Chapter 3
The Engine of Innovation
We talk a lot these days about the need for continuous innovation. But who is more responsible for innovation, IT or the business?
“It's a balancing act,” says Rich Adduci, senior vice president and chief information officer at Boston Scientific. “We certainly want guidance from the business. Under our governance model, it's up to the business to sort out where we make our investments. At the same time, we can't allow every project requested to go forward. If we're going to continue being efficient and effective, we need to get the most value from the solutions we deliver. Sometimes we have already invested in a solution, and we need to leverage that investment.”
Rich makes a great point. As IT leaders, we need to be innovative. But we also need to know how to say no—tactfully, gracefully, and respectfully—when the business requests a solution that duplicates an existing capability, appeals to a limited number of users, or creates more problems than it solves.
“There has to be a business case for making the investment, or you're doing the shareholders a disservice,” says Rich. “That's why you need good governance and strong leadership, so you can concentrate on adding value to the company. You cannot afford to waste money.”
The consumerization of technology has been great for consumers, but it can make headaches for the CIO, especially when the business asks for devices or solutions that cannot be integrated smoothly into existing infrastructures.
“There will always be that bright shiny object that attracts attention, a niche solution that people like better than what they have today,” says Rich. “But if everyone acts independently, then nothing connects—and you have a big mess. The hard part of IT is getting everything to work together so information flows seamlessly across a tapestry of different platforms and solutions. That isn't easy, but it's an important part of the job.”
“The hard part of IT is getting everything to work together so information flows seamlessly across a tapestry of different platforms and solutions.”
Rich recently launched an innovation incubator within IT to provide seed money for internally developed projects that show promise. “We can take an idea to the proof-of-concept stage, offer a live demo, and show people the opportunity,” says Rich. It's a “fail fast” approach to innovation that keeps the creative juices flowing without wasting precious resources.
In some instances, it makes sense for IT to take the lead in mainstreaming new technology. For example, the IT group at Boston Scientific recently rolled out an initiative to equip the sales force with tablets. Rich says that when he introduced the idea to the members of his leadership team, some raised concerns about security, connectivity, integration, and other potential problems.
“There were a thousand reasons not to do it. But part of our mission in IT is bringing innovation to the business. I remember pointing to the tablet and saying, ‘This is clearly the right answer, so let's go do it.’ And we did, and it was a home run.”
Were there some risks involved? Yes, but Rich and his team identified the risks and figured out how to manage them. “You cannot be innovative without taking some risks. If you think you can mitigate all the risks and still be innovative, you're wrong. You have to be willing to jump a little, to make a leap. If you're not willing to do that, you cannot aspire to be innovative.”
I think that's a wonderful way of framing the challenge of bringing true innovation to the enterprise. You need strong governance, strong leadership, and strong relationships. And you need a certain amount of courage—because you can't predict the future with total certainty. There will always be risks. Transformational CIOs understand the risks, weigh them judiciously, and then make decisions that will add value to the enterprise.
Bringing Innovation to the Surface
Rich's story started me thinking about the role of the CIO as a champion of innovation. Obviously, the CIO can't be held personally responsible for innovation. But the CIO can certainly help create an environment and a culture that encourages and supports innovation across the enterprise, no matter where it arises.
Innovation comes in many forms and dimensions. You can find innovation in every part of the enterprise: procurement, HR, finance, IT, operations, organizational development, product development, manufacturing, sales, marketing, distribution, fulfillment, customer service. Human beings are born to innovate. It's part of our DNA.
Because innovation can lead to competitive advantages in business, it is considered the key to growth and success. That's why we spend lots of time thinking, talking, and writing about it.
Despite the overwhelming importance of innovation, we often find it difficult to create work environments that are truly receptive to innovation. Sometimes, in our haste to streamline business processes and reduce inefficiency, we act as though innovation were an enemy instead of our friend. The resistance to innovation is understandable, because innovation brings change, and nobody likes change.
So when I heard this story from Allan Hackney, SVP and CIO at John Hancock, I knew I had to share it with you. The story begins in June 2010. Like many companies, John Hancock was recovering from the impact of the global recession. Many of the company's employees were worried about the future. Management was looking for ways to boost morale and reignite the spirit of creativity that had led the company to success in the past. Here's the rest of the story in Allan's own words:
We decided to hold a contest. The challenge was to develop a practical way for managing mobile tablets, which had been recently introduced in the marketplace. You had 90 days to develop a prototype, using a mobile tablet provided by the company. You would have to demonstrate your prototype to the rest of the company at a special event. Your prototype would be judged by a panel, and if you won, you would keep the tablet. It was that simple.
