical structure for its first digital lab, hired a leader and assembled an agile team to get started.

" American Cancer Society: For Ferro, securing innovation resources hinges on showing senior executives something concrete. "You need to give them confidence that this isn't some nebulous thing," he says. Another important element is focusing innovation around specific objectives. "When executives see you're targeting innovation at outcomes that matter and not aiming it blindly, they derive comfort from that," Ferro says.

Ferro dedicates a small percentage of the IT budget to experimenting with new ideas and spinning up proofs of concept. Before they are moved further in the process, ideas are subject to a more formal review. "Our process recognizes good ideas, so that even if we didn't plan it for 2013, for instance, we will pursue it if the ROI makes sense," Ferro says.

" MasterCard: Above all, says Lyons, having a CEO who understands the importance of innovation is critical. It also helps, he says, to show how the work done by MasterCard Labs enables other company efforts to succeed. Because Lyons reports to both the president of the technologies and operations division and the president of the global products and solutions division, "together, we can work through the really tough questions about why we should advance one idea or another," he says.

" Grange: Fergang agrees that the more you can show business leaders something concrete, the more they will back innovation. "When the business realized we were expending energy on innovation that could have been applied to known production needs, they asked, 'What are you doing?' Fergang says. "But when we started showing them our prototypes on a regular basis, that went away." The key, he says, is to gain the trust of business leaders by executing well on the basics. "You can't apply resources to innovation when you're not taking care of the rest of the business," he says.

" Equinix: The main thing, Lillie says, is to ensure innovation is focused on moving the business forward. "It's important to stay not only current with customers but, really, even ahead of them," he says. To fund innovations, Lillie takes an indirect approach, reserving a portion of his budget for innovation projects. "I don't formally say, 'This is our innovation budget,'" he says. "But in my budget [request], I always leave an earmark for innovation."

How do you involve external organizations?

" CapitalOne: Establishing a community with technology companies, academic institutions, startups, venture capitalists and collaboratives is essential to innovation, according to Shivanandan. CapitalOne works with MIT, Stanford University, Georgia Tech and the University of Virginia on research initiatives and is active in communities such as Fintech, an annual program run by the Partnership Fund for New York City and Accenture to encourage startups developing cutting-edge financial services technology products. The company also participates in hackathons and has sponsored some of these events in its lab.

" Equinix: After hearing a speaker discuss gamification at the Innovative CIO program at Stanford University (which Lillie helped develop), Lillie worked with Deloitte to revamp the company's sales processes using gaming principles and ideas. "We brought these ideas back from Stanford and drove them into the organization," he says. The sales system incorporates game elements such as leader boards, rewards and avatars and is being deployed across the globe, Lillie says.

" American Cancer Society: Ferro agrees that innovation is spurred by communicating with outsiders, which in his case include businesses like IBM and Johnson & Johnson. "We look at how we can learn from the industry standards and best practices in the private sector and apply that to our organization," he says. An example is a recent conversation he had with Terry Jones, founder of Travelocity, who emphasized the importance of being open to everyone and everything. "The trick is not getting overwhelmed by all the input, and that's where having established innovation processes comes in," Ferro says.

" MasterCard: According to Lyons, MasterCard Labs taps into a number of external sources to spark innovation and is currently opening up its services to others through open APIs.

" Grange: The innovation group occasionally shares prototypes with customers to get their input on the idea's value. Additionally, Fergang is involved with TechColumbus, a public/private partnership focused on central Ohio's innovation economy. The ideas shared by entrepreneurs and startups help him keep up with what people outside the insurance industry are thinking about.

This story, "How Enterprise IT Gets Creative" was originally published by Computerworld.

Copyright © 2013 IDG Communications, Inc.

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