Future CIOs will look a lot like entrepreneurs, Pt. III

Joel Dobbs.GIF

The preceding quote, from PwC’s The strategic CIO’s new role in innovation report, summarizes the opportunity in front of CIOs today. As I explored in my previous posts, CIOs cannot innovate alone. To truly get innovation into their companies’ DNA, CTOs must build teams with skills that complement their own abilities and other members of the team. Next, CIOs must foster an organizational culture that encourages, recognizes and rewards innovation.

Probably the single biggest criticism I hear from executives about their IT departments is that they are too cautious, risk-averse, and only interested in operational matters. This criticism is echoed in the results of a recent Information Week Survey of 382 IT and non-IT business professionals. When asked if IT is foremost a support or maintenance organization, as opposed to an innovation engine, 39 percent of IT professionals agreed but 54 percent of non-IT professionals agreed. Fifty-seven percent of IT professionals considered their organization to be agile and flexible compared with only 29 percent of non-IT professionals. One respondent commented, “Here, IT is seen as a drag on innovation. The user perception of IT is very low and generally this perception is ignored by senior IT management as not being of importance.” Even more telling, only 32 percent of the IT respondents think IT plays an extremely important role in business innovation, while only 25 percent of non-IT respondents think so.

In a recent Wall Street Journal piece, Clint Boulton points out that CIOs must embrace risk if they hope to achieve greater strides in innovation. CIOs are encouraged to think more like venture capitalists by taking the risk of reaching for more ambitious goals despite the risk of failure. Doing so can result in innovative new products and services that could improve their companies’ competitive position. See Diane Frank’s recent CIO article titled Innovative CIOs Show How to Make Money With IT for some great examples of how entrepreneurial CIOs have created new business opportunities for their companies.

Here are some suggestions for ways to put innovation to work in your organization.

It all begins at the top. The CIO must model the behavior he or she wants to see, and to increase innovation it starts with continuously questioning the status quo and asking, “Is there a better way?” An important point here—a better way is not the same as a different way. Too many CIOs miss this. They look for new ways to use technology that do not really add value or create new opportunities. We used to call this “paving cow paths.” Sometimes improvements may involve using less technology or involve a conscious decision to not deploy the latest new thing. CIOs gain respect as innovators when they are seen as solid strategic business thinkers who can see the whole picture, not just the parts that involve technology. A solid understanding of your company’s business model, competition and the dynamics of the markets you compete in are essential first steps.

Once the CIO and his or her senior staff model this behavior, it becomes easier to push it deeper into the organization. A simple way to start is to solicit suggestions from the entire staff. Just like the old suggestion box but with a twist. Review the suggestions collectively, looking for trends and for complementary ideas that, taken alone might not provide much benefit, but when combined with others create a larger opportunity. Recognize and reward contributors.

Finally, pay attention to what is happening around you and teach your staff to do the same. What frustrates your colleagues? What are your competitors doing? What are people in other industries doing? Don’t fall victim to the “we are different” syndrome where you believe that your business or industry is somehow immune to certain market forces or that something that works for one industry or company would never work for you because “we’re different.”

Several years ago I recognized the value of being able to collect and transmit data from our clinical trials on new drugs directly, over the Internet, from investigator sites to our facilities instead of using the cumbersome paper forms (or crude remote data entry systems) previously used. Doing this in real time could allow us to not only get data in house faster but would allow almost real-time quality control and better planning of the site visits we were required to regularly make to our far-flung investigators. Selling the idea initially proved challenging as the leadership of our company felt that, because we were a regulated industry, we were somehow different and this would never work. I used the financial services industry as an example of both a regulated industry and one that regularly transferred literally billions of dollars daily over secure Internet connections to show them that a regulated industry could successfully transfer sensitive information via secure methods as part of their normal business. I had even hired several former Wall Street telecommunications folks who understood how to make all of this work (keep in mind this was several years ago!). We successfully sold the idea and, in partnership with an Internet startup that was developing software in this area, completely revolutionized how we conducted clinical trials. This, by the way, is now standard practice, but we were one of the pioneers and reaped great advantages as a result.

Never waste a mistake or a failure. Learn from it, correct the root causes of the problem, and move forward. If you are not making mistakes, you are not trying hard enough. This doesn’t mean that you tolerate laziness or incompetence. There is a big difference. Honest mistakes are those made while putting forth your best effort. Honest failures are those that occur when something just doesn’t work out as planned. You learn from them and move on. Negligence, incompetence and sloppiness should never be tolerated. You should be able to recognize the difference!

