Strategy

Playbook for Innovation

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There are numerous definitions; perspectives and understanding exist for innovation in market place. It is educational to listen, analyze and understand various school of thoughts on the subject and most of it is useful. My definition on innovation for a profit organization is:“Innovation is a better or new method to bring efficiency or generate revenue”. As always, since Stone Age, innovation is the back bone for future & future economy and this message was echoed by The President of United States, The Prime Minster of India, major management consultants and chief executives of corporate world. In the recent survey conducted by McKinsey, 84% of executives say innovation is extremely important to their companies’ growth strategy. Strong message and emphasis on innovation from senior political leaders, management consultants and top executives motivates citizen of a nation and members of a corporate world to think and work on innovation. But the real challenge being faced by corporate world is lack of executional leadership capacity and refined steps to cultivate innovation.

In absence of executional leadership capacity,a structure for innovation within a corporate world, the members who would like to invest their time to be innovative, go down on a path which does not provide fruitful result. Innovation initiatives in an organization without a framework nor a structure is similar to the people who tirelessly worked hard, creative, extremely smart who were passionate to develop a flying machine by watching the behavior of birds. They were successfully able to fell down with wings in terms of flying.

In my own experience, I have seen in organizations where innovation program is established by placing suggestion boxes, launching bright idea database and introducing contemporary furnished conference rooms. When an organization is placing suggestion boxes for innovative ideas, the organization culture is too far behind in general communication. The immediate goal and focus of that organization should be to work on basic general organization communication.

“The real challenge being faced by corporate world is lack of executional leadership capacity and refined steps to cultivate innovation”

By just having a bright idea database, the employee who would like to take the organization imperatives and be part of it would come up with ideas which are impossible in reality due legal, regulatory, and compliance reasons. For instance; for an auto finance industry, a bright idea from an employee is to enter mortgage business segment. It is an idea, may be a bright idea but the company may not have license to be in that segment, nor capital to get into that market. Without this key information, employees are going to work very hard and think about the new ideas which are not practically possible to implement.

Playbook for Innovation:

  1. Establish an innovation program office
  2. Develop an innovation framework
  3. Communicate innovation framework to the organization
  4. Manage innovation
  5. Measure innovation
  6. Report innovation

1. Establish an innovation program office:

Make it as one of the performance measure of a strategic objective of a strategy map (strategy). Assign this task to an executive leader who has visionary ideas with executional insights – I called it as “executional leadership capacity”. It is challenging to find an executive leader in an organization with this trait.

2. Develop an innovation framework:

Let the program office develop this framework. The framework is a tool helps the organization to think outside the box within a business context boundary. There are five components to the framework. They are a) Organization change management: Partner with human resource department. Bring necessary training and coaching to the organization that helps members of the organization to think outside the box. Instill during the training that organization is willing to face both positive and negative consequence of each individual who are thinking outside the box. b) Business-IT alignment: Strong partnership with business team is critical for the innovation program office’s success. To accomplish it, identify partner relationship manager or IT ambassadors for each business unit and develop a sustainable bi-directional communication plan to enable fluid ideas flowing between all teams. c) Industry insights: Partner with the business strategy or business development team. Provide a periodic economical and industry data pertains to the business unit to entire organization. The organization must be aware of whom they are competing in the market, what is the market volume, market segment, how the distribution are spread out, what are the growth opportunities in the competitive landscape and etc. d) Business process competencies: Partner with business process management team or business process operation team or the team who manages the business process for the entire organization. This component of the framework should help the reader of the framework to understand how organization makes money.  e) Technology competencies: Identify technologically savvy and curious members in the organization and ask them to study game changing technology trends which are in the pipeline. At this time the game changing technology trends are: big data, mobile computing, social computing and cloud computing. The members must not be nominated by managers, the members of the team must be volunteered who wants to contribute in this domain.

3. Communicate innovation framework:

The framework is a document that contains all the above components. Make the framework available to the entire organization in all possible media and channels. If the organization management training and coaching technique is effective, organization will seek for the framework and keep it for their reference. It is program office responsibilities to keep the framework up to date and make it available to organization. The framework should also be made available as part of orientation training for new hire for both employee and contractor/consultants.

4. Manage Innovation:

It is the program office responsibility to guide organization to differentiate disruptive & sustained innovation combining with traditional and non-traditional approaches.

