Why Business Doesn't Look To IT For Innovation

The Innovation Blitz

Think about innovation, and you automatically think big insurance company, right? Probably not. But Allstate Insurance, under the office of its CIO, assigned Matt Manzella the job of chief innovation officer five years ago. (Just over one-fourth of companies in our survey have a chief innovation officer, and more than 70% of the time the role is part of IT.) "Innovation is less about traditional research and development and more about employee engagement," Manzella says.

Allstate runs what it calls "innovation blitzes." Manzella's innovation group works with a business unit to lay out a problem or opportunity, and then it's opened to employees, via an online forum, for ideas and discussion. Blitzes last about 10 days. The best ideas bubble up through voting and a high volume of comments. Business units and IT teams decide which to push into prototypes.

An Innovation Council consisting of top Allstate executives also reviews the results to see if the leading ideas have been adopted. There's even an Innovation Posse, which rounds up the good ideas that didn't make it to the top of the pack but are still worth exploring.

Allstate also stages hack-a-thons, known as Allstate App Attacks, four times a year whereby programmers working on new business systems on their weekends compete for prizes. With these techniques, Allstate collected 4,000 ideas from 20,000 employees in a year. It's implementing 100 of them.

Manzella, speaking at the InformationWeek 500 Conference, explained how one Blitz led to the development of a new process that steered claims around an adjuster if that person is unavailable. Allstate's innovation group produced a lightweight prototype, which the claims department helped to flesh out. Allstate, which implemented the process a year ago, estimates that it saved the company $18 million by reducing the time claims assigners and adjusters spend in meetings and reducing errors associated with claims processed after employee vacations.

Manzella offers three pieces of advice for developing innovation practices: Get top executives to buy in and participate; get business departments to do the same; and respond rapidly to comments and suggestions.

And as IT organizations look to drive innovation at their companies, be prepared for skeptics. That Allstate claims department with the $18 million savings? It was reluctant to even take part in innovation blitzes because it manages staff time closely to keep productivity high. Now the claims department runs blitzes under its own branding, Gold Mine.

You never know where the next great idea will come from. When Allstate did a blitz around its mobile app, it opened it up to about 5,000 people, producing 200 suggestions, from which 19 turned into actionable ideas that went on to the mobile app road map--including one from a top Allstate trial attorney in an office far from headquarters. "I guarantee you that guy's boss never said, 'Do you have any mobile ideas?'" Manzella says.

Mobility is one big reason the IT team at JPMorgan Chase got more aggressive with innovation. For example, Chase was among the first banks to let customers deposit a check by taking a picture of it with a smartphone. "We were bleeding edge, and that's something new for us," said Paul Heller, senior VP of the bank's corporate Internet group, speaking at the recent TechTomorrow IT leadership conference in Columbus, Ohio.

But Chase's IT team faced doubters when it first pushed the mobile agenda several years ago, when it suggested that the bank should offer text messaging for certain transactions. "Stupid idea" was the initial reaction from a business unit leader, Heller recalls. After some small experiments, which proved popular, that same skeptic is the biggest mobile advocate--and asking why the IT team can't move faster. Chase now has a dedicated strategy team that tracks trends in mobile payments and behavior, and takes those to business units where they work together on potential uses.

Today, it's the huge tech-driven opportunities that are creating the pressure on IT organizations, and the dissatisfaction. Line-of-business leaders see the chance to connect with customers better via smartphones or understand consumers better via high-speed analytics, but they aren't sure how to get there. The IT teams that help them get there will be on the fast track to hero status. --With Charles Babcock and Chris Murphy

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