We called the contest Project Launchpad. It was open to all employees in the U.S. and Canada—about 7,000 people. We estimated that maybe 25 to 40 ideas would be submitted. We received 176 ideas—more than four times the maximum amount we had anticipated. We had ideas submitted from every level and every part of the organization, everyone from nonexempt hourly workers to executive vice presidents. It was truly amazing. People were coming out of the woodwork with great ideas.
We had formed a cross-functional team of five employees to manage the contest. They went through every idea submitted and winnowed the field down to 26 employees working on 14 projects (similar ideas were folded into one project to avoid duplication).
At the end of the 90 days, the contestants demonstrated their projects at our two main sites in Boston. The team leading the contest had picked four senior executives to judge the demos. Some of the judges were selected because they were skeptical about mobile computing, and we wanted them to experience working with mobile tablets. We even built a little tablet app for scoring the projects.
The judges loved it. They awarded prizes for first, second, and third place. Best of all, we adopted all three of the winning projects and put them into production. One of the employees who entered the contest—someone from our retirement planning business—was reassigned to work full-time on developing his idea. And he's not an IT guy!
The real lesson we learned is that there is a huge amount of talent and creativity within our organization. We also learned that no single department has a lock on innovation. The contest enabled us to tap into the knowledge and creativity of our employee base. Our people have great ideas, and we gave them the opportunity and the resources to show what they can do.
“The real lesson we learned is that there is a huge amount of talent and creativity within our organization. We also learned that no single department has a lock on innovation. The contest enabled us to tap into the knowledge and creativity of our employee base. Our people have great ideas, and we gave them the opportunity and the resources to show what they can do.”
Project Launchpad was so successful that it inspired a similar approach for solving challenges in modeling actuarial data, an area of critical focus in the insurance business. The company assembled a cross-functional team to look beyond the traditional solutions and develop innovative ways for handling increasingly complex data.
“After Project Launchpad demonstrated that our employees could help us solve problems like managing mobile computing, we realized we could use a similar approach to solve different kinds of problems, such as data modeling,” Allan says. “The point of the story is that you don't always have to spend an arm and a leg on innovation. You can find great ideas by reaching into your organization and letting people work on projects that excite them.”
Let's stay on the topic of innovation a bit longer. In this section, I'd like to drill down and explore the process of encouraging and rewarding innovative behaviors and instilling a culture of innovation.
Becky Blalock is the former senior vice president and chief information officer at Atlanta-based Southern Company. With 4.4 million customers and more than 42,000 megawatts of generating capacity, Southern Company is the premier energy provider in the Southeast. A leading U.S. producer of electricity, Southern Company owns electric utilities in four states and a growing competitive generation company, as well as fiber optics and wireless communications. Its brands are known for excellent customer service, high reliability, and retail electric prices that are below the national average. The company is consistently listed among the top U.S. electric service providers in customer satisfaction by the American Customer Satisfaction Index and topped Fortune's “Most Admired” list in the electric and gas utility sector for 2011.
I cite these statistics and achievements to give you an idea of what makes Southern Company different from other companies in the energy sector. Southern Company doesn't see itself as just another utility. It sees itself as a company providing essential services to customers spread across four states. When tornados struck in Alabama, for example, Southern Company used Twitter to send updates to customers in affected areas. That might not seem like a big deal, but if you are a customer with no power, seeing a tweet on your smart phone that lets you know the repair trucks are on the way can bring a lot of comfort.
Becky fit in well with the customer-focused culture at Southern Company. In her role as CIO, she directed IT strategy and operations across the 120,000 square miles and nine subsidiaries of Southern Company. She led more than 1,100 employees, and her responsibilities encompassed infrastructure, networks, desktops, applications, telephony, and cyber security.
Technically, she's not really a techie. Becky has an undergraduate degree in business administration from State University of West Georgia. She holds a master's degree with honors in business administration from Mercer University, and she successfully completed the Program for Management Development at Harvard University in 1994. A graduate of Leadership Atlanta and Leadership Georgia, she was named a Fellow of the International Women's Forum Leadership Foundation.