5. Measure Innovation:

It is the program office responsibility to measure how program office is performing by measuring number of disruptive & sustained innovative ideas submitted, reviewed, rejected, approved, funded, implemented, benefit realized and etc.

6. Report Innovation:

It is the program office responsibility to report all program office performance metrics to IT balanced scorecard to provide a holistic view on the organization performance.

IT Strategy: In the absence of a Business strategy

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Business strategy drives IT strategy. But, what drives IT strategy in the absence of clearly defined business strategy?

Identification of successful business strategy in a dynamically evolving consumer and financial markets is extremely challenging and sometimes, it is impossible. Look back in few years, take business strategies of top companies and their result today, and hence the evidence of extreme complexity and challenge exist in defining successful business strategy for an organization in a dynamic market.

IT strategy supports business strategy in spite of the out come of the business strategy. True. However, the point is, some times business strategy can not be defined clearly or it does not exist and in that case, how the IT strategy should be defined.

In the absence of business strategy, IT strategy is to increase the value of IT organization.  Now the questions are, what is IT valuation and how to measure it, and finally how to increase it?

I had the opportunity to work with a purchase accounting project for a well known demerger in the auto industry.  I noticed, there is a significant market opportunity for a IT valuation model in spite of 3 of  big 4 consulting and accounting companies were heavily involved in that project. So I developed a simple IT valuation model to determine the fair market value of an IT organization to readjust the book value of IT assets.

To simplify it, let me put a different spin to IT valuation. Purchase accounting occurs after a merger or demerger occurs. But, before a merger or acquisitions occurs, an organization is evaluated for its market value. That includes tangible and intangible assets. The tangible assets are mostly fixed assets and over the years, valuation process for the tangible assets is more matured. Most of the IT valuation comes from intangible assets.  For a pure technology companies like Microsoft, Intel, the intangible assets of the organization can be quantified by patents, copy rights, trade mark and etc. For an IT organization supports a business function in banking and finance, oil and gas and etc, the intangible asset valuation is challenging.

In those scenarios, the intangible assets are:

  • An organization ability to adapt to market change in terms of capacity & capabilities. ie scale up or down infrastructure based on future requirements
  • An organization ability to develop a rapid applications for future requirement – skill set, processes, knowledge
  • An organization’s efficient operating cost mode –  in terms of license, hardware depreciation
  • An organization’s IT general controls and management – IT risk management, Security Management, compliance management

The above intangible assets of an organization improves the value of IT organization. It will be reflected  in case of merger or an acquisition.  In the absence of clearly defined business strategy, take the above strategic objectives of  IT strategy and plan.

The above IT strategy will reduce the cost, improve the over all reliability, flexibility, security and adaptability  of an IT organization. It requires investment and the question is how a CIO can justify the ROI for the above initiative.Biggest advantage of the above approach is, the initiative does not require any additional incremental cost. Since it has very high ROI, it will sponsor the project from its saving and improves the value of IT organization. When there is no clearly defined business strategy then the IT strategy is to improve the value of IT organization.

If any one interested to understand the granular details of the above IT strategy, practical difficulties of framing the strategy, actual results and etc. More blog postings will follow to provide the details of the above steps. Mean time, if you’re impatience and you need immediate information,  please do not hesitate to contact me.

IT Strategist Job

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Predicting monotonic events are trivial, whereas,  preciously predicting the continuous non-monotonic events are impossible. For instance, , it is possible to predict that the Sun is to arise on east the next day. Well, assuming that our star, the Sun, is not sucked by an external moving black hole (Yes, black holes can move!! and it was recently proved). The probability for a black hole to swallow the Sun on next day is almost zero.  Like wise, preciously predicting continuous non-monotonic events like weather,stock market for next ‘n’ days are impossible.

Any profit organization events are non-monotonic and preciously predicting the organization future is impossible. but, strategist can define it or approximate it.

A strategist or chief architect can shape up a small state and make it as an empire. Strategist lays a strong foundation for growth and road map to flourish. He (or she) uses abstract and vertical thinking skills to study the past, analyse the current, and approximate the future.  Chanakya, was an strategist, who lived 2500 years ago,provided thought provoking ideas to Maurya Emperor Chandragupta and defined strategy to transform the entire kingdom.

Strategy in an organization starts with people. A strategy can be made successful only if the strategy has an exemplary communication management plan.  In communication plan the following questions must be answered..

  • Why do we have the new strategy?
  • What are the expected results of the new strategy?
  • Will we be successful?