Executives are more determined than ever to make their elephant organizations dance. With increasing frequency in companies around the world, they speak of the need for "agility" and "innovation."
Even companies with a solid history of developing new products feel under pressure to show they're capable of innovating at a rapid pace. Take Procter & Gamble, which in a recent statement following its soft financial results talked about "increasing our agility, improving cost efficiencies, improving our speed to market, and relentlessly focusing on innovation in every part of our business." Perhaps this widespread urgency can be chalked up to the recent demises of Kodak, Borders, and other companies.
But applying the latest management technique is a bit like going on a fad diet. It may yield short-term improvements, but it likely won't deliver a sustainable advantage. Let's focus here on more substantive approaches and map out how IT management should respond to business needs to increase agility and innovation.
Let's start with agility. The latest agility fad is the "standing meeting," said to be a surefire way to accelerate decision-making. This approach is derived from agile software development, with its incremental delivery streams, frequent, even daily, turnarounds, and tight feedback loops. Rather than make the leap to apply agile project practices to how the business is run, instead use agile judiciously. From my experience, agile methods are best utilized when:
-- requirements, particularly user interfaces, aren't well defined or likely to be fluid.
-- a rapid turnaround or incremental delivery provide a significant market advantage.
-- the business process will be changed and improved in tandem with the system development.
A good rule of thumb for the typical IT shop is to leverage agile development for at least half of your small to midsize software projects and at least a quarter of your large projects. But remember: Agile is a build methodology, not a run methodology. Apply a mix of lean and capability maturity model (CMM) approaches to your run functions. Treat these run activities as the factory that they are (or should be). Successful run approaches emphasize process definition, metrics, robust execution, a high degree of analysis, and incremental process improvements.
Reduce this oft-neglected bureaucracy by investing in an intranet manager approval page, one portal where a manager can see what requires his or her approval and either approve it directly or easily link to the appropriate page. Modern workflow systems let HR, finance, and other departments set approval (or rejection) time service-level agreements for all managers. These investments will speed up dozens of company processes affecting most employees, and set an agile pace.
Also slowing down most companies are their processes for defining system requirements. Requirements, either poorly designed at the outset or improperly constructed after multiple, elongated sessions, are a likely cause of significant defects and serious project delays. Excellent requirements management tools, such as IBM's RequisitePro and Borland's Caliber, can improve your definition time and quality. Also, work with your partners to ensure there's enough expert staff (business and technical) dedicated to timely completion of the requirements. Use proven best practices such as Rapid Requirements to gain further advantage.
Moving on to innovation, what are some of the ways that you as an IT leader can contribute?
First, ensure the base IT capability is in place. Because IT is an increasingly important element of nearly every service or product your company produces, it almost goes without saying that you must ensure that your systems perform reliably and your IT organization is staying on top of the latest technology trends and their application to your company's market--and hiring the people with those skills. Analyze and discuss those trends regularly with your business partners. This dialogue is where many of the good innovation ideas will emerge.
With that base capability in place, there are two ways for most companies to drive innovation:
1. Build a separate team.
One reason companies succeed is because they focus on delivering quality products predictably. Their operations, product, and technology divisions all strive to eliminate variation and improve efficiency.
But innovation, by its nature, is discontinuous and causes failures. Many innovation case studies point to setting up separate innovation teams, either as incubators or as autonomous groups launching entirely new businesses. IBM, Dow Chemical, Shell, and others have taken this approach successfully for years.
Companies need to set well-defined innovation goals and sponsorship. Sponsorship should be at a senior level, with both line-of-business and technology members. Companies should view their innovation initiatives as an investment portfolio, where diversity is good and poor investments are traded out quickly. Recall that innovation has a high rate of failure; the most successful groups are ruthless about stopping efforts that won't succeed.
Most of the company still must drive ongoing incremental improvements, innovative in their own right, that are important to the main business. And this improvement pace must be supported and just as focused and energized.
2. Leverage a culture of tinkering.
Companies that foster a culture of ingenuity, curiosity, and experimentation can accelerate innovation faster than companies that don't. But for companies to be able to set aside the time and space for people and teams to engage in "tinkering" requires that they first master the base disciplines of quality and operational excellence (current delivery must be close to flawless).
You'll find such companies in many industries, their ongoing success attributable not only to their ability to innovate, but also to out-execute their competitors. At 3M, scientists famously spend 15% of their time on projects they find personally interesting. Some of their greatest successes (e.g., Post-It Notes) didn't result from some innovation session or project, but instead came together over years as ideas and failures percolated in a culture of tinkering.
Historically, one of the best places for innovation, Bell Labs, shared many of the same characteristics: outstanding operational excellence; the willingness to invest in a culture of tinkering; and encouraging scientists, engineers, and even factory teams from multiple disciplines to work in an open environment with clear goals. The results were legendary, from the transistor to Unix to fiber optics.
With these approaches to agility and innovation, the elephant can dance while continuing to reliably handle the day-to-day heavy lifting.
Jim Ditmore is senior VP of technology. operations, infrastructure, architecture, and innovation at Allstate. He has worked in IT for more than 25 years and as a CIO or CTO for the last 15 years. You can read more about Jim's views on IT at Recipes for IT.
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