The New Age Of Innovation

Is there a new paradigm for business in the 21st century? The authors of a new book say yes, and CIOs will need to play a prominent role in it -- or they won't, to their detriment.InformationWeek has just launched a new blog site called The New Age Of Innovation. It takes as its inspiration a new book by noted business management authority C.K. Prahalad and his co-author and colleague at the University of Michigan Ross School of Business, M.S. Krishnan.

The new book, called "The New Age Of Innovation: Driving Co-created Value Through Global Networks" (McGraw-Hill; 2008), will be published this month in India, and available in the United States starting next month.

The thesis of the book is that the future of business is this: N = 1; R = G.

Let me explain.

Companies will need to interact with their customers so closely that they actually "co-create" value with them on an individual basis (N = 1). Think of the Apple iPod and iPhone; these are products that allow customers to use and customize them for their own individual purposes. At the same time, companies will resource the goods and services needed to develop new offerings from anywhere in the world (R = G). Think of Wal-Mart and its highly interactive, superefficient supply chain.

The first equation, N = 1, calls for a level of customer intimacy that can only be achieved with extensive use of deep analytical technology. The second, R = G, requires supply chain and logistics expertise that allows companies to source goods and services efficiently and effectively from anywhere, either within their own organizations or outside them.

All that demands deep expertise in IT. Not only that, it requires an understanding of and ability to manage business processes that will let companies innovate quickly, continuously, and with a minimum of inertia and conflict. And it requires both areas of expertise together, not separately.

That's where the CIO comes in. CIOs must step into that role, which will become more prominent as the N = 1; R = G paradigm becomes the dominant way of conducting business. If the CIO doesn't fulfill that role, another business executive position will.

This isn't something that will happen later on this century -- it's happening now. Besides Apple and Wal-Mart there are many other cogent and compelling examples of new age of innovation companies in Prahalad's and Krishnan's book. I'm sure if you were to look around your own company, you would find examples of at least one of those equations, probably both. Most companies are at some point -- beginning (most), middle (some), or far along (a few) -- on the spectrum of the new age of innovation.

CIOs can help push their companies along that spectrum. Or they can let their companies -- and themselves -- get left behind.