Innovation strategy for IT organization:

The ideas about broad range of business models are from my unpublished strategy paper. I propose there are two abstract business models.

• Wide open business model.
• Close business model.

Wide open business model
Wide open business model is primarily the models used by companies like google, apple, etc. For example, google’s vision/mission statement is to organize world content and make it universally accessible and useful to every one (or something similar to that). Towards that vision, they build businesses around that. Google is not just a search engine company (do you remember there was a search engine called altavista.com!! It was a search engine company). Google will build any business which aligns to their vision and generate revenue. They are already providing location based content, personality based content etc. They may also provide or facilitate a car loan process or be broker for a mortgages etc based on your location/ creditencials . They are wide open and their vision/mission/strategy map is created such way that they will enter into any venture. It is business proliferation by leveraging their core competency (search technology)

Close Business model:
Close business model is the one confined to do business around their established business model. Let us take a bank as an example, the bank never get into the grocery market and vice versa. A financial service organization focuses only on selling financial services (loan, lease, checking account, credit cards,etc) and very closely related products like financial consulting. The corporate strategy is to focus on the business in and around the core business (like financial)

Innovation strategy for wide open business model:

Innovation strategy for wide open business model is relatively easy since sky is the limit. Based on the type of business model you are in, create the strategy map (ie. Strategic objectives, – the bubbles – the representation of the organization strategy), performance measures for each strategic objectives, targets for each performances measures and initiatives to meet the targets. It is a classical, text book approach to form and drive a strategy for an organization. For example, google being in the wide open business model, they need people who can come up with unlimited innovative ideas. The folks who has unlimited innovation ideas are generally from the younger generation who uses facebook, myspace, blogs, wikis extensively, naturally collaborate and seek for better ideas all the time. The younger generation need money but they do not just work for money, they need pride, recognition and satisfaction. The company who are in the open business model formulate the recruiting strategy to support the over all organization strategy and bring the right people who fits into the strategy. It helps to bring the people whose chemistry matches to the company’s strategic objectives.

In my opinion, driving innovation in the open business model organization is relatively easier to compare to the close end business model.

Innovation Strategy for close end business model:
Formulating and driving the innovation strategy steps in the close end business model organization is more challenging. Innovation strategy for this type of organizations are:

• Ensure the organization understand the core business (how the company makes money)
• Ensure the organization understand the value proposition (how the company create value to the customer)
• Ensure the organization understand the boundary of the innovation (ie. the focus area)
• Create a dedicated innovation program office to build & assist innovation development platform
• Funnel through all new ideas through the innovation program office
• Innovation program office to include the SMEs to validate the innovative ideas
• Develop an innovation incentive program
• Develop a innovation promotion – ie. the whole innovation team wins or the whole innovation team looses (defeat the individual contributor’s recognition and drive collaboration by design)
• Start small and accelerate the phase based on the practical & suitable ideas
• Value driven innovation
• Provide platform to every one to think out side their daily function (You do not need to put everyone in the room and ask them to do yoga and spell innovate as in the IBM commercial)
• Ideas are going to come all over the place if the above strategy steps are followed in an organization which has the close end business model.