5 Innovation Pitfalls For CIOs To Avoid

As the top executive charged with tech-driven business transformation, CIOs have a crucial role in guiding their business’ innovation strategy.

5 Innovation Pitfalls For CIOs To Avoid

by Mark Samuels

Posted on 03-05-2020

As the top executive charged with technology-driven business transformation, CIOs have a crucial role in guiding their business’ innovation strategy. And if there were ever a time innovation matters more, it’s now.

Innovation is vital for business transformation. Among many reasons, it helps companies stay agile, adjust to evolving market conditions and changing customer needs, and, ultimately, keep ahead of the competition.

But CIOs have their work cut out for them. While many (59%) said they aim for excellent innovation capabilities, 41% said they are only at the stage of building out these capabilities, according to consultancy Deloitte. Alarmingly, a quarter said their organizations’ innovation capabilities are nonexistent.

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Why does delivering on innovation remain such a challenge? Here are five key innovation pitfalls CIOs fall into and, even more crucially, how they can work around them.

Pitfall #1: In-The-Box Thinking

Upwards of 40% of CEOs view their CIOs as the executive most likely to lead and deliver innovation, according to researcher IDC. That’s all well and good, but in a global study the majority of CIOs cited limited internal resources and budget among the major barriers to meeting company aspirations.

CIOs who want to deliver change must start collecting ideas. Working across business departments is key, but not all great ideas will be generated internally. CIOs need to charge their teams to get out of the data center and find fresh digital inspiration beyond the firewall.

Rather than serving as a service function, the modern IT team must act like a team of talented consultants and work with innovators beyond the four walls of the enterprise. Smart CIOs build hooks into an ecosystem of external partners, including vendors, nonrival firms, and startups.

Pitfall #2: Weak Business Cases

Creativity can cost big money, according to consultancy PwC. The board will want to know that an outlay for innovation by the CIO is likely to deliver a return on investment. Presenting the board with weak business cases that don’t identify how creativity will generate value will not pass muster.

CIOs must recognize that innovation isn’t about a great idea searching for a problem. IT teams must use their deeper collaborations with line-of-business colleagues and an ecosystem of partners to identify strong use cases, where an investment in innovation is likely to produce big returns.

They should then develop proof-of-concept studies that demonstrate how innovation can help to generate a solution to a key business challenge. Such innovation might include the application of data analytics or AI-enabled agents to help boost customer experience, for example.

Pitfall #3: Outdated Ways Of Working

Many companies remain hamstrung by old ways of working. Instead of focusing on greater agility and creativity, tech teams often end up delivering stable IT operations at best. Research from Deloitte found as much as 57% of IT budgets are often allocated to operational concerns.

Innovation requires a new mindset. If you want your organization to use innovation to transform, then you will have to create a cultural shift internally. Instead of just provisioning systems and services they think people want, IT teams must understand what the business requires and then deliver agile solutions to meet these challenges.

To promote this new way of working, CIOs must foster cross-department collaboration. The idea for your next great digital service is as likely to come from marketing, HR, or procurement as it is from the IT team.

Pitfall #4: Bottom-Up Thinking

The likelihood of any innovation-focused project succeeding is dependent on senior backing from the highest level of the business. So why do many businesses still take a bottom-up approach to innovation, where great ideas are expected to percolate to the top?

Innovation should be led from the very top of the business. McKinsey research suggested organizations are more innovative when their leadership capabilities are rated “strong” or “very strong.” As Harvard Business Review recognized, the best CEOs are entrepreneurial by nature.

CIOs must be entrepreneurial, too. They should work with their C-suite colleagues to identify the key challenges the business faces. They should then use this identification process to create a top-down and proactive approach to innovation, where everyone in the business understands the aim and, of course, is encouraged to voice their own ideas.

Pitfall #5: Information Dead Ends

Any CIO is only as good as their last innovation. In an age of almost-continual change, no business can afford to rest on its laurels. Too many businesses still fail to build on the lessons learnt from both project successes and project failures.

Innovation is an iterative process. Lessons learnt must be passed on to the next project so that a culture of innovation continues to thrive across the IT organization. Rather than letting best-practice knowledge reside in information cul-de-sacs, the very best CIOs find ways to spread their wisdom at specialist events to embed innovation at the heart of the company’s learning and development processes.

“CIOs should establish a strong identity and purpose that defines their team’s culture and values, as this will guide and unify people while ensuring alignment, focus, and efficiency,” Stoddard said. “Establishing purpose helps IT staff understand their contribution to corporate priorities. CIOs should tie these elements together by sharing expertise across forums, drop-in sessions, and hackathons to promote a culture of innovation.”

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