Often, the hardest part of innovation isn't generating ideas; it's deciding which to place bets on and pursue. A traditional project proposal without measurable ROI may just be a bad proposal, but an innovative idea may have no measurable ROI because it hasn't been tested. To distinguish between the two, IT organizations need a quick, lightweight filtering mechanisms based primarily on nonfinancial criteria and drivers of competitive advantage. The idea is to determine whether an innovation warrants further exploration, not to generate a business case or estimate ROI, as too little is known about the innovation to assess the business case effectively.
4. Adopt A 'Test And Learn' Approach
"Fail" is an unwelcome word in IT, but sometimes, indeed often, innovations fail. The secret is to get to the failure as quickly and cheaply as possible, accept the failure without faulting anyone, and move on.
One way to do this is to identify potential uncertainties. Typically, the uncertainties relate to the business model, not the technology. Asking "Will this idea really improve how we do business?" is usually a better approach to finding the uncertainties than asking "Will this technology work?" Having identified the uncertainties, the next step is to test them, starting with the most serious.
For example, an insurance company we work with wanted to test whether a new type of online quote generator would win more business from agents. The biggest uncertainty was whether the delivery of faster quotes would make a difference in the market. Having identified the value of fast quotes as the first uncertainty to test, the company looked for a simple low-cost experiment. Instead of building a prototype, it asked its call center to start providing quotes by email. The faster quotes did win business, so they moved on to test the next uncertainty.
So what does the innovative IT organization look like? It's an organization that challenges its business partners, encourages its staff to be creative and take risks, doesn't always look at project ROI (at least not at first), and isn't afraid to fail. This is a tall order, but if IT can master it, then it will provide a capability few can match.
Andrew Horne is managing director at the Corporate Executive Board. Write to us at [email protected].
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