Upload
joshua-mckenzie
View
214
Download
0
Tags:
Embed Size (px)
Citation preview
The IT Leader Challenge Creating Innovative Business Uses of Technology and Creating Value for Customers
September 27, 2007
Amy Muller Director, Strategos
Strategos® Proprietary & Confidential 2
The IT Leader Challenge: The IT Leader Challenge: Management Innovation Management Innovation
IT and Innovation Operational Innovation Business Model Innovation
Management Innovation What it is and why it is important Gary Hamel on Management Innovation Why IT is so important to management innovation
Strategos® Proprietary & Confidential 3
The Eras of IT The Eras of IT
1980 – 2000 Productivity: IT + REENGINEERING
2000 - ? Value Creation: IT + INNOVATION
1960 – 1980 Cost Savings: IT + AUTOMATION
Strategos® Proprietary & Confidential 4
Innovation Innovation
CIOs expect to focus more on strategy and
innovation in the form of new technologies and
new ways to exploit information in the years ahead
….as they step back from overseeing day-to-day
operations, process improvement, data quality,
projects, standards …….
- CIO Insights’s Annual Survey
Strategos® Proprietary & Confidential 5
Your IT life today? Your IT life today?
Dealing with legacy systems?
Assuring 100% uptime while trying to improve the systems?
Ridiculous deadlines?
Overwhelmed resources?
Tight budgets?
Project overload?
Unplanned or unbudgeted initiatives?
Business – Technology Relevance gap?
Massive cost pressure
Relentless internal demands for high service at low cost
Industry turbulence: outsourcing, open sourcing etc.
Strategos® Proprietary & Confidential 6
The Third Era:The Third Era:Value Creation: IT + Innovation Value Creation: IT + Innovation
Operational Innovation
Business Model Innovation
Management Innovation
Strategos® Proprietary & Confidential 7
Operational Innovation Operational Innovation
Supply chain management applications “Retail Link”: Data on sales, returns, shipments,
forecasts, etc. shared with 17,000 suppliers in 80 countries
Used to optimize assortment and pricing and anticipate and prepare for demand spikes
From backwoods of Arkansas to Fortune #1
Leveraging technology to radically improve operations
What did he have that Frank Woolworth and S.S. Kresge did not have?
Computers.
Sam Walton
Forbes Magazine, “Captains of Industry, October 8, 2007
Strategos® Proprietary & Confidential 9
Operational InnovationOperational Innovation
From upstart to UPS challenger
Pioneered the package tracking system
Now the world’s largest cargo airline
Leveraging technology to radically improve operations
Just in Time supply chain management
Eliminate waste, reduce inventory, and continually improve production
Now world’s #1 auto maker
Strategos® Proprietary & Confidential 10
Business Model Innovation: Netflix Business Model Innovation: Netflix
Market Cap $1.3B
Market Cap $1.1B
Low overheadAdvanced website and logisticsAnalytics anticipate customer behavior and buying patterns
Leveraging technology to enable new business models
Strategos® Proprietary & Confidential 11
Total Rewards frequent gambler program 4-tiered loyalty program, with 40 million customers in data base Uses smart cards that plug into slot machines
Fast Cash program Real time incentives based on ongoing game play Knows every individual transaction of 80% of its customers
Uses IT to Adjust availability of slot-machine games based on variables including day of
week, time of day and game popularity. Dynamically price hotel rooms to attract guests more likely to gamble Improve marketing, on-site customer service and online interactions
Business Model Innovation Business Model Innovation
Business Model Innovation Business Model Innovation
Innovation #1: Taking the flea market online
Innovation #2: Supporting 40,000 independent developers with its (free) open API’s A network of companies that help make eBay work better, grow
faster, and reach more customers Allowing people outside eBay to write services that communicate
with eBay Making big sellers more efficient: Infopia Inc. connects directly
eBay sites to help high volume sellers price and list more efficiently Extending the platform: bringing bidding and buying tools to
television, IVR platforms, and mobile devices – extending the platform
Moving eBay into new markets, and new geographies : localizing applications for countries and cultures
Inside eBay’s Innovation Machine, CIO Insight, December 6, 2006
Strategos® Proprietary & Confidential 13
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to Translating technology innovation to winning business modelswinning business models
Where do we play? Target customers Value chain locations Roles performed
Strategos® Proprietary & Confidential 14
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to winning Translating technology innovation to winning business modelsbusiness models
Where do we play? Target customers Value chain locations Roles performed
• What benefits does the technology deliver?
• What problem can it solve?
Strategos® Proprietary & Confidential 15
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to winning Translating technology innovation to winning business modelsbusiness models
Where do we play? Target customers Value chain locations Roles performed• What are all the components
needed for the solution (short term question)?
