The 3 surprising secrets that drive innovation in the digital era

What if creating innovative breakthroughs and developing a much-heralded innovation culture isn't about creating tiger teams or unleashing unbridled, free-wheeling creativity into every corner of the organization? What if driving innovation in the digital era came down to three simple actions?

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What if everything you knew about innovation was wrong?

The fear of digital disruption and the boundless opportunities that are arising as we enter the digital era are making innovation a critical topic for CIOs and their C-suite counterparts.

As a result, enterprises are launching innovation-focused initiatives at every turn.

But what if creating innovative breakthroughs and developing a much-heralded innovation culture isn’t about creating tiger teams or unleashing unbridled, free-wheeling creativity into every corner of the organization?

What if driving innovation in the digital era came down to three simple actions?

Start here: Innovation ISN’T about technology

It's inevitable, hear the word innovation, and you immediately start thinking about technology. After all, innovation and technology have been nearly synonymous for most of the last two decades.

This inclination is even more likely if you're an IT professional, given our natural fondness of technology.

But if you want to transform your organization into an innovation machine, the place to start is with the recognition that innovation is not, in fact, about technology at all.

This fact was brought home for me during a keynote presentation at an IoT event last year. On stage was the CIO/CTO of Dutch smart building developer EDGE Technologies, Erik Ubels. As he talked, I checked my program several times. This was a CIO?

The way Ubels discussed what the company was doing was illuminating. “I love technology, but it’s about building better buildings for the world,” he explained during a subsequent conversation we had on the subject. “It’s healthy, sustainable, the best working environment for employees. There’s a war for talent and a building is an important part of how you express yourself as an organization and a building that people like to go to.”

Here was the person responsible for the technology at a company that had made technology a central component to its value proposition — and there was almost no talk about technology either from the keynote stage or during our conversation.

The message was clear: If you want to innovate, don’t anchor your mindset to technology.

Secret #1: Gaze to the future, but act in the present

One of the reasons that it’s easy to join innovation and technology at the hip is that it simplifies the process — it makes it more concrete.

If there’s pressure or demand to innovate, just launch an ambitious technology project and you have something you can point to as proof that you’re responding. But as my conversation with Ubels made clear, that’s jumping the gun.

Instead, the place to start is by continually casting your gaze toward the future, both in terms of trends affecting your industry and the technologies that may impact those trends. "It's the CIO/CTO's role to keep an open eye on things and even if technology has failed in the past, don't give up on it, keep it in your mind, and you might be surprised," he shared.

But Ubel’s statement leaves a couple of things unsaid. The first is the business context. It’s about keeping your eye on the future, but not generically — it must be in the context of what technologies could be the game changers for your organization.

“The way we were able to get the business to see IT as a business partner rather than overhead was when we created the ability to articulate technology capabilities in business terms,” explained Bradd Busick, CIO of Seattle-based mechanical contractor MacDonald-Miller. “I’m involved in the sales process when we pitch companies like Facebook, Microsoft, Amazon, and Boeing. They want to talk to the CIO. The CEO would never have guessed, in his wildest dreams, that someone from IT would be helping to lead the company.”

The second unstated, but essential element to a forward-looking gaze is the reason that Busick is now at the leadership — and deal — table: the ability to transform that gaze into competitive advantage for his organization.

Both Busick and Ubels have created this advantage by looking forward and being willing to place bets that others would not. As Ubels puts it: “We get an edge by being on the leading edge. Others want to wait until the technology is proven and a commodity.”

Secret #2: Lay the foundation with standardization

In 2015, Bloomberg called EDGE Technologies’ first building (located in Amsterdam and also called The Edge) the “smartest building in the world.”

So, when I had the chance to talk with Ubels one-on-one I was understandably excited to hear the secrets to how they were able to create this level on innovation on a sustained basis — and make it all work.

I was not at all prepared for what he shared.

According to Ubels, one of the essential enablers of innovation is standardization. "Even though we move quickly with adopting new technologies, we establish a standard and document very well how everything integrates together," he said.

When he shared this, I stopped him. I wanted to be sure I'd heard him correctly.

After all, standardization conjures images of bureaucratic processes that force people into well-trodden paths, ban anything even a little progressive, and restrain creativity. It seemed to be the complete antitheses of how an innovation process should look.

But he clarified that they see standards as things that continually evolve and, therefore, enable them to simultaneously innovate, adapt, and ensure quality. "We build buildings with that standard, and while that's happening, we're working on the new standard. So, we're always creating ‘minimum' standards — and then allow for that to adapt, and change sensors, lights, etc. to update at the time of deployment."

