7 Habits Of Innovative IT Leaders

Writing about innovation is a lot like writing about politics or the environment: The subject matter is so broad and complex that it defies tidy overviews and prescriptions. So with that qualifier in mind, allow me to proceed with a handful of takeaways from the "Innovative CIO" program I attended recently at Stanford University, as well as from readers who responded to my recent column "Innovation Doesn't Happen By Chance."

1. Permit innovation. That's a no-brainer--far from an unconventional concept, you might think. But the reality is that most people simply don't carve out the time to think about innovation because there's no directive or permission from the top to do so. In most IT organizations, people are so busy keeping the lights on that they’re not anticipating what's next--the innovative business applications, systems, and processes that could yield a competitive advantage.

InformationWeek has written about companies that have set up IT-centric innovation teams to get their people out of their day-to-day comfort zones. Payroll and HR outsourcer ADP, for example, last year started an innovation lab, led by CIO Mike Capone, that consists of four or five permanent people, including so-called innovation experts, and another 15 to 20 IT pros who rotate into and out of the lab in six-month cycles. Casino company Caesars Entertainment several years ago created an innovation group, now led by CTO Katrina Lane, that draws talent from IT, marketing, financial planning, and other disciplines. It uses a rigorous process to propose, finance, pilot, and evaluate the results of its leading-edge technology initiatives.

David Robinson, CIO of Kansas City-based insurance brokers Lockton Companies, wrote me to advocate the old skunk works approach. Lockton's IT organization presides over no formal innovation team, but its people don't have to ask permission to go outside their everyday jobs. "Give people a specific challenge and then empower them to solve it without rules," Robinson says. "Most folks have the resilience and drive under such circumstances." Mutual fund company Vanguard is more ad hoc with its permissioning. When its IT organization is assembling a team for a cutting-edge project, it looks for volunteers, who log extra hours to work on the project while keeping their day-to-day responsibilities.

2. Get people jazzed. The process of innovation isn't an analysis of actuarial tables. It should be energizing, exciting, and inclusive of different job functions and personality types.

A famous Stanford case study of software development and engineering company Rite-Solutions and the internal innovation tool it created, a stock market game called Mutual Fun, provides a good example. In a nutshell, Rite-Solutions employees propose ideas--to save the company money or develop new products--as stock listings on the internal Mutual Fun exchange. Other employees help pick the winners (and losers) by bidding (or not bidding) their own virtual money on those stocks. So everyone at the company is encouraged to join the innovation process and have some fun in the process; it's not an exercise for a committee of the good and great. (Caesars is quick to note that its innovation group doesn't "own" IT-based innovation at the company but is charged with driving it.)

Mutual Fun appeals to a basic human need: social recognition. And because the collective bids ideas up or down, it's easier to kill the bad ones. "Bad ideas often win because of the skills of the communicator," observes Brian Lillie, CIO of data center operator Equinix, who helped organize the Stanford innovation program. "The organization becomes an echo chamber of the boss."

3. Get comfortable with failure. "In the corporate world, failure is an F word, and you just don't talk about it," laments Steve Schlecht, CEO of clothing maker Duluth Trading Co. IT pros in particular gravitate toward peace of mind, what Stanford marketing professor Baba Shiv and his colleagues call the Type 1 mindset. They fear making mistakes. Organizations need to cultivate a Type 2 mindset, a fear of missing out on opportunities. It's the innovator's mindset.

Legend has it that in the early days of MTV, overseer Steve Ross would fire employees who didn't fail enough. Caesars' innovation group "pushes" for a 50% failure rate--it's an internal metric, not something Lane's team brags about. She figures that if the team's not failing that often, it's not pushing the envelope hard enough.

That doesn't mean these innovators like to fail--that is, don't get too comfortable with failure. Caesars, for instance, is very careful to manage risk and exposure as part of its innovation process. The idea is to fail fast (you've heard that before) and cheaply and learn from your mistakes, potentially sparking ideas for related innovations.

4. Start out raw. When putting ideas on the table and whipping them into shape, don't pine for perfection. In fact, it's better to set vague innovation goals and build rough prototypes, the Stanford experts say. Shiv talks about jugaad, a Hindi word that roughly means innovation on the cheap. The thinking is that you don't stimulate innovation by acting like you have most of it figured out from the start. It's a process that benefits from lots of starts and restarts involving lots of different people's input.

If you build a polished prototype, others will tend to look for flaws. But if you build a rough prototype, colleagues will tend to see opportunities and will jump into the "co-creation" process to make it better, Shiv says. "Ideas become their baby," he says. This approach is taught at Stanford's renowned Hasso Plattner Institute of Design, where the 40 or so participants in the three-day Innovative CIO program gathered for a couple of hours of hands-on learning. We were broken into groups of two and given an hour to discuss with our partners a recent gift we had given and then prototype a better gift-giving process, using only paper, marker, pipe cleaners, and other rudimentary materials. The exercise produced some clever ideas. (One entailed setting up a Mutual Fun-like gifting exchange for friends and family.)

Raw prototypes also encourage more honest feedback, says the design school's Evelyn Huang. If you put a lot of time into polishing up your presentation, your (generally nice) colleagues are apt to not want to hurt your feelings by criticizing it. Take the approach: "I know it's crap, so let's build from here," Huang says. (Back to learning from your failures.)

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5. Instill a sense of desperation. When times are tough, like during a recession, the tendency is for everyone's head to stay down. When business is brisk, the tendency is to not mess with success. Neither environment is a petri dish for creative ideas.

In bad times and good, organizations must apply innovation pressure on themselves. Shiv recommends doing a "pre-mortem" exercise: Look ahead two, three, five years and assume that the business or some foundational IT project has failed. It forces organizations to face potential threats and address opportunities now, not when a crisis throws everyone into a frenzy.

6. Start off by talking with people. This beats fielding surveys. Our little gifting exercise started with a discussion with a real-life gift-giver, the "customer" of the process we were tasked with improving. It's amazing what you can take away from such informal chats. Ken Stewart, CEO of change management advisory firm ChangeForge, agrees. "I'm a firm believer that true insights come from interaction," Stewart wrote me in response to my recent column on innovation. "Executives who are most in touch with their customers and their markets often have the strongest 'innovation quotient.'"

7. Beware unintended consequences. Understand the difference between innovation to achieve a defined benefit and change for the sake of change. "The former is great; the latter can be both costly and disastrous," says reader Christopher Engel, a network infrastructure manager with software company Conxeo. "Even when change can be quite beneficial in one area it can lead to some pretty serious unintended consequences in others." Engel cites social media and mobility. Many organizations that rushed into those areas got burned because they didn't take the time to consider the risks, such as exposing sensitive company information.

"It's great that many organizations have 'innovation' champions," he says. "At the same time, they badly need individuals who can take a step back and take a long hard look at just what practical effects any given innovation is designed to achieve, along with the costs and potential unintended consequences. Unfortunately, whenever I hear someone pitching 'innovation,' a picture of the Titanic comes unbidden to my mind. The ship’s hull design was supposed to be quite the innovation for the day. Unfortunately, White Star Lines was so enamored of their unsinkable innovation that they didn't spend enough time thinking about the lifeboats."