• What are all the key capabilities needed for delivering the benefits (long term question)?
• Who are the best at providing the components or capabilities?
Strategos® Proprietary & Confidential 16
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to winning Translating technology innovation to winning business modelsbusiness models
Where do we play? Target customers Value chain locations Roles performed
• What customers should I go after?
• What role could/should I play in the solution value chain?
Strategos® Proprietary & Confidential 17
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to winning Translating technology innovation to winning business modelsbusiness models
Where do we play? Target customers Value chain locations Roles performed
• How do I win in the long run? – What if some one copies my offering?– What if a new technology comes along?
• How do I communicate my differentiation with customers?
Strategos® Proprietary & Confidential 18
What do we provide? Benefits/solutions Products & services
How do we provide it? Channels Partnerships Value chain configuration
How do we make money? Value levers Cost levers Pricing rationale
How do we differentiate & sustain advantage?
Brands Quality, consistency Competence leverage
Translating technology innovation to winning Translating technology innovation to winning business modelsbusiness models
Where do we play? Target customers Value chain locations Roles performed
• What are cost drivers?• What is the best way to
charge for the product/service– Preferred by the
customers– Difficult for late comers to
take away market shares
Strategos® Proprietary & Confidential 19
The Next Frontier: Management Innovation The Next Frontier: Management Innovation
Strategos® Proprietary & Confidential 20
Which has changed more in the last 100 Which has changed more in the last 100 years?years?
US life expectancy was 47
years
14% of homes had a bathtub
6% of homes had a telephone
8000 cars in the US
144 miles of paved roads
42% of the work force was in
farming
Life in 1900
Standardized job descriptions
Production planning and
scheduling
Cost accounting
Profit analysis
Financial controls
Incentive based compensation
Personnel departments
Business in 1900
Strategos® Proprietary & Confidential 21
Examples of Management Innovation Examples of Management Innovation
Perfected research lab management that bought discipline to the chaotic process of scientific discovery
Originated capital-budgeting techniques that standardized the evaluation of performances and investment decisions
Advanced brand management practices for creating value out of intangible assets
These pioneers invented management practices that are now generally adopted or frequently imitated
Source: Gary Hamel, “The Why, What and How of Management Innovation” (Harvard Business Review, February 2006)
If you look at a hundred year period of
industrial history, typically it is management innovation that
has allowed organizations to reach new performance thresholds -- more than any other kind of innovation.
The challenge is instilling management innovation into organizations. Often, the technology you need to do new
things is there long before you change the management processes in a way that allows you to use that technology.
What do we mean by “Management Innovation?”What do we mean by “Management Innovation?”
Fundamental, continuous, creative change in how we organize, lead, coordinate, motivate, and influence
Challenging orthodoxies about how we manage
Encompassing a range of processes and methods
Part of an ongoing, compounding program
Adapted from “The Why, What, and How of Management Innovation,” Gary Hamel, HBR Feb. 2006
Strategos® Proprietary & Confidential 25
To Start: Challenge long held management beliefs To Start: Challenge long held management beliefs
Is this a belief worth challenging? Is it debilitating? Does it get in the way of an important organizational attribute (like strategic adaptability) that we'd like to strengthen?
How does this belief serve the interests of its adherents? Are there people who draw reassurance or comfort from this belief?
Have our choices and assumptions conspired to make this belief self-fulfilling? Is this belief true simply because we have made it true - and, if so, can we imagine alternatives?
Is this belief universally valid? Are there counterexamples? If so, what do we learn from those cases?
Retail Grocery: What’s the Management Retail Grocery: What’s the Management Orthodoxy? Orthodoxy?
Success in retail is all about discipline:SOPs, tight supervision, role definitions, and reviews by bosses
Freedom plus Discipline is a constant
If everyone is off innovating, who’s minding the store?
Strategos® Proprietary & Confidential 27
Freedom plus Discipline is a ConstantFreedom plus Discipline is a Constant
Is this a belief worth challenging? Wouldn’t everyone like to have more freedom to innovate AND more
discipline?
How does this belief serve the interests of its adherents? Makes the boss more comfortable (who is afraid of losing control)
Is this belief true simply because we have made it true ? “If we allow more freedom to innovate we lose control” and everything
conspires to support this
Is this belief universally valid? Are there counterexamples? If so, what do we learn from those cases?
Challenging the Discipline beliefChallenging the Discipline belief
Self-directed teams: Basic organizational unit is the small department team, not the store
Teams select new employees, control pricing, and select product
Teams meet regularly to discuss issues, solve problems and appreciate each other's contributions. Adapted from “Break Free,” Gary Hamel
Fortune, October 1, 2007
Teams are accountable for profitability of their department
Bonus for teams that exceed targets
Teams’ performance
visible across the company
What’s the Management Innovation at What’s the Management Innovation at Whole Foods?Whole Foods?
