Process innovation

Where should CIOs be driving innovation? And how should they deliver on the promise of innovation?

laptop displaying binary code with bandages on its screen
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In “Zone to Win,” Geoffrey Moore suggests that businesses should be focused upon innovations that can do one or more of the following things:

  1. Drive a 10x improvement in a performance metric of great importance to the target market
  2. Represents a business opportunity that has material size, a minimum of 10% of total enterprise sales
  3. Represents a net new business for the enterprise, as opposed to an adjacency to an existing line of business.

Moore’s perspective provides a reasonable framework for a CIO conversation about process innovation and what should be weighted high or low in a corporate evaluation of process innovation opportunities.

What should be the focus of process innovation?

CIOs claim that process innovation should be about reimagining what organizations are already doing in ways that make them better, faster or smarter. Here, you should get resources to do new things by optimizing things that are in many cases old.

Clearly, there are many reasons to innovate business processes. They include the following:

  1. Finding new business efficiencies
  2. Reacting to changing market conditions
  3. Defining new perspectives

CIOs interestingly see parallels between process innovation and DevOps. They suggest that DevOps thinking, and approaches shouldn’t be just for IT. They believe DevOps can provide benefit throughout the organization. For this reason, CIOs ask why there shouldn’t be a wide platform for process innovation.

At the same time, CIOs claim that while the goal of digital transformation may be at the start to transform the business, it is often the case that the resulting innovations will change or improve the business as well. CIOs believe that only sometimes is the impact limited to transformation.

Clearly, businesses can put in place initiatives that are innovative but not transformative. For example, suddenly becoming creative or having a "light bulb" moment doesn't mean necessarily there will be longer term change to the way things are done. It is important to remember, say CIOs, that innovation is not necessarily invention. Some CIOs, however, say that process innovation is simply a sexier way of saying can IT please make a business process easier and more aligned with where the organization is trying to go.

One CIO said here that in remodeling, you don't always need to completely remodel let’s say of a kitchen. Sometimes refacing cabinets is fine enough as a close friend of mine just did. The same can occur with business processes. However, the question that Gary Hamel would ask business  leaders is do we need to go further in our initiatives to root out dogma and dated management approaches. Hamel suggests that most of the tools and techniques of management were invented by people born in the 19th century, including standardized job descriptions, standardized work methods and protocols for production, planning and scheduling.

So, the question is: are you and your business leadership just putting additional band aids and duct tape on processes that should just be replaced?

Where are the biggest opportunities for process innovation?

CIOs believe process innovation opportunities come from understanding what an organization, its customers, or its partners need and want. Today, clearly, data is big element of this, but success also involves partnership regarding what is needed. This is pivotal to building the data that changing business models demand.

Clearly, it is important that organizations respond more effectively to customer feedback. One of the best ways to build loyalty and differentiation is to get closer to the customer. The fact is this is key as well to building a brand that lasts. You can't do this if real time data collected regarding customers is used weeks after it's created. If you are not using real time data then it's equivalent to driving a car down the road, only looking in the rear-view mirrors.

One CIO, however, asserted at this point that they have struggled with the notion of providing real time data in general to executive leadership. Their experience has been that the higher you go in the organization, the more likely leaders cannot act on data in less than a few weeks or a month. They say for this reason they would settle for data that is still current and not outdated or old. Clearly, this is right for strategic decisions, but using the data predictive models can dramatically impact what is sold to customers especially when data modeling determines what customers want that you have in stock.

Overall, process innovation should be about incorporating new technologies and innovating processes using new technology and ideas. A lot of old processes were created around technology, because that's the way it worked. Some CIOs said at this point that having data on partnership business models is becoming valuable. It doesn't matter what you think the technology should be. You want to spend time building partnerships and understand what it is that the business really needs. Whether the customer is internal or external, this should drive innovation.

Does process innovation by necessity build itself upon low code tools versus packaged software?

CIOs say that the focus should not be between low code versus packaged software. CIOs say it is important to revisit the how and why of a business process especially those that were defined many years ago. The how and the why likely have changed since processes were first implemented. CIOs say it can involve simply sitting down and talking through what the process is doing and why. I always did this in the software product organizations that I have led. Tooling is helpful, but it's rarely the thing to worry about first. It all depends on what you are trying to accomplish.

Having said this, CIO do say that packaged software hasn’t ever been a perfect "fit.” But having said this, low code tools should be a later issue to consider. It is important to discuss and talk through business objectives. Having done this, CIOs say low code is just that much quicker and easier to get exactly what you want. CIOs say being able to quickly mock-up a workflow to trial something can even drive better innovation. CIOs say that, at the same time, low-code tools are becoming more and more sophisticated and intuitive. CIOs say there are a few great ones out there for scalability and easy of deployment. At the same time, they say you should make use of tools that are easier, autonomously update.

Can process innovation involve rethinking an existing back office process?

Most organizations, especially those with heavy spend on complex CapEx do terrible job of the request to procure process. CIOs suggest that a couple of the areas needing the most help are and customer service. They have been largely ignored from a process standpoint for quite a long time.

There is a big opportunity in back office innovation especially in cross-unit collaboration. So many processes were optimized for local use. New perspectives, tools, and technologies allow so much more in collaborative and synchronous work. An interesting IT use case example is the ability to move a server build process from weeks down to a day or two by removing the unneeded processes. Other opportunities include SAP and most CRM implementations.

It's important to start at the beginning.  Process innovation should include validating need for each back-office process. This is where the power of "why" is so powerful. CIOs have seen entire business processes completely stopped once someone asked why with folks from all sides of the process in the room. With this, the business can move forward much more aggressively on new things.

How does the CIO enable process innovation?

CIOs say it is important to embed staff who can see a process from the perspective of technology options. CIOs believe, for this reason, it is important to partner with the right business folks and give them freedom to explore processes that cause the most pain. One way is to spend time with department heads understanding their pain points. Make this known to the IT team gives IT leaders the opportunity to come up with ways to address those pain points.

In this process, it is important to help organizations challenge their aging assumptions as Hamel suggests. In this process, IT leaders can offer new tools that may not be on the solution radar, create prototypes, and the socialize prototypes. All of this can create genuine, reciprocal trust and confidence. Doing this is essential to the future of most organizations.

Process innovation is essential for the future of your business. It should be focused on what Geoffrey Moore suggested – driving a 10x improvement in a performance metric of great importance to the target market. By taking concrete action, it is possible to improve aging processes that limit business growth. Process innovation clearly should be in every CIOs toolkit. And with business alignment, newer low code approaches do offer the ability to demonstrate and prove the value of process change.

But everything starts with a CIO and their team doing what Theodore Levitt said in “Thinking About Management,” asking “simple questions: why do we do it, why that way and what are the alternatives.”

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