Over the span of her career, Becky has served in a variety of leadership positions in corporate communication, external affairs, the office of the CEO, accounting, finance, and customer service. Prior to joining Southern Company, she was vice president of Georgia Power's community and economic development department, responsible for marketing and positioning the state of Georgia in a global economy. Under her leadership the department was internationally recognized as one of the top economic development organizations in the world, and she was named one of the “Top 10 Outstanding Young Leaders in Economic Development in America.”
Becky has received a host of honors, including being named one of Computerworld magazine's 2006 Premier 100 IT Leaders and 2003 Georgia CIO of the Year, Global Category, by the Georgia CIO Leadership Association.
I mention Becky's accomplishments and awards because they are relevant. In today's complex and customer-centric markets, being technically proficient is not enough. You need to understand the needs of the business, and you need to understand the needs of the markets that the business serves.
Visualizing the customer and understanding the customer's needs is now part of the CIO's core responsibility. In the past, it might have been okay for the CIO to focus primarily on technology. Today, the CIO's vision must include the company's customers.
Southern Company, for example, is one of the nation's most automated energy providers. It uses automation to improve efficiency (internally) and to improve service to its customers (externally). The company is now applying its expertise in automation to the product itself—electric power. Southern Company is leveraging its automation capabilities to develop a Smart Grid that senses trouble and enables the company to take action to prevent potential outages and reduce the impact of outages when they do occur. From an internal perspective, it means rolling fewer trucks and deploying fewer repair teams. From an external perspective, it means higher levels of customer satisfaction.
The ability to balance a company's internal needs with the needs of its customers is becoming increasingly critical to the CIO's overall success. But achieving this balance is not a solo act. It requires company-wide effort and cooperation.
It also requires a culture of continuous innovation, because the needs of the market are continuously changing. Becky and her team at Southern Company were acutely aware of this, and they developed a unique process for encouraging and incentivizing innovation.
“Companies don't innovate—people do. If you want to be innovative as a company, you have to reward people for being innovative.”
I interviewed Becky while she was CIO, and she explained to me how the process works:
Companies don't innovate—people do. If you want to be innovative as a company, you have to reward people for being innovative. Seven years ago we created our intellectual property program. Anybody who turns in an idea gets a coin that says, “Innovative Thinker.” Some people have 20 coins in their office.
Since inception, our employees have generated 500 ideas. About 10 percent of those ideas have cleared the hurdle for a conventional patent filing. Upon filing for a conventional patent, each employee inventor is awarded $500. If the patent is granted, each employee inventor gets $2,000. If we commercialize a patented idea, the inventors can receive up to 1 percent of the revenue. So far, the program has resulted in eight patents and brought in more than $12 million. It's also a great source of pride for all of us.
We recently licensed the rights to a product we developed through the program. The product is called EM-PACT™ and it enables us to onboard contractors much more quickly than in the past. Another product developed through the program enables us to locate and recover missing meters. We're moving forward to obtain a patent on that, too.
IT presents an Innovator of the Year Award, and we make a big deal out of it. We produce a video about the winner and they receive $1,000. When people know they will be rewarded for innovating, they get excited and they start thinking about innovation. They focus on it. Even the coins help. They cost us three dollars apiece, but they mean a lot to people.
For the last five years, we have been ranked on Computerworld's list of “Best Places to Work in IT.” This year we received our best ranking to date: number 18! Part of the reason for our ranking is due to the intellectual property program. We are seen as an innovative company. To celebrate this success, we create postcards for our employees. On one side it says, “Southern Company—One of the 100 Best Places to Work.” On the other side, I write a note thanking the person for what they've done to help us make this a great place.
All of these steps create a positive culture. When you walk around our offices, you can see the postcards tacked up all over. People like them. The coins and the postcards are very effective symbols. They remind us of our commitment to innovation and excellence.
“When people know they will be rewarded for innovating, they get excited and they start thinking about innovation. They focus on it.”
I think Becky's story is a powerful reminder of the importance of providing tangible rewards for innovation. Everyone wants to be recognized for making a contribution—it's simply human nature. Investing time and effort to devise a formal program for incentivizing innovation will surely pay dividends.