The Strategy to Bottom Line Value Chain

The Innovation Practice

The following is an excerpt from "From Business Strategy to IT Action"

"Historically, IT has been, and still is, primarily a support organization.  Its goals and its criteria for success have been related to its ability to respond to the needs of the business through business applications, infrastructure capabilities, and related support services.  A key word used to describe IT’s role as a support organization has been automation, to take an existing business process or function and replace the human processing elements with those of a computer.  IT has been judged by its ability to align its resources with the needs of the business and to reduce costs, both its own unit costs and those of the business processes that it has automated.

Increasingly, IT is now expected to add value to the enterprise not only by responding to business requests but also by creating business opportunities through the innovative combination of IT capabilities with customer needs and requirements.  These business opportunities are not only cost-saving opportunities but also opportunities for new markets and new customer offerings.  In other words, IT is expected to deliver value to the business through IT-enabled innovation.

A challenge for IT is to find the right balance between these two seemingly contradictory expectations: to maintain alignment with the business as a support organization and to be an innovative agent of change. The management expectations and cultures for each are quite different.

Alignment Culture An alignment culture shows up in management’s project methodologies, planning methodologies, and attitudes about what IT should be working on.  Such methodologies characteristically define the business objective, identify the business initiatives and programs to achieve the objective, and then consider the consequential IT implications (the system and infrastructures necessary to support the achievement of the business objective).

Innovation Culture IT can enable new objectives, programs, strategies, and plans.  IT can create and distinguish products, markets, and potential customers.  The management expectation is that IT can actively drive innovations in the company strategies and, ultimately, in its processes to carry out the innovations.  The innovation culture creates innovation through IT and rewards IT-driven change.

Innovation has two underlying component parts.  The first component is creativity or the generation of new ideas.  The second is the implementation of the idea.  Innovation only happens when both components occur.  The dot.com bubble was filled with many creative and new business models.  The bubble burst when it became apparent that the implementation of many of these creative ideas could not be financially sustained.  The point here is that innovation is not just about being creative and thinking outside of the box.  The other necessary piece of the innovation puzzle is having a culture and a set of processes that can cope with new ideas and allow them to develop, be fairly evaluated, and successfully implemented. "

Excerpt from "From Business Strategy to IT Action"