Desktop operating system upgrades have historically been costly and disruptive exercises. Several years ago we attempted to devise a way to do the complete upgrade using our remote software distribution capabilities combined with some custom scripts our team had written. The idea was to train folks and do the update either while they were in training or overnight the night following the training. We would be able to do numerous computers simultaneously and minimize the disruptions. We got it to work in our labs but we would experience random failures, which we couldn’t predict. Being one who embraces the “eat your own dog food” approach, I suggested that we do a trial with a group of us, including me, to see if we could further sort out the cause of the random failures. No luck. In the end we had to abandon the approach and move on. A failure? Yes, but we took an honest chance, did our best and learned a great deal from the experience. That is an honest failure. Contrast that with someone who fails to adequately plan, doesn’t do adequate testing and improperly resources the project. That isn’t an honest failure. That is incompetence and should be dealt with as such.

In order to learn from mistakes and failures, one must create an environment where prudent risk-taking is encouraged and rewarded. Visible symbols become very important here. If you say that you want employees to try new things and then punish the first person to make a mistake while attempting something new, your efforts will be immediately doomed to failure. Internal competitions are an effective way to stimulate creativity and risk-taking. Put a “wicked problem” before a group and ask them to come up with creative ways to solve it. Offer a prize to the winner of the competition. Build upon successes to create more successes.

Model what you want to see by showing a willingness to take risks yourself. As Gandhi said, “Be the change you want to see.”

If we invest wisely, which I hope all of you do, we spread the risk of our investments. Depending on our age we may put a percentage in low-risk, fixed-income investments, some in moderate-risk mutual funds and some in high-risk investments with the potential for great rewards (or great losses). We should do the same thing when investing in new ideas. Be willing to spread your risk by taking on a small number of high-risk initiatives with potential great rewards. When I was a CIO we used four categories to classify the initiatives in our IT portfolio. These were:

• Frontier projects: High-risk, high-reward-potential initiatives. We generally put somewhere between 10-15 percent of our annual investments in these. The remote data capture initiative I discussed earlier was one of these.
• Efficiency projects: Traditional IT projects aimed at incremental improvements or the upgrading of older technology.
• Maintenance projects: Things required to “keep the lights on” such as network maintenance, storage capacity growth, etc.
• Required projects: Being a regulated industry there were a number of things that we were required by regulation to do. These were basically “no choice” projects and had to be funded.

By balancing the investments across several areas, we were able to allocate funds to areas where we, and the business executives on my IT governance board, agreed that the risk was worth the potential reward.

Ambidextrous organizations encompass two profoundly different types of businesses—those focused on exploiting existing capabilities for profit and those focused on exploring new opportunities for growth. For CIOs this means successfully keeping one foot in the “operational and grow the business” camp while keeping the other foot in the “innovate and create new business opportunities” camp. The Harvard Business Review article I have linked at the start of the paragraph provides a description and several examples of successful ambidextrous organizations.

In the past many IT organizations attempted to solve this problem by creating Advanced Technology Groups (ATGs), aimed at exploring new technologies. The problem in most organizations is that they did exactly what they were created to do. They explored new technologies. More frequently than not, these explorations were totally divorced from the real problems and opportunities the business faced. The challenge for CIOs is to keep these explorations relevant and doing so requires the type of inter-disciplinary teams I describe next. Don’t attempt to explore new technologies and their applications in a vacuum. Do it with partners from outside of IT who will be able to add context and focus that will greatly improve your odds of success.

I am working with a group now that is attempting to identify and solve “wicked problems” in the fields of neurosurgery and cardiovascular surgery. We have put together a group of surgeons, biomedical and mechanical engineers and business folks like me. The surgeons identify a serious problem that they repeatedly have to deal with in their practice. The engineers and surgeons then brainstorm ideas for how to solve the problem. The solution, given the nature of the problems we deal with, is likely some type of improved medical device or surgical tool. The business folks then figure out the market and how to best commercialize the innovation. This type of multi-disciplinary approach to problem solving can yield remarkable results because individual team members see the problem, and potential solutions, through the lens of their own unique expertise, experience and knowledge. Of course, one of the challenges is getting smart people with different perspectives to play nicely together.

This year we created a new senior-level course where we put senior biomedical engineering students and senior business students together in a year-long design course where they must identify a problem that can be solved with a medical device of some type, design the device, build a working prototype, and create a business model and business plan to support the commercialization of the device. As one might expect, getting the student teams to play well together is a significant challenge. We use this creative friction as a tool for teaching the students how to work in cross-functional teams and how to problem solve in a constructive and productive way.

Put groups with different backgrounds together to solve problems or find creative ways to address opportunities. Use an external facilitator if necessary to help the groups learn to work together. The results may amaze you.

Are you a good listener? See my post from last year titled “Are you listening?” for some tips on being a good listener.

The second step is listening with an open mind. Be willing to entertain new ideas and think about old problems in new ways. A leader who hopes to foster innovation must make sure that they create an environment where new, different, and sometimes radical ideas are welcome. Model this new world by being open to both listening to and hearing new ideas.

Opportunities abound for CIOs to make game-changing contributions to the success of their companies. For this to occur, the lure of innovation must trump the fear of failure. New opportunities will not be found in the safety of doing what one has always done.

Related links: Future CIOs will look a lot like entrepreneurs