"Deciding that innovation is a strategic necessity is one thing, but making it happen is another."

The Human Factor

Brilliant people are the key to progress. You cannot strictly define an innovation process, but you can foster innovative thinking. Innovation is essentially a cultural and social activity.

Process and Discipline

A systematic process to capitalize on creativity is an essential capability for growth. The same process won’t work for everyone, but innovation processes can approach repeatability.

Opening Statement

"Innovation" seems to be the buzzword du jour in many organizations, and certainly in the IT world. Many books and papers have been written on the subject in the last few years. Search for "innovation book" in Google, and you will find a link to a collection called "Great Innovation Books" on Amazon.com, with no fewer than 21 titles. Innovation has become a business in itself: consulting firms promise to tell you how to innovate, and independent inventors form loose networks of people who, Web 2.0–style, market their skills on open networks (see www.innocentive.com).

The resumption of investment in novel IT concepts may be a sign that the "dot-com hangover" is finally behind us. Companies that were always conservative in the first place, or that had become gun-shy after the excesses of the late 1990s, are once again looking for emerging information technologies that can positively impact their bottom line.

Deciding that innovation is a strategic necessity is one thing, but making it happen is another. Let's examine some of the challenges organizations face. First, our profit-driven corporate culture defines success in terms of quarterly earnings per share. This in turn requires monitoring and adjusting costs on a short-term basis. Innovation typically takes place over a much longer term. A healthy pipeline of new IT-based product capabilities that ensure long-term growth requires relatively stable investment, especially in people. Moreover, you cannot determine at budget time what ideas may come up during the following year. Therefore, new mechanisms for fund allocation are required in order to respond rapidly to new ideas.

The next challenge is to decide where to innovate. This does not just mean "in which country," but more fundamentally, inside the organization or outside? Traditionally, large industrial companies had internal research centers. In recent years, the need to refresh one's ideas by working with outside innovators has been recognized. But as we open our arms to ideas coming from outside (universities, national research centers, startup partners), we may create a credibility problem with our own best and brightest: if we reduce our permanent headcount in order to devote some of our budget dollars to external contracts, we could demotivate our engineers and researchers. How do we tell them, "We love you, too"?

Outside participation in our innovation efforts also raises tough intellectual property challenges. We want to jealously guard the confidentiality of any invention that might give us a competitive edge, but research contracts with universities need to be compatible with those institutions' research agendas, and their work is still governed by the "publish or perish" dictum.

There is even a global sourcing aspect to innovation, as there is for manufacturing and customer service. So far, the model applied by companies in the G7 nations has been "innovate at home, manufacture and service elsewhere." But with some of the top universities (not only in terms of quantity but also in terms of the quality of graduate students produced per year) now located in India or China, why not follow the outsourcing or offshoring route on innovation, too? Technology watch can certainly be done from afar, but "tech watch" is to innovation what a couch potato is to a real athlete. Innovation may be one of the last refuges of the erstwhile leaders of the Industrial Revolution, but probably not for long.

The next dilemma is how to manage risk. This is particularly interesting because in all other areas of an organization's work, the constant imperative is to reduce risk and then mitigate what cannot be eliminated. But with innovation, if you don't fail often enough, it probably means you're not trying hard enough. Yet we've all known senior managers who would exhort their subordinates to "take more risk" (usually after a competitor has beaten them to the finish line on a new product announcement) -- only to mercilessly punish or sideline any middle manager whose project fails. Until we can have a more adult conversation about risk, we will not be sending the right message to innovators.

Furthermore, if we focus back specifically on innovation in information technologies, it is still difficult for a company whose core competency is not IT to pilot new IT tools. While Microsoft and IBM arguably need bigger IT innovation efforts than a paper mill or a food processing company, we know that all businesses today depend on novel applications of IT to maintain their competitive leads. After all, to take only one example, who spearheaded grid computing? Not the aerospace industry, and definitely not the oil and gas industry. Most senior managers in those companies have come to believe that IT is a commodity and that introducing new technologies will not have an impact on their competitiveness (Nicholas Carr's legacy may afflict us for a while longer). Instead, leadership in this area came from a somewhat unexpected source: finance and investment companies. In reality, this corroborates the "core computing" point made above. Financial institutions systematically rate at the top of all sectors in terms of IT spending as a proportion of revenue, often exceeding 10%. These organizations understand that data analysis and trend forecasting are their core competencies, and as a result they are resolutely innovating in IT.

Considering all this, it should be clear that innovation needs to be managed in order to avoid these obstacles, but since it is a creative activity, it cannot be overly managed. There must be some sort of process to fund innovation and to decide which projects to launch, continue, and stop. But we cannot simply push a button and make innovation happen, so this process probably needs to be very lightweight as far as the innovators are concerned.

