A lot has been written about innovation. IT can play a big role in driving innovation and that is an important agenda for the contemporary CXO leaders. Through my work, I have identified four ways in which they can drive IT led innovation.
But before I get into describing that, let me define innovation. As per the Wikipedia, “An innovation is something original, new, and important—in whatever field—that breaks in to (or obtains a foothold in) a market or society”. Innovation is not about the final products and services but has to include the processes, technologies, ideas and the structures. Superimposing this definition of IT gives us four important ways in which IT can drive innovation- innovation by processes, technology, ideas and structures.
1. Innovation of processes
More often than not, IT is used to automate the existing processes to make them better and faster. In certain cases, IT can also be used to create new processes. But every new process cannot be termed as innovation, they become innovation when such new processes help the organization service the customers better, differentiate it from the competitors and has the potential of deeply impacting the business performance.
One media company CIO I have worked closely with shared how he used IT to create a new process of disseminating the news and servicing the customers. This new process helped the organization not only save in big ways by leveraging the internet as a medium but also ensured faster delivery of news feed to the subscribers. Another CIO in a tyre company shared with me how IT has helped them create a differential price mechanism, where they can charge a premium for faster delivery of tyres. In both the cases, the new processes gave the organizations an edge over their competitors as the competition could not imitate it fast and the customers valued it.
2. Innovation of technology
Innovation of technology refers to new method of producing a product or delivering a service. Technological breakthroughs can be seen in automobiles, pharma, telecom services, medical equipments etc. where IT can add substantial value to the creation of a product or a service.
3. Innovation of ideas
The above two are more or less direct impacts of IT on creating innovation; there can be indirect impact also. This indirect impact is driven by creating an innovation-conducive environment for new ideas to come up. This is primarily focussed on people and is driven by the informational aspect of IT, where information and insights provided by IT can lead to identifying gaps, opportunities and new ways of bridging and tapping them respectively. When customer centric information helps get new product ideas or a new process idea, the seeds for innovation are sown.
4. Innovation of structures
And finally what supports the innovation of ideas is the innovation of structures. In the media company example I cited earlier, the CIO replaced the underlying proprietary IT infrastructure with IP based platform and extended IT to automate the existing processes. This enhanced the collaboration between the field journalists and the editorial staff and provided structural support to work closely and drive new products and services for their subscribers. Many call this as business model innovation.
Hence, in order for IT to drive innovation in organizations, CXOs must look at how it impacts the four aspects of processes, technology, ideas and the structures. When all four of them get suitable attention, innovation becomes a reality and can really become a source of strategic advantage.
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