He went on to explain two other essential drivers of innovation that standardization enables.

First, he explained that innovation doesn’t happen at every layer, so you must focus your innovation energy where it matters. “Standardize, simplify and remove variability to create the foundation of innovation. This allows you and your staff to focus on the innovation on top — not having to worry about making it all work.”

Second, he cautioned that innovation is not about just doing anything and everything — it must instead be measured and targeted. Almost paradoxically, standardization helps create that focus. He explained, “That’s the core difference between how we do [innovation]. Others just hook up everything because they can. If you want to scale, do it cost-effectively, [and with] stability…standardize.”

Secret #3: Change the mindset

Another reason that innovation can be challenging for CIOs is that it doesn’t happen in a vacuum. No CIO can innovate on their own. It requires both buy-in and participation across the enterprise.

And given that many IT organizations continue to fight perception issues, this need for buy-in can be a significant barrier to adopting an enterprise-wide innovation culture.

Overcoming this barrier and shifting the mindset both within and outside of IT, therefore, becomes an essential building block of an innovation capability.

“I realized that I had turned the corner when I heard my CEO and CFO talk about the fact that our maintenance baseline [revenue] had grown 11% since we introduced wearable technologies into the field,” said Busick. “They didn’t know how we capture it. They just knew that our customers weren’t leaving and that we’re adding new ones because of this technology capability.”

That ability to deliver innovations that were directly affecting the bottom line helped cement the mindset shift that Busick had sought to create as he transformed IT from a traditional back-office role to a driver of business value. That initial value then created a virtuous cycle, that opened the door to even greater innovation opportunities.

Busick explained: “Being able to drive real business benefit gives me the right to be heard and the opportunity to do something like introduce a dedicated space for virtual reality…and that capability, what we call the M-Lab, enables us to build a fully interactive model of a project before its built…And that will flip the entire supply chain. ”

The question, however, is how to get your organization to this place. There are two answers.

The first is that you need to build and cultivate a team that is willing to go there with you. “It’s a mindset. Every day we can do better, faster, smarter. You need to build a team with the same kind of mindset,” extolled Ubels. “If you hire people that don’t have that mindset or aren’t getting it, they’ll leave. It creates a fast pace. If you’re constantly on the latest and greatest and figure out how to do this — you get this trust from the CEO and leadership.”

At the same time, however, the CIO needs to be laying the foundation for this to work. "Earn the right to be heard. Change the perception from keeping the lights on — that's table stakes," implored Busick. "Instead, paint the picture that I'm a business guy that just happens to be in IT. That opens up a different dialogue. Once you start participating in the actual business — things like going on sales calls and ride alongs — that's what changes the game."

Building innovation as a strategic capability

Perhaps the most significant problem I have with how organizations approach innovation is that they treat it as a project — something that some team over there is responsible for handling. It's much the same problem I see with how people approach the broader question of digital transformation.

In both cases, the minute an organization treats it either as a fixed-time project or the responsibility of some specialty team, the effort is doomed.

Instead, organizations must view innovation — and digital transformation, more broadly — as a strategic capability that they must build and then continually foster.

Of course, that’s much harder than just launching a tiger team or hiring a consulting company to “create an innovation.”

The trick, it would seem, is to not start with innovation as your goal. As Busick explains, you should instead focus on being the enabler that helps the organization identify those things that will create competitive value and use that process to drive innovation.

"I used this as a fact-finding effort [to identify] those capabilities that were valued but missing. And then I put it back on [the business leaders] asking them to prioritize where we were at in terms of importance, both where we're presently at and how important it will be to future business," he shared. "And as I asked this of every department, suddenly I'm identifying themes that can quantitatively determine the capabilities we need. Now I'm at the investment table because I own the data."

This process became, in effect, the organization's innovation roadmap — and firmly cemented Busick's role as a principal driver of innovation in the organization. "We call this a capabilities roadmap, and it became the tool that everyone used to decide what to invest in — and now no one is talking about technology or spend. They're talking about capabilities."

As we step fully into the digital era, the ability to innovate on a sustained and scalable level will be a critical capability. And as technology will continue to be a vital component of that innovation, the CIO's ability to drive and lead innovation efforts will be just as critical.

The good and bad news is that stepping into that role and creating an enterprise-wide culture of innovation is not out-of-reach for the modern CIO, but it may demand that you fundamentally alter your view of how to do it.

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Copyright © 2019 IDG Communications, Inc.

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