Consider the following scenario: A prospective customer walks into your store to buy an air conditioner. He evaluates several models and then buys one - but not from you.
It turns out your competitor located two miles away is offering the same model at a 20 percent discount. How did he know this? He scanned the product's bar code using the RedLaser app on his iPhone, which displayed several local retailers with lower prices than yours. If he had been willing to wait three days for shipping, he could have purchased the exact same model while standing in your store from an online retailer at a 30 percent discount.
This example is one of many instances where technology-led innovation is fueling disruption across every industry. Since the early 1900s, businesses relied on competitive barriers such as manufacturing strength, distribution power, and information mastery. But this is all changing in what Forrester calls "the age of the customer," where empowered consumers have at their fingertips the ability to check a price, read a product review, or ask for advice from a friend, right from the screen of their smartphone.
In the age of the customer, it's more important than ever for enterprises to innovate to differentiate. The current economic turmoil provides the best possible justification for innovation. Why? In the past three years, we've seen the demise of established companies unable to adapt, which were quickly replaced by more innovative and agile enterprises.
Within IT, however, the I&O organisation often takes a backseat role, perceived as the supporter of innovation but not the innovator. The reality is that many businesses are ill-equipped to foster innovation in dynamic environments like I&O, where change, not stability, is the norm. I&O leaders must try that much harder to create a culture of innovation where it may not exist or where broader organisational constructs get in the way. In order to define and solidify I&O's role in innovation, recent research from Forrester argues that that I&O executives must recognise that:
1. Infrastructure and operational skills are an essential asset for any innovation project - but I&O can also be the catalyst to ignite the creative spark.
I&O has both a deep knowledge of the IT infrastructure and processes supporting business services, and a unique view of the users. Infrastructure is the contact point between the user and IT services, giving I&O professionals visibility into how the users consume IT services. Innovation directed at simplifying and improving business services at the end user level and derived by observing usage patterns would use the skills and knowledge already available within I&O.
Alternatively, I&O can also act as a participant supporting innovation. A typical scenario would be bringing together multiple I&O skills and experience to stitch together different technologies to support a business service idea: what is possible, achievable, and manageable in the context of an innovation project. For example, the distribution of digital content such as films, books, and music involves a number of disciplines, from designing end-user devices to negotiating distribution rights to using either the Internet or a 3G network. These innovations are viable only if the content delivered can be guaranteed error-free, in a time frame acceptable by the buyer, and at a cost that makes the operation economically feasible. In the case of movies, this means the ability to deliver high-quality content for the length of the film, which can't be accomplished without strong involvement and innovative management solutions from the respective I&O organisations.
2. IT must become a Partner Player to innovate.
The ability of your I&O organisation to be an effective innovation catalyst or supporter is highly influenced by much broader organisational constructs. Of the three archetypes of IT organisations - Solid Utility, Trusted Supplier, and Partner Player - "Partner Player" organisations are where I&O innovation is most likely to occur and succeed. Why? In Partner Player organisations, technology and its leaders are viewed as critical to go-to- market offerings and provide a source of differentiation (the business is IT and IT is the business). IT organisations in these firms pour their energy into creating unique and competitive solutions for customers, suppliers, and internal business users.
The critical element here is partnership. When IT is considered a Solid Utility or a Trusted Provider, there is a clear trend to exclude IT from any sort of business innovation on the basis of its ignorance of the business. But cooperation can't exist without mutual respect of the conviction that each participant has something to offer. An enterprise aiming at innovation must clearly get IT off the sidelines and onto the playing field.
Jean-Pierre Garbani is a Vice President and Principal Analyst at Forrester Research.
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