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EXHIBIT 9.15 Innovation Planning in the Value Chain

Innovation

Strategic IT Planning Annual IT Planning
Business The Business Enterprise: Lines of Business, Departments
Strategic
Business
Intentions
Plan Projects
Strategic
(Strategic Budget
IT Agenda Strategic
Business Plan)
Proj- Projects
Action
IT Require-
ects Plan
ments
Assessed Strategic Lights-On
Portfolios IT Plan Budget
IT Plan
(Alignment,
Service/Quality,
The IT Enterprise: Four “Lights-On” Asset Pools
Technology)
Performance Measurement Metrics
188 PLAN FOR THE RIGHT RESULTS


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 opportuni-
ties 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 inno-
vation.4
A challenge for IT is to find the right balance between these two seemingly
contradictory expectations: to maintain alignment with the business as a sup-
port organization and to be an innovative agent of change. The management
expectations and cultures for each are quite different. See Exhibit 9.16.


EXHIBIT 9.16 Alignment /Innovation
Planning Practices

Strategies and IT Capability
Objectives (Potential for new
(Strategic business directions)
Intentions)
Innovation



Alignment
Business Units and IT
Processes (Strategy for the
(Strategic Agenda supply of IT)
for use of IT)




Alignment Culture
An Alignment culture shows up in management™s project methodologies, plan-
ning methodologies, and attitudes about what IT should be working on. Such
methodologies characteristically define the business objective, identify the busi-
ness initiatives and programs to achieve the objective, and then consider the con-
sequential 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 expec-
tation is that IT can actively generate 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.
189
The Innovation Planning Practice


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 suc-
cessfully implemented.

What are the key management issues that the practice area addresses?
The key management issue is how IT™s role in business innovation can be
expanded and improved. This issue really raises two related questions. The first
is the cultural question that asks whether IT recognizes its innovation role and
encourages that role via a set of management norms. The second question relates
to the specific processes that can be used to enhance and bring attention to IT™s
role in innovation.

Is IT participating as an innovation “partner”? Does IT™s management culture
actively support IT-enabled innovation?
IT must be able to assess its role within the organization™s innovation chain and,
as needed, enhance and improve its credibility and capability as an innovation
partner. During the go-go period of the dot.com rush, many organizations set
up separate dot.com divisions that included integrated IT capabilities. The exist-
ing IT organization was viewed as being too slow and too cautious to run at
Internet speed.
Exhibit 9.17 summarizes some of the characteristics of organizations that
successfully encourage and reward innovation.

EXHIBIT 9.17 Cultural Aspects of Innovation
Norms that promote creativity Norms that promote implementation
Support for risk-taking and change Effective group functioning
• Rewards and recognition for innovation • Teamwork is emphasized
• Positive attitude and role models for change • People share common goals
• Information is shared openly
by management
• People are expected to challenge the
status quo
Tolerance of mistakes Speed of action
• Mistakes are accepted as a normal part of • Decisions are made quickly
• Flexibility and adaptability are emphasized
the job
• People are given the freedom to make • Sufficient autonomy is given to insure
changes implementation
• “It™s better to be safe than sorry” is not an
accepted practice
190 PLAN FOR THE RIGHT RESULTS


Can IT™s role in business innovation be managed and improved?
Some argue that creativity and innovation cannot be induced or managed
through formal processes; that innovation is about improvisation, serendipity,
and emergent behaviors caused by the inherently unpredictable juxtaposition
and combination of previously unrelated ideas or concepts. We would respond
by saying that although specific flashes of creativity cannot be predicted, their
probability can be increased through the presence of processes that open up
broad conversations between IT and business; and through an environment and
culture that creates opportunities for new thinking. The same can be said for an
organization™s ability to convert new ideas into opportunities and competitive
advantages by providing a fertile ground for their germination and development.

