You know "innovation" has over stayed its welcome as the buzzword of choice when IBM, a champion buzzword-slinger in its own right, starts poking fun at all the mind-numbing blather on the subject. In one IBM ad, the spunky leader of an "innovation meeting" declares that the company is "100% committed to facilitating a culture of out-of-the-box, goal-oriented, value-added, disruptive, Web 3.0 ..." at which point an attendee who's keeping score of the buzzwords blurts out "Bingo!"

The ad's all the more funny, of course, because it hits home. Although innovation is a rallying cry at most companies, there's often very little structure around how to make it happen. When it comes to technology-led innovation, the fact that 80% of most IT budgets are still devoted to legacy systems maintenance and only 20% to new investments (of which only a fraction are truly leading edge) is a sure sign that those organizations are paying little more than lip service to driving breakthrough products and processes.

Two organizations we've called attention to recently take a decidedly different tack. One is Harrah's Entertainment, the world's largest casino and hospitality company, which last year created a 10-person innovation group under CIO and senior VP Tim Stanley, InformationWeek's 2007 Chief of the Year. Another is British Petroleum, whose "sourcing for innovation" program lives within a 20-person group led by CTO P.P. Darukhanavala.

Both companies' innovation teams represent a cross-section of expertise and disciplines, with IT at the core. Darukhanavala taps what he calls "hybrid" people--those with serious tech chops as well as a front-line understanding of business problems the energy company is trying to solve. At a presentation last week at the Nasscom conference in Mumbai, India, Darukhanavala highlighted a few projects spawned by that team, including one that tracks employee tasks and another that measures machinery to reduce downtime.

BP spends most of its $3 billion IT budget with a handful of strategic outsourcing providers. But to tap innovation, it opens to literally thousands of sources, with the goal of taking an idea to adoption within 18 months. As senior executive editor Chris Murphy reported from Mumbai, Darukhanavala says BP will work with its existing IT suppliers to spark innovation, but it also shoots problems out to a far-flung network of business and academic specialists, via sites such as InnoCentive and NineSigma. Once an idea gets more fully baked, BP plays the role of broker with the big and small vendors invited to its innovation table. "We're making sure the big guys don't squash the little guys," says Darukhanavala, who adds that the process requires participants to take risks, since these projects don't always pan out. "Suppliers that aren't willing to take the risk don't play in this game. Innovation is not a transaction."

Innovation at Harrah's, while also reliant on the technologies and input of vendor partners, is seeded internally within a central group that draws talent from IT, marketing, customer service, financial planning, and other departments. New people are regularly rotated in and out, testing everything from TV-based systems that control hotel room functions to RFID-supported table games and identification schemes.

While innovation always will involve trial and error, it's hardly a "let the chips fall where they may" affair at Harrah's. Stanley has segmented opportunities into six categories, including "interactive CRM," "games and gaming," "expanded channels," and "enabling platforms and technologies."

In our recent Chief of the Year interview, Stanley was quick to note that his 10-person team doesn't "own" all the innovation at Harrah's. "It would probably be unwise for a lot of reasons," he said. "Innovation comes from all different parts, all different levels, and all different points."

But it clearly takes some structure to harness it.

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To find out more about Rob Preston, please visit his page.