CIOs looking to adopt the venture capital mindset as they evaluate emerging technology options might build an ideation funnel and create a technology diffusion process.
Such measures can help organizations make better decisions as they look for products and startups that lend competitive advantage. But they might not go far enough to make new ways of thinking stick.
Cultural transformation is also required. The goal is not just having a step-by-step innovation process to follow, but embedding innovation as a central tenant of the organization.
Creating a culture of innovation calls for technology leaders to operationalize innovation, putting ideas into general practice and advancing technology pilots into widely used platforms. Innovation culture also involves a greater tolerance of risk, which could run counter to how traditional enterprises operate. Another aspect of culture: helping users acclimate to rapidly evolving technologies and new ways of conducting business.
"The greatest thing that CIOs can be doing for their company right now is to create a culture that can facilitate change as quickly as possible -- no matter what is thrown at you," said Tony Olzak, CTO at Trace3, an Irvine, Calif., consultancy that runs a venture capital briefing program for CIOs.
"Any new tech that you bring in is worthless unless you can adapt to it and can change your organization so that you can be successful," he said.
Here are four challenges organizations face when building an innovation culture.
1. Gauging your organization's readiness to accept risk
At a fundamental level, the way an organization thinks about risk influences how readily it can adopt unconventional technologies. Stephen Franchetti, CIO at Samsara, an industrial IoT technology company based in San Francisco, identified the user base's risk acceptance as a key variable.
Stephen FranchettiCIO, Samsara
"With early-stage companies, stealth-mode companies, there's going to be a degree of iteration and experimentation that goes on," he said. "It's not going to be perfect out of the gate."
To improve the prospects for a successful rollout of emerging tech, organizations should select use cases that align with their risk tolerance and ensure users have an appetite for experimentation, Franchetti said. As for use cases, sensitive areas, such as financial controls, might not lend themselves to innovation as their performance is less negotiable. However, an organization might be more willing to sign off on a use case that applies AI to accounting, he noted.
Born-in-the-cloud companies, like Samsara, enjoy a higher degree of experimentation tolerance, so encouraging a healthy risk appetite is less of an issue, Franchetti said. Such organizations, however, may encounter the flip side of that challenge, according to Franchetti: "We're risk-tolerant, but we need to be able to manage that risk effectively across the enterprise."
A cloud-era business employs many tech-savvy people ready to swipe a credit card and bring in the latest SaaS technologies. CIOs must find a middle ground between experimentation and chaos.
"How do we actually manage that within a risk framework so that we can build an effective enterprise architecture as we move forward, versus everyone's out there doing their own thing?" Franchetti asked.
2. Democratizing ideation
Instilling a culture of innovation also means getting everyone in the company bubbling up ideas. CIOs looking for transformational thinking must create an organization ready to receive it, Olzak said.
"You democratize the ability for people to bring those ideas back to you," he advised. "And you create your deal-flow funnel so that you've got a culture of innovation, where everyone down to the most associate-level person in your organization is thinking, 'How could we be using technology to better our trajectory?'"
3. Institutionalizing news ways of working
Getting people to think about innovation and tolerate some degree of risk is a good start. But then comes the fiery test of making innovation a workplace reality and managing the effects on the workforce.
"The work that people do actually changes," said Sanjay Srivastava, chief digital strategist at Genpact, a professional services firm based in New York. "When that happens, the operational model, the skilling and resourcing [have] to change," he added.
Change management, the process of helping users adapt to new technology, comes into play at this point. But industry executives also point to the broader task of operationalizing innovation, which goes beyond training employees to productively using new technology. This component addresses the need to rethink old ways of doing business so innovation becomes institutionalized.
Olzak said organizations typically have no problem stepping through a process that takes them from idea to proof of concept and onward to deployment. The sticking point, however, lies in changing the organization so it can fully adopt and take advantage of innovation.
Olzak cited the example of a business building a new AI platform to update an old data engineering pipeline. The emerging technology only thrives when work is performed in a certain way, but old ways of organizing that work can block the potential benefits, he noted.
"We actually find that the process of stepping through the technology itself is very straightforward," Olzak said. "It's all the rest of the stuff about an organization that actually keeps them moving too slowly. Operationalizing innovation is probably the largest challenge."
It comes down to managing all the changes surrounding technology introduction -- and bearing in mind the law of unintended consequences, Olzak said.
4. Establishing guardrails
An organization that cultivates a culture of exploration must remain grounded in the realities of its business. With that in mind, industry executives suggested creating governance mechanisms to keep innovation on track.
"In most cases, because data is involved, governance will be a key way of establishing the guardrails," said Sean Beard, vice president at Pariveda Solutions, a business and technology consultancy with headquarters in Dallas. Emerging technology projects, such as creating AI models, depend on well-maintained data.
Beard, however, cautioned that innovation governance can't be bolted on after the fact, but rather incorporated into the process as part of the operating model. To do this, organizations can establish organizational norms, such as guiding principles and a governance charter, that determine baseline governance policies and practices, he noted. CIOs should think about what new roles would be necessary for the governance charter, such as data steward, data catalyst and data product manager.
In addition, adopting DevOps and DataOps practices creates automated mechanisms for implementing and enforcing the governance principles, Beard said.
Technology leaders should also consider launching an in-house innovation group, which can shepherd initiatives and provide guidelines.
"As you think about orchestrating changes, you need all the business stakeholders in a brainstorming session, and you need a mechanism that brings people in and gets them committed," Srivastava said.
That mechanism could be a digital innovation council or a technology advisory board. Such groups let businesses run innovation "as a program, not as a chance serendipity," he added.
In the case of an enterprise acquiring a technology startup, the business may need to stand up another organization, if it hasn't already. That practice has become more commonplace in recent years as nontech companies look to digitalize acquired startups.
An integration management office handles the job of bringing a newly purchased company into the corporate fold.
The integration management office "is where a lot of the governance structures sit and decision-making takes place," said Darren Person, CIO at The NPD Group, a market research company in Port Washington, N.Y.
That office looks into reconciling IT systems and security policies, for example. Its goal is to take care of the logistics of integration and escalate any issues that can't be resolved to the company's CEO and executive team, Person said.
Committing to innovation
Culture, process and organizational structure aside, a business must commit time and resources to make innovation happen. That's not a simple ask for technology managers juggling multiple priorities and dealing with tight budgets.
CIOs should aim to dedicate a percentage of time, whether it's 5% or 10%, to work on innovation and "bring to bear our knowledge around the best emerging technologies within a particular space," Samsara's Franchetti said.
And, along the path of innovation, CIOs should continue questioning their approaches, Olzak noted: "Have you built a proper organization that can change the way [stakeholders] think about organizational structure, the way they think about operationalization, the way they think about change management?"