Plenty of CIOs are making hay for their companies by coming up with ideas for new products based on IT, using data in new ways. Hughes Telematics devises IT-enabled systems for Mercedes-Benz. Stun-gun company Taser collects motion, audio and video data from equipment supplied to police forces and creates evidence-collection Websites in the cloud. New product innovation is a critical part of the CIO’s job and some IT groups are accountable for generating new revenue for the company.
But don’t get too comfortable. Your next challenge: New business models. No longer are new IT-based products enough. CEOs are looking for entirely new ways of operating, according to the MIT Sloan Management Review. MIT highlights Apple’s invention of the iPod – and subsequent development of iTunes – as a prime example of business model innovation.
MIT defines business model as:
“…a system of interconnected and interdependent activities that determines the way the company ‘does business’ with its customers, partners and vendors. In other words, a business model is a bundle of specific activities — an activity system — conducted to satisfy the perceived needs of the market, along with the specification of which parties (a company or its partners) conduct which activities, and how these activities are linked to each other.”
It sounds to me like what CEOs mean when they say they want new business models is a combination of technology innovation and old-fashioned business process redesign. Home Box Office broadening business to mobile content. Walgreens morphing from a drug store to a “daily living” service retailer.
Helen Cousins, CIO of Lincoln Trust, told me recently that in a tumultuous economy, senior executives are open to big change. “Recession gave me the opportunity to show how we in IT could enable transforming the way we do business. I’ve had the opportunity to do more advancements with technology than I’ve ever been able to do,” she says.
Substantial transformation requires a broad yet nuanced understanding of how a company works right now, as well as the ability to interpret market and economic trends. CIOs are well-positioned in the first realm and eager to prove themselves in the second realm. CEOs are waiting.
