As the CEO of a fast growing software company, I meet with hundreds of CIOs and business leaders every year. At one recent meeting the business leaders at a large bank expressed their deep frustration with the pace of change from their IT organization. They told me; “We have four times as many innovation projects as we have budget to implement, and we need IT to deliver them twice as fast.” I bet this message sounds familiar to many of you.
CEOs live and breathe business agility in today’s hyper-competitive markets. If you play your cards right, your CIO and the entire IT organization can be the spark that fuels innovation to open up new sources of revenue or streamline business processes. But is everyone on the same page?
Technology can be a strategic weapon of choice, but far too often communication between business units and IT breaks down, slowing innovation and leaving IT relegated to the role of a cost center. This opens the door for more agile competitors to move in, spurred by an innovation process that enables them to move more quickly.
In order to create a more efficient, business-driven IT capability, the business-IT relationship must evolve. As mobile technologies and the fully inter-connected worldwide economy give rise to a global competitive landscape, the speed at which you can deliver technology innovation can make the difference between winning and losing. The most successful companies are those in which the CEO (and other business leaders) forge a collaborative partnership with the CIO and IT organization that enables the company to deliver business innovation faster, with greater certainty and less risk.
But how do CEOs make this happen? Here are five powerful ideas for creating a culture of innovation and building a true partnership between business and IT.
1. The CIO as Full Business Partner
For the past 30 years, the typical CIO grew into the position through the technology ladder. The core CIO skill set valued by CEOs was focused on technical knowledge and the ability to build an organization that supplied operational excellence. The model was IT as a utility – their job was to keep the lights on and stay out of the way. It’s no wonder that many IT organizations quickly became irrelevant at many companies.
The world has changed dramatically. This model simply doesn’t work anymore. CEOs have quickly realized that technology is a key market differentiator with the ability to contribute tangibly to revenue growth, market responsiveness and competitive positioning.
The modern CIO must complement this model. The new CIO is a business leader, with a deep understanding of the business at all levels, not only P&L and market understanding, but a process point of view as well. For an increasing number of world-class companies, the CIO has actually moved into the role directly from executive leadership positions in the business. Many have established an effective CTO function that handles critical technology decisions around architecture and platforms. The CTO watches your back on technology while the CIO steps up to be a business leader.
Recently, top-tier commercial insurer CNA transformed its business and realized significant gains in agility by moving its major software development projects to a managed services model. Rather than continue to meet evolving needs with existing paradigms, the company opted for transformational change to lower development costs and accelerate delivery through this new model. Spearheaded by CIO Ray Oral, who classified the transition as “a major shift” and a radically new approach to software definition, the effort leveraged software visualization to solve some of the inherent communication problems that existed between business, IT and global sourcing providers. Oral and CNA expect the transformation to accelerate time to market, cut project costs by one-third and dramatically improve the quality of its products and the end-user experience.
This kind of business-driven IT innovation is critical to maintaining a competitive edge. However, if your CIO is still reporting to the CFO, your company may be stuck in a service-oriented utility model where IT is still a cost center. Cutting costs were possible is definitely a noble cause, but this is not the only standard by which the CIO should be measured.
World class companies now have the CIO reporting directly to the CEO and operating as a full business partner focused on how the IT organization will advance common business goals and drive overall innovation. In this model, the CIO and the entire IT organization become relevant to the business.
2. Foster a Culture of Innovation
Driving innovative new product ideas to market quickly is the lifeblood of growth. Creating innovative new sales, marketing and customer channels through integrated mobility, social networking and Web-based interfaces is not the future – it’s here now. And these channels are essential to competing for the next generation of customers growing up in the mobility and Internet age. Streamlining business processes is another innovation that directly affects the bottom line and drives better customer care.
Innovation is not the job of one person; it is not a task that can be assigned. Great ideas come from everywhere, both inside and outside your company, but to harness this powerful force for change requires a culture of innovation.
We’ve seen amazing companies like American Express and CSC that make innovation a part of their culture and as a result, are able to drive incredible business agility. What makes their models work? For one thing, they have established an environment where innovation is everyone’s job. At CSC, there is an innovation team, but their job is to encourage all employees to participate, not only in generating ideas, but empowering them to actually work on their ideas and bring them to life. They do this through clever internal marketing, company-wide contests and recognition programs that reward the best ideas. Lem Lasher is the Chief Innovation Officer at CSC and his approach has led to numerous awards, but more importantly, has helped the company thrive in a highly competitive market.
Google’s now-famous 20% “Innovation Time Off” has spawned some of the company’s most successful and groundbreaking endeavors. This forward-thinking approach has become a formalized model copied many times over by companies looking for a way to bridge the gap between the unfettered creativity required for innovation and the need to establish some structure in the workplace.