One thing the innovation process must definitely address is how to motivate our own employees to participate -- both in raising new ideas and developing selected ideas through prototypes and pilot projects. This means doing several things that are radically outside of the normal way we manage our human resources, such as:

• Asking people to engage in lateral thinking, instead of just focusing on their assigned projects
  
  
• Letting them set aside some time each week to work on skunk works projects, in spite of the pressure of their main assignment (or, alternatively, giving them a "sabbatical" from their regular role)
  
  
• And, most difficult of all, telling their managers to get out of the way
  
  

Finally, an innovation process must take care of how a project ends. If one ends up with a promising invention, it needs to be transferred to the part of the organization that will transform it into a new product or service. But that group may already be fully busy on a set roadmap, so it may be difficult to make room for something that, as far as they are concerned, comes out of left field. On the other hand, if the message is that the innovation has failed, the project needs to be closed in a way that does not kill the messenger. The lessons learned should be documented for future innovators and also for the people who manage the innovation process.

In this issue of Cutter IT Journal, our contributions by authors from remarkably diverse backgrounds will help you understand and explore, if not resolve, some of the challenges and myths affecting the current preoccupation with innovation. Their thoughtful analyses provide guidance to those who wish to foster, maintain, and exploit innovation in information technologies in their organizations.

We start with San Murugesan and Mohan Babu K, who look at the shortcomings of the "closed" or internal innovation model and at the culture change required to embrace "open" innovation. Innovative ideas, they suggest, are everywhere: "The Internet and Web, blogs, wikis, and social computing and networking [help] to tap the potential of the world's growing reservoir of human creativity and innovation capabilities." Furthermore, the authors report how some companies that formerly kept tight control over their proprietary IP are now deriving significant financial, strategic, and competitive benefits from the strategic licensing of even core technologies, ideas, and applications. They outline a number of different strategies organizations can use to take advantage of these global capabilities for innovation, placing particular emphasis on the Center of Excellence (COE) model. They present a case study of a real-world COE and conclude the article with some helpful recommendations for harnessing innovation in your own organization.

Sebastian Konkol looks at the myth that all it takes to innovate is brilliant people. Rather, he argues, innovation requires brilliant (or at least smart) people who can work with each other. For as he observes, "Innovation appears among people rather than inside them. It is developed in the course of cooperative work." Konkol points out two key tools organizations can use to achieve what he calls the "social engineering of innovation": knowledge modeling and social network analysis. Knowledge modeling (and/or competencies modeling) lets organizations know what knowledge and skills each person has. Once people with the needed skills have been identified, social network analysis can determine which individuals communicate and work best together. This second factor is critical, Konkol suggests, because "investing in an individual's knowledge and skills while ignoring her group behavior potential is a waste of time and money."

Ana Paula Valente Pereira brings us back to a more formal view of process definition, but with an interesting twist. Instead of just recommending that companies define a suitable innovation process from scratch, she presents the OpenIP/Open Innovation Practices library, a framework created by members of the Eclipse Process Framework. The framework defines specific roles (Innovator, Collaborator, Innovation Leader, etc.) and "practices" that are the building blocks of the process. There is even a process definition tool that can be used to construct a custom process out of these components.

After these three articles that discuss the innovation process in general terms, we move to actual experiences. When I met Brian Voss last year at Louisiana State University, he impressed me with his vision of the role of the CIO in defining the future of an academic institution. His article should not disappoint you -- it is a discussion of how one defines a roadmap for the future that many of us in the corporate world would be well advised to emulate. Voss tells us step by step how he did it, addressing the tough question of how one funds innovation while continuing to support the existing base.

Matt Ganis and Garrett Hall's article provides the perfect balance with Voss's article, since theirs comes from IBM. At ibm.com, the organization that provides the visible face of IBM to Internet users, there is a well-defined mechanism for encouraging ideas, selecting the most promising ones, developing pilots, evaluating them, and making the decision to include the results in the official Web site or close the project and move on. I am struck by how pragmatic and lightweight the process appears to be. Many readers will find, as with the previous article, that they can take home many of Ganis and Hall's recommendations and apply them, mutatis mutandis, in their own organizations.

We conclude with an artcicle by Robert Glass, who tells us -- to paraphrase a famous presidential campaign statement -- that he voted against discipline before he voted for it. While Glass is specifically referring to software engineering, I believe that his discussion of, and change of mind about, the balance between discipline and creativity applies much more broadly. Indeed, as he reflects about the uneasy relationship between discipline and innovation, he draws parallels between software engineering and other domains. His realization that "innovation is crucial, so is discipline, and the task of all of us -- traditionalists, open sourcers, agilists -- is to find workable and appropriate ways to make that odd couple work" is a fitting conclusion to this issue.

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