A Systematic Approach to Innovation

The role of CIOs and their IT departments have morphed over the years as they have felt increased pressure to provide collaborative tools and systems to support innovation. A study of leading companies shows that a systematic approach can be used to stimulate and support innovation as well as break down departmental silos and barriers to integration.

Also See:
How To Open Up Innovation
What It Takes To Be An Innovator

By Ellen Pearlman

Strategic Thinkers:
James Cash, Jr., Michael Earl, Robert Morison
Cash is the recently retired senior associate dean and James E. Robison Professor of Harvard Business School; Earl is the recently retired dean of Templeton College, Oxford, emeritus professor of information management and a current pro-vice chancellor of Oxford University; Morison is an executive vice president and director of research at nGenera Corp., based in Austin.
Big Idea:
Innovation and enterprise integration require a systematic approach that can be best handled by the formation of two IT-intensive groups.
"Teaming Up to Crack Innovation and Enterprise Integration," published by Harvard Business Review, November 2008, $6.50 for a single copy of the article online.

The role of CIOs and their IT departments has morphed over the years as demands on the corporation for rapid growth fueled by innovation have escalated. IT departments are expected to provide the tools for collaborative innovation and to build horizontal enterprise-wide platforms of business processes, information, systems and technology. The technology and departmental silos of the past are barriers to innovation and integration and IT is frequently charged with playing a strategic role in breaking them down.

Two professors-James Cash of Harvard Business School and Michael Earl of Templeton College-teamed up with Robert Morison of nGenera to undertake some research in 2006 of 24 major U.S. and European companies, many global, to understand the additional roles that CIOs and their IT departments were being asked to play in today's large corporations. They found that 12 of the 24 were charged with improving the horizontal integration of the business and one third were focused on innovation and growth initiatives. A few were charged with both innovation and integration.

The three research leaders knew that few corporations had systematically leveraged technology for business innovation and enterprise integration, but their study of 24 large businesses led them to a model that could achieve it. In an article in the Harvard Business Review in November ("Teaming Up to Crack Innovation and Enterprise Integration"), the three authors recommended that large corporations form these two agencies to promote innovation and integration:

  • A distributed innovation group (DIG)—fosters and channels innovation, but does not "do" innovation. The DIG serves as the center of expertise for innovation techniques, scouts for new developments outside the company and provides experts for internal innovation initiatives. It also deploys technologies and methods that help to facilitate collaboration and innovation.

  • An enterprise integration group (EIG)—focuses on the horizontal integration of the corporation. It picks the integration projects to support and provides resources to help them succeed. It develops architecture and management practices that speed integration. It may manage a portfolio of integration activities and serve as the corporation's center of expertise in large project management. It can provide staff and leaders for major integration initiatives.

It is important that these two groups remain small and are dispersed throughout the organization. They are not centralized staff functions; their role is support and not execution. Membership in these teams is not permanent; people join the team and eventually return to an operational area. These teams may report to the CIO or may not, but they are filled with some of the organizations most capable and experienced IT professionals with a very special set of skills specific to each group's mission. And they deploy the latest tools and technology to accelerate innovation and integration progress. But there are differences in how these two groups operate.

A DIG is charged with promoting innovation in several ways: scouting for ideas internally and externally; researching technology trends and emerging technologies, focusing on how technologies are converging to offer new possibilities; facilitating online idea marketplaces, utilizing information dissemination and collaboration technologies; acting as an innovation adviser, helping business units do rapid prototyping and using analytics to uncover new patterns in customer behavior; publicizing promising innovations; and serving as a temporary home for developing pilots or prototypes, providing the resources and skills that enable business units to overcome technical, financial and cultural barriers. The DIG doesn't replace R&D; it works with them. The DIG may report to the CEO if innovation is a top strategy of the organization, or it may report to an R&D executive, business unit executive or even the CIO.

An EIG is expected to help an organization "federalize" its operations, instituting horizontal processes and shared services to improve efficiency of operations, maximize expertise and raise the level of customer service. Specifically EIGs are charged with managing the portfolio of integration activities that the corporation is undergoing, this requires cultivating relationships throughout the organization; acting as the center of expertise in process management and improvement; contributing staff to major integration efforts, serving as coaches and sometimes leaders; being responsible for enterprise architecture; and anticipating how the organization might work in ever more integrated ways in the future. EIG staffing is critically important, since it can be difficult to find the specific skills needed by team members-people who are system thinkers and completely understand both the business and information architecture. Moreover, team members need strong relationship building and coaching skills. The EIG may also report to the CEO if horizontal innovation is a top imperative, but it is more common for the group to report to the COO. In some companies, where IT has had much success with cross-enterprise systems, the EIG may report to the CIO.

The authors give several examples of companies that have put elements of either a DIG or EIG in place-to great effect. For instance, Procter & Gamble launched Connect and Develop in 2000 to find new ways to innovate. The program was such a success that it raised the rate of new product ideas originating outside the company from 15 percent in 2000 to 50 percent in 2007. General Electric has a Corporate Initiatives Group that reports to corporate CIO Gary Reiner. The group is responsible for all horizontal integration at the global company. The group has successfully identified ways to use lean workouts (two-week exercises aimed at reducing cycle times) to reduce the time it took to finance private-label financing for retailers from 63 days to one day and to reduce the time to identify a prospective hire and put them to work from 102 days to 30.

While DIGs and EIGs have different missions and challenges, there are also important similarities. Each type of group acts as a catalyst, using their leadership skills and relationships, communication abilities, and specific expertise to facilitate internal teams and work with external partners and customers. And both groups require funding and support from the executives at the top of their organizations.

Being part of a DIG or EIG team is a tremendous opportunity for IT professionals. It's a strategic role that brings members in touch with leaders throughout the organization. The results are noticed and highly desired. And it's not a role that can be outsourced to the lowest-price supplier. As the authors say, "These are rare human beings, and competition for their services will be high."

Reprinted by permission of Harvard Business Review. Excerpted from "Teaming Up to Crack Innovation and Enterprise Integration," Copyright (c) 2008 Harvard Business Review; All Rights Reserved.

Also of interest:

Project: Initiative for Distributed Innovation (ITI)—an MIT/NSF initiative; its goal is to better understand the distributed innovation process within and across organizations. Participate and learn more.

The Integration Consortium. The mission of the IC is to foster the leading community of like-minded Information Technology professionals responsible for transforming business through both traditional systems integration and emerging SOA with greater agility, ease of use and business results. The IC is a member-driven community that shares experiences, knowledge and best practices in multiple forums.

CIOZone Question: Have you ever been part of a distributed innovation group? If so, what did it achieve?

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