3. Use Software Visualization to Fail Fast and Minimize Risk
As a CEO, it’s your job to get business and IT to move faster. But many times the two sides are unable to communicate effectively. Business people are often unsure of exactly what they want until they see it, while the IT team often struggles with antiquated methods for documenting business needs. This slows down the process of understanding and leads to confusion and delays around critical innovation initiatives.
Other industries have solved this very same problem by moving away from paper drafting boards to computer aided design, 3D modeling and visualization tools to dramatically speed up new product delivery and improve quality. The best companies in the world are now using these same paperless techniques to accelerate the delivery of innovative new business software. Software visualization empowers the business to interact with and fully experience business systems as a first step in the process, eliminating confusion and delays. Everyone gets on the same page quickly by test driving the final system before any expensive coding begins. Software visualization enables the business to fail fast and cheaply rather than late and expensively.
This is especially true with bet-your-business ERP implementation like SAP. These projects are often gigantic and can take many months to implement, which is inherently risky while your business units wait to see finished code. Software visualization is now the global standard for SAP as a strategy to help their customers accelerate delivery with lower cost and risk.
Visualization works across all verticals. At the University of Texas M.D. Anderson Cancer Center, developers embarked on an ambitions five-year project to build their own custom electronic medical record (EMR) system. With former nurses trained to act as business analysts, the center uses iRise to visualize clinician applications, cutting application development time in half. With its goal to make cancer history, M.D. Anderson’s CIO, Dr. Lynn Vogel, Ph.D. says the center sees technology as a way to get there faster.
“To achieve that goal, we need to move at a more rapid pace and grow the organization,” Vogel said. “iRise’s simulation capability gives us the mechanism to communicate the desired application clearly, and therefore, speed the delivery of new, critical care systems. Now we have more time to spend on improving patient success and eradicating cancer.”
4. Integrate IT at a Grass Roots Level
While it’s true that IT touches all areas of the enterprise, in many cases it still exists as a separate structure, rather than a truly integrated function. To be effective at supporting the kind of innovation and agility required in today’s markets, IT must be brought out of its silo and woven into the fabric of the organization.
Here are some simple ideas for how to make this happen:
- Move IT offices into the business. Imagine what could happen if IT rank and file lived and breathed the same air as business people; fighting side-by-side, listening to business people talk about their challenges and opportunities every day. This is an amazingly effective way to get business and IT on the same page.
- Cross-pollinate the workforce. Imagine if you took business people out of the business and had them work in IT. Or if you had IT experts report into the business for a period of time to let them cross train and gain a better understanding of each other’s challenges and day-to-day operations.
- Employ cross functional teams to tackle specific business challenges. Some of the best companies in the world engage small, agile teams made up of people from many different departments that are assembled for specific initiatives.
- Align compensation plans to business goals. This can be a powerful way to get IT organizations on the same page with the business and everyone pulling in the same direction.
5. Establish Centers of Excellence
What good is knowledge gained if it is not shared? Establishing Centers of Excellence (COE) can be an amazing way to not only capture and share best practices throughout the company, but when executed correctly, can also become a dynamic sales and marketing tool. Successes around innovation can be lauded as shining examples and promoted throughout the company, improving morale and getting everyone motivated to contribute new ideas. Cross-functional teams, and even unrelated business units, can leverage this internal knowledgebase to improve results and streamline processes.
In some companies, the COE takes the form of a physical place co-located within a corporate briefing center; in others, it’s an online portal of assets that can be shared company-wide. Some companies create a program of monthly presentations highlighting the COE as way to share best practices among different business units that may share common problems. COEs can also be implemented at a business unit level to spur innovation and ideas.
The COE can be a powerful way to promote excellence, innovation and idea sharing, and can also be a cornerstone for employee recognition, putting a spotlight on the best and brightest in your company.
At CSC, Lem Lasher’s Strategic Innovation Group is perfect example of this strategy in action. CSC’s group includes six functional teams of employees from Australia, India, North America and Europe representing a cross-section of the company’s 92,000 employees across 80 countries. By organizing the innovation effort into a COE, CSC has been able to bring a culture of innovation across the entire organization to improve the company’s overall competitive position.
Speed Up or Die
The old saying was that businesses are like sharks; they need to be constantly moving forward or they will die. But the pace of change is accelerating. It’s no longer enough to be simply moving forward. The new imperative is speed. As CEOs, we must find ways to accelerate the pace of change within our companies in response to shifting market dynamics and competitors that are coming after us at an accelerated rate. Business agility is the new mantra of successful CEOs everywhere and we must create a business agility plan that delivers the speed you need to thrive.