Front line employees are responsible for results Team members have access to real-time performance data They have decision authority over the key variables that
influence performance outcomes There’s a tight coupling between results, compensation,
and recognition
Empowered front line employees don’t need a lot of top down discipline if …
Strategos® Proprietary & Confidential 32
Innovating Management Innovating Management
Planning: deciding what you should do
Organizing: structuring ideas and allocating resources
Motivating: encouraging and rewarding participation
Monitoring: tracking progress and results
Designing processes to support the broader
distribution of decision-making and innovation
within the firm
Strategos® Proprietary & Confidential 33
The Big Challenge The Big Challenge
Designing processes to support the broader distribution of decision-making and innovation within the firm
Cost effective scalability
Maximizing the creativity of employees
Strategos® Proprietary & Confidential 34
IT: Enabling Management Innovation IT: Enabling Management Innovation
1. Communication
2. Collaboration and decision making
3. Knowledge sharing
Requires a shift in mindset :
Risk Mitigation
Value Creation
Tools of value creation:
Strategos® Proprietary & Confidential 35
Tools of Value Creation Tools of Value Creation
TransactingPower Tools
CommunicatingSharingThinkingCreatingExpressingTools
Web 2.0 is these tools
Applications over the Web
Social networks
Rich media
Most CIOs understand the Web as a powerful tool for
driving operating efficiency and they understand the
Web as a catalyst for new business like digital music. I
don't think they yet see the Web as a tool for
dramatically reinventing the work of management.
-Gary Hamel in CIO Insight, Sept. 13, 2007
Most CIOs understand the Web as a powerful tool for
driving operating efficiency and they understand the
Web as a catalyst for new business like digital music. I
don't think they yet see the Web as a tool for
dramatically reinventing the work of management.
-Gary Hamel in CIO Insight, Sept. 13, 2007
Strategos® Proprietary & Confidential 37
Management Innovation: Management Innovation: What What it might it might look like look like
Increased use of distributed and peer group decision-making and evaluation
Use of internal judgment markets – “wisdom of the crowd”
Real-time collaboration and discussion tools
Low-effort participation methods to engage a more diverse set of informed people
These tools are finding their way into the These tools are finding their way into the EnterpriseEnterprise
Strategos® Proprietary & Confidential 40
What to DoWhat to Do
Get serious about your desire to innovate as a business partner
Recognize the shift from “cost effective scalability” to “maximizing the creativity of employees”
Dig into the beliefs that hold back innovation
Emphasize designing systems for people, not just tasks
Strategos® Proprietary & Confidential 41
Further ReadingFurther Reading
Julian Birkinshaw and Michael Mol, How Management Innovation Happens, MIT Sloan Management Review, Vol. 47, No. 4, Summer 2006
Gary Hamel, The Why, What, and How of Management Innovation, Harvard Business Review, Feb. 2006
Gary Hamel, Break Free, Fortune, Oct. 1, 2007
Allan Alter, Strategist Gary Hamel Re-Imagines Management, CIO Insight, Sept 13, 2007
Strategos® Proprietary & Confidential 42
Example: Financial services organization
Functional units have their own pipelines IT, Risk and Capital Mgt, Transaction Mgt
The Global IT Group(London, Hong Kong, Frankfurt, US) 12 months to create an active community and a sustainable pipeline Approximately 300 active members in the IT innovation community(~10%) Simple ideation sessions, small ideas coupled with a drive for action helped
create engagement Mostly small ‘i’ ideas in the pipeline; now focused in increasing the ratio of big ‘I’ 1 manager & 2 part time coaches create challenges, sort, filter and connect ideas
to resources Horizontal feedback, dialogue across locations starting to take off
Strategos® Proprietary & Confidential 43
How Management Innovation HappensHow Management Innovation Happens
Stage 1: Dissatisfaction with the status quo Future threat Current problem Means to escape a
crisis Stage 2: Inspiration
from other sources Stage 3: Invention Stage 4: Internal and
external validation
Julian Birkinshaw and Michael Mol, How Management Innovation Happens, MIT Sloan Management Review, Vol. 47, No. 4, Summer 2006
Become a conscious management innovator
Create a questioning, problem-solving culture
Seek analogies and exemplars from different environments
Build a capacity for low-risk experimentation
Make use of external change agents to explore your new ideas
Become a serial management innovator
Strategos® Proprietary & Confidential 44
Management Innovation is about:Management Innovation is about:
Designing processes to support the broader distribution of decision-making and innovation within the firm
Being “skeptical and thoughtful” about how our management processes can be modified both to achieve their intended objectives and to tap the initiative and creativity of our people