How are the management issues addressed by the frameworks and processes that
define the practice?
The NIE Innovation Planning practice has four components:

1. Business and Technology Monitoring is a review for IT and business man-
agement of the business and technology change factors that could affect
their business. This process produces a technology and business status
report and uses external research, IT architecture and plans, and business
information to fully explore the technology and business dynamics affect-
ing business and IT. See Exhibit 9.18.


EXHIBIT 9.18 Innovation Planning Questions and Components

Visioning:
Innovation
What
Visioning
Can We Do ? Business and
Technology
Monitoring
Business
Monitoring:
Innovation
Choices:
What are the Oversight
Business
What
changes Process
Choices
Should We Do?
affecting us?


Innovation
Key
Actionable: Process
Innovation Actionable
What
Components Innovation
Questions Will We Do?




This can be in the form of an ongoing process that engages business
and IT management in reviewing current changes and future opportuni-
ties. It addresses the question “What are the changes affecting us,” both in
191
The Innovation Planning Practice


technology and business terms. The process can consist of a two- or four-
hour session, with the following sample agenda:
Input from outside experts who are aware of technology and business
changes affecting the industry.
Updates from IT on potentials for addressing key business strategic
issues.
Updates from business management on key business changes occurring
in the industry.
Facilitated discussion on the possible implications for the company.
2. Innovation Visioning develops broad alternative visions/directions for the
enterprise, responding to technical and business changes, and establishing
a consensus set of alternative visions/directions. This process engages the
business and technology managers in addressing the question “What can
we do?” Potential gaps and potential changes in the client™s business and
IT strategic plans are identified for each scenario. Issues to be addressed
include:
The key business and competitive drivers; which can be causes for busi-
ness change in industry.
IT drivers affecting industry; opportunities provided.
Alternatives for company action in response; possible scenarios describ-
ing company action; likely initiatives needed.
Innovation visioning, which can be in the form of a workshop with both
IT and business management participation; a sample agenda.
Input from outside experts aware of key technology and business issues
in the industry; input from business management on the implications
for the company.
Development of alternative scenarios in response to issues and impli-
cations.
Discussion of possible business responses, with IT as a key enabler.
3. Business Context and Choices makes choices about the vision/direction for
the enterprise that govern how the business can function. This interaction
establishes a “problem” statement: “here™s what the drivers are, the direc-
tion we need to develop, and the ground rules.” This process engages the
business and technology managers in a full consideration of the possible
business scenarios ”What should we do?” as well as developing those that
are most consistent with client business goals and strategies. The process
identifies the best scenario and outcome for the client. Issues addressed can
include:
Current goals and strategies, and initiatives; basic principles that drive
company actions.
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What company responses are best, in light of current goals and strate-
gies, initiatives, and basic principles?
What major initiatives are likely in the next two years, given the best
company responses?
Business Context and Choices can be in the form of a workshop, engag-
ing business and IT managers in discussion of the implications of business
and IT opportunities, and creating potential scenarios for moving forward.
A sample agenda would include:
Presentation of scenarios in response to business and IT change.
Selection of most appropriate scenarios for the company, in the light of
mission, principles, and strategic intentions.
Discussion of the implications of the scenarios.
4. Actionable Innovation develops the scenario and prototype action plan for
the innovation (which establishes the outlines of an actionable plan). This
event engages the business and technology managers in a planning exercise
focused on the defining business and technology scenario based on new
technology or business conditions ” in other words, “What will we do?”
The event develops the planning into an actionable plan, including steps to
gain commitments, for both business client and technology service provider.
Issues that can be considered include:
What™s currently being done in IT and business that relates to the pro-
posed scenario.
What is specifically required to carry out the scenario; steps needed.
Effect on existing planning, organization, and budget.
Leadership roles and responsibilities.
Actionable innovation can be in the form of a workshop, engaging busi-
ness and IT management in describing the next steps for implementing the
innovation. A sample agenda could include:
Presentation of potential scenarios.
Practical discussion of the implications.
A “What™s Next?” discussion for business and IT management.

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