When Gartner researchers asked CIOs at midsize enterprises what digital business means to them, they ended up with more than 100 different answers.
The reality is that digital business means something different for everyone. But at the CEO level, it’s about fundamentally changing the business, not optimising what you already have. This means IT teams need to innovate and foster a culture of innovation.
Innovation is hard. Where at one point it meant productivity or enterprise resource planning, that’s not what CEOs talk about now. On average, midsize CEOs have made promises to drive 11% growth from the digital side of the business. This requires more than a change to technologies, it requires a business model transformation. Midmarket CEOs are looking to change the business their companies are in.
Pharmaceutical is selling wellness outcomes, insurance companies are selling claims prevention. MSEs are shifting from widgets to experiences or outcomes. This means transforming the product, channel and operations to a customer-centric operation.
Leading innovation in a midsize enterprise is a two-pronged approach. First, enable the IT team and then enable business teams.
Enable the IT team
It’s easy to make an announcement about creating a culture of innovation, only to have everyone return to the old way of doing things in the day-to-day. To counter that, the CIO of Service King, a collision repair chain, decided to use its existing IT framework to create a culture of productisation over projects. He told his team to examine any business request that came in for product opportunities. What else can you do with the widget one business unit requested? As long as they met the original request, the team was free to innovate, experiment, fail and work with whatever teams necessary.
For the past few years, the IT organisation has focused on consolidating, centralising, standardising and creating stability. It has built a culture that is extremely risk-averse, which is not an environment conducive to innovation.
To bring innovation back to the IT team, CIOs need to:
- Use product design principles in IT
- Instill a climate of innovation
- Align to customer workflows
It paid off for Service King. The IT team filed seven patents with a total valuation of about $30 million. It doesn’t matter what business you’re in. You’ve got to find a way to disrupt.
Enable the business
The reality of digital business is that IT will not be able to support all the projects that the business units want to do. The good news is that most projects the businesses want to experiment with won’t scale.
To enable the businesses to innovate:
- Encourage business experiments
- Open channels for communication
- Formalise architecture principles
We’ll never be staffed and funded for all that work and we might not be the best ones to deliver it anyway. How do we empower the businesses to lead experimentation?
General Atlantic, an equity firm, set up a series of options for the business to communicate. There was a genius bar for those groups who needed a little help. People with several successful projects became “technologists”, and the team designed a collaboration portal across the company.
Finally, when you set business units free to experiment, make sure you establish a short, succinct framework of architecture that they need to adhere to. This might include items such as ensuring the technology is compatible and has a better user experience. As long as the technology meets a certain criteria, the business unit is free to experiment and, if they find a technology that needs to scale across the business, IT will be there to help.