As a CIO, how to cope with business innovations?
For some CIOs, the ‘I’ stands for innovation. These CIOs are focused on the implementation & running of the innovation process and optimally using information and latest technologies. They use these insights to lead the change of business models, processes, products, and services and implement business innovations.
What mindset is required to be such a CIO?
Think as an entrepreneur: The idea of getting to the root of how entrepreneurs think is relatively new. An entire culture of research and education is growing around the entrepreneurial mindset. There are a lot of competencies that come with entrepreneurial behavior. Think of creativity; opportunity recognition; to weigh and assess risk; to have a future orientation and be self-directed and motivate yourself to reach goals.
Continue to ask questions yourself: challenge your own traditional way of working. Firms that failed to challenge their incumbent businesses are lost, like V&D, BlackBerry, and many others. Incumbent managers and organizations tend to defend their own profit sources as this was a basis for (personal) success.
The primary duty of executive level officers is to -as the word execution implies- get things done. Leadership implies mobilizing people to achieve desired results. For that, leaders need to inspire their followers to reach challenging goals, perhaps even go beyond what they have done before or believe is possible. Here positive thinking matters. Holding a somewhat exaggerated level of self-confidence isn’t a flaw of character; it often helps to stimulate to a higher performance.
How to cope with innovation as a process?
Evaluate your business model by making use of Business Model Generation. Understand the ins and outs of your current business model and compare it with businesses in- and outside your industry. We find that even executives have limitations in understanding their business model and the way forward. Run this evaluation at least once per two years. Insight in your business model and functionality is an essential for designing strategic alternatives and enabling decision making.
Define a decision model. The decision model is an intellectual template for identifying, organizing, and managing the business logic behind a business decision. Decision models enable the evaluation of various scenarios in a rational way. With the help of the decision criteria, the various scenarios are assessed for their likelihood to deliver the required business outcomes.
In a decision model, design principles including goals and decision criteria, are defined. It contains several criteria aimed at evaluating strategic options or innovations over multiple dimensions: quantitative, qualitative and financially. For decision criteria standard categories are available. The exact content and interpretation, however, differs per client and also depends on the purpose and scope.
Develop strategic options. Strategic options mostly have three sources:
- First of all, we see companies innovating via business process improvements or -redesign. This can be automated or not and often is a combination of administration, human activities and IT. Efficiency is leading. In most companies, 90% of all innovations are achieved in this manner, whereas we would strive for a maximum of 70%.
- Secondly we see innovations sprouting from business model evaluations, affecting one or more of the 9 building blocks in the Business Model canvas. Reconfiguring, repositioning of key partners, changing strategies like online or bricks-and-mortar are typical examples here. Effectiveness is leading here.
- Finally we see disruptive models. Starting a business unit beside the existing business model, for instance by initiating, incubating or acquiring start-ups. We often see companies working in co-creation or joint venture here.
- A variant on option 2 and 3 is the acquisition of scale-ups. Scale-ups are most of the time very interesting because they passed the survival stage, they are fast-growing new companies with a track record that could be future competitors but need sources to grow faster. And these will immediately strengthen your business as well.
For ideation (the generation of ideas) different techniques are available like using short pilots, Proof of Concepts, hackathons or following startups. Ideation initiatives could be led by the business and supported by selected technology partners.
Currently, the technology market shows an overwhelming offer in technology options. You need partners and suppliers to open up all these technology options. By using hackathons and Proof of concepts, you can also compare and validate different technology options, like tools, programming languages, RAD-platforms, IoT, connectivity, devices, and etcetera.
Build the case with data and financials obtained in pilots, hackathons, and PoC’s. You are able to work out business cases and clarify pro’s and con’s, economic and organizational risks and costs. Of course, you take transition- and transformation costs into account. Is it expensive to innovate in this way? Compared to traditional ideation and business case evaluation, costs and returns are considerably better. A good business case really helps.
How to realize your innovations?
Use a programmatic approach to further your business. Using the previously mentioned decision model enables you to prioritize required initiatives and create a roadmap. The roadmap shows the to-be-realized initiatives on a timescale, preferably over 3 years or more. For instance, the Managing Successful Programs (MSP) method offers a framework that helps you to evaluate the business cases, keep track on the initiatives in the roadmap, and report in line with a governance structure to sponsors.
The related Prince2 project management method offers a framework to steer each consecutive project. This helps you to define Project briefs, assign a project owner and a -manager. The governance structure enables you to keep track of the individual projects.
Business innovations do not fall from the sky
No individual or organization can escape failure. It is an inherent, inescapable component of business. It’s also a truism that the road to success is littered with failures. These days, progressive organizations no longer consider failure a negative-value dead end. Instead, they expect to draw benefits from it. But you have to take care of a proper process, to generate, realize and exploit innovations. Because ‘fail fast, succeed faster’ still requires good thinking, discipline and hard work.
If you have other perspectives and lessons do share them here!
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