How Innovative Is IT?

Michael Schrage, co-director of eMarkets Initiative, MIT Media Lab and CIO magazine columnist, speaks in a torrent of probes, throwing concepts and ideas out at his audience at warp speed.

Schrage, who studies (among other things) how organizations behave, especially when they invest in innovation, says don’t look at what organizations say, look at what they do.

What are the profitable ways to translate technical capability into business advantage? This should be the CIO’s challenge. But, says Schrage, we make horrible decisions about how to invest in innovation.

At MIT, says Schrage, we have a peer review system to tell us which ideas are cool and which are not. But in business, innovation is simply what the business adopts. Innovation is not about creation, it’s about adoption—what’s used. When that’s not kept in mind, we overinvest in what we believe are good ideas, not in what will work.

Indeed, in business today, there’s a glut of good ideas, a shortage of good implementations. Let’s start paying less attention to good ideas, says Schrage, because unless they’re adopted, they’re not good ideas.

And why are good ideas not adopted? Because they are not worth it.

For example: Blockbuster. Most of the CIOs in attendance have Blockbuster cards. Most have paid late fees. Twenty-five percent of Blockbuster’s profits came from late fees. What a great business model! You do nothing, and you get paid for it.

Schrage suggested to Blockbuster that it experiment with alerting customers that they were about to be charged late fees. Blockbuster thought he was crazy: He was threatening their easiest money.

Now, with the competition from NetFlix, Blockbuster is trying to charge customers for the price of the film. As a result, their business is suffering. Why wouldn’t they experiment? Because the innovation culture at Blockbuster was: “We can’t do that because . . .”

Innovation is the process of overcoming resistance. All innovation plans, said Schrage, should contain tactics for overcoming resistance. Asked how many of them had plans for overcoming resistance in their innovation plans, only one CIO out of hundreds in the audience raised a hand.

Be practical about innovation, Schrage said. Don’t think about the ideas. Think about how you’re going to get them done. Again, if it’s not implemented, it’s not a good idea.

One needs to brand, market and sell innovation. It has to be better for customers, cheaper for your organization and simpler for your employees.

When we discuss IT innovation, what do your internal customers think about it? What are its brand attributes? IT within the organization, says Schrage, should be as much of a brand as Ivory or Tide. All CIOs, like it or not, are brand managers.

How do you know what your brand is? What are the complaints your internal customers make? That’s your brand.

IT has allowed change management and innovation to become synonymous. They’re not. Is upgrading an innovation? It is not. It is a necessary evil. Too many IT departments have a “Compliance” brand: i.e., “Do It or Else.”

When Schrage was starting out as a writer, he’d go to lunches with magazine editors and ask them, “What’s the biggest problem with freelance writers?”

“They write too long.”

Then Schrage asked, “How do you pay?”

“A dollar a word,” they’d say, oblivious to the irony.

And as the CIOs laughed, Schrage asked, “How do you measure programmer productivity? Lines of code, right? And what’s your biggest complaint? So what are you laughing at?”

Another example: Operating room utilization is a mess all over America. Doctors are late, patients have to wait. What was the answer? Fine the doctors. How’d it work? Real well. IT should take a clue.

Don’t reward your people for coming up with ideas. Create incentives for people who come up with ideas that are implemented and utilized.

People talk about agile development. What about agile adoption? To do that, CIOs need to build better feedback loops to find out how its users are using what IT builds, and Schrage suggests simulation to allow the user base to teach themselves. It’s dangerous for IT to allow itself to be seen as indifferent to successful adoption, focusing only on successful roll-out and implementation.

Technology, Schrage reminds, is not an end in itself. The challenge is to bring the users back into partnership with IT in the creation of value.

One CIO suggested to Schrage that in fact IT gets its budget through a culture of complaint. If it doesn’t work, if it’s causing pain, then IT will get the money to fix it. That may be a negative brand, but that’s how it works in the real world. Schrage argues that the better way to brand IT is to go through the customer, to solve the customer’s problems, and then the business will be happy to pay to fix that.

The Wells Fargo CIO, Danny Peltz, who does build a plan to overcome resistance into his innovation plans, said he agreed with much of what Schrage said, but that executive support (and alignment) is essential. Schrage pushed back, saying that in most companies, in large enterprises, there were already too many demands on executives, and CIOs should try to achieve what they can without executive support.

Schrage suggests IT organizations should have the VP of Five Minutes, in charge of things you can get value from in five minutes.

Mike Hugos from Network Services says he gets things done through a “benign conspiracy of management” to find elegance and simplicity. It’s up to IT, he said, to learn to ignore the complexity when the users present their problems. Schrage says that then Network Services brand is “We Find Simplicity and Automate It.”

Getting good implementations going in an organization, Jonathan Zittrain suggests, could be a craft, with people who are good at it rewarded.

We all have the field of dreams fantasy, said Schrage: if we will build it, they will come.

No they won’t. You have to sell it.