Posts Tagged ‘business opportunities’

Faux Market Secrets: How CIOs Capture Innovation

Monday, July 13th, 2009
CIOs Can Use Faux Markets To Identify Innovative Ideas

CIOs Can Use Faux Markets To Identify Innovative Ideas

So picture this: you’re a CIO and you desperately want to be seen by the rest of the C-level executives as something more than a simple cost center. What to do? If only there was some way that you could tap into all of that incredible creative energy that we all know lives in the IT department.

If you could harness that energy and apply it to innovative projects, you’d be a company hero. Guess what? The power of Faux Markets is exactly what you need to do this…

What Is A Faux Market?

You know that things are getting fancy when we start using French words! A Faux Market is simply a term that refers to using simulated market forces to make a decision. Perhaps an example would show what I mean. A good case study would be GE Research.

Back in 2005 GE Research had a problem. They had too many product ideas that had been submitted and only $50,000 to spend on investigating them. Clearly they need to make some hard decisions as to which ones they would persure.

The way they picked which projects to work on was by using a faux market. They had their 85 employees spend three weeks buying and selling any one of 62 proposed projects. At the end of the three weeks, GE ended up with a  prioritized list of the top projects that its employees thought had the most value. The project that won was an machine intelligence algorithm that a researcher had proposed but which had not yet traveled through the normal management bureaucracy.

Why Use Faux Markets?

All too often IT departments have a bewildering array of possible projects, technologies, or directions that the department can choose. Sometimes senior management will huddle and make a decision, sometimes no decision gets made. Faux markets offer an alternative.

A faux market tool allows a firm to quickly sort though large numbers of projects or proposals in order to attempt find those that will provide the most bang for the buck. Firms believe that this approach offers them the best chance of finding the next blockbuster product or solution.

Not A Silver Bullet

Faux markets can be a big help; however, as with everything else they do have their drawbacks. One such drawback is the that the voting process does not provide much insight - there may be no penalty for backing a bad idea. Just because a proposal is popular does not necessarily guarantee commercial success.

Final Thoughts

Using faux market tools to quickly sort though a large stack of ideas can provide IT departments with a way to identify innovative ideas no matter where they come from. However, a group vote alone isn’t enough in most cases.

A two step process where voting is initially used to narrow a large list down into a more manageable list of less than 100 candidates is a good first step. The next step can be to use a prediction market allow employees to buy and sell the candidates in order to see which ones go up in value. This will reveal the true winning ideas and you will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

Questions For You

How do you process new idea suggestions today? Do you have employees vote on things in order to sort them out? Are these just popularity contests or do they take market factors into consideration? Do you think that faux markets could help you capture more innovative ideas? Leave me a comment and let me know what you are thinking.

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

As a CIO, you’ve got some challenges facing you. You’re managing a diverse and potentially distributed work force of highly skilled and talented IT professionals. You need to find a way to keep them challenged, and yet at the same time enable them to find ways to work together. Have you considered Alternate Reality Games?

Tags: , , , , , , , , , , , , ,
Posted in business opportunity | No Comments »

Why Don’t IT Alliances Work Out?

Monday, April 20th, 2009

IT Department Alliances Can Make Everyone Stronger - If They Are Done Correctly

IT Department Alliances Can Make Everyone Stronger - If They Are Done Correctly

You would think that the more alliances that your company / IT department makes with other firms, then the better that they would become at making them. After all, practice makes perfect – doesn’t it? It turns out that this is not always the case.

Koen Heimeriks has spent time studying 200 firms that had formed more than 3,400 alliances. What he has found just might surprise you.

He found that those firms that had the most experience striking up alliances actually had worse results when compared to those firms who had moderate experience.

Why the difference? It turns out that there are two problems that develop in firms that already have  a number of alliances:

  1. they have a tendency to become overconfident in their alliance building skills, and
  2. they can develop learnings about alliances that are in actuality based on unsupported ideas about cause and effect.

So what can make an IT department’s alliance with another firm actually work out well? It turns out that it’s the methods and procedures that the firm uses to create alliances that will determine their eventual success. Established firms that already have many alliances will probably have rigid and inflexible business processes for making decisions and selecting partners.

However, IT departments with fewer existing alliances will have more flexibility built into their processes. An example of this would be where employees who have worked on previous alliances share information with the employees who are trying to create a new alliance. This type of discussion can lead to experimentation and allows novel approaches to each alliance opportunity.

So in the end, what does all of this lead to? Heimeriks reports that the larger firms who had many alliances and a more rigid alliance creation process had an alliance success rate of around 50%. Those firms that had fewer alliances and a more flexible alliance creation process had an alliance success rate of around 71%. Sure looks like flexible processes are the key to successful IT alliances!

Does your IT department have any alliances with outside firms? Would you say that you have a lot or a few of these alliances? Are they generally successful or not so successful? Do you feel that your alliance creation processes are fixed or flexible? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , , , ,
Posted in process | 2 Comments »

When Giving IT Information, More Is Better

Wednesday, April 1st, 2009
Providing Data About Data Can Make Data Even More Valuable To A Company

Providing Data About Data Can Make Data Even More Valuable To A Company

So just what is the job of an IT department once you get past the keeping the network up and applications running stuff? I think that we can all agree that it must have something to do with the company’s data, but exactly what does that mean?

Ranjay Gulati, James Oldroyd, and Phanish Puranam are three researchers who have been studying this problem and they’ve made some interesting discoveries. They realize that IT is the source for countless reports – our job is to turn data into information that the company can take action on. However, they’ve discovered that it can be just as important that we share with the rest of the company HOW we’ve come to know something as well as WHAT we know.

Now this is the tricky part: IT needs to find ways to tell our audience the answers to their questions AND we need to tell them how we got the data and what, if any, strengths and weakness there are with that data.

If you want to get all fancy about this the word to use would be that we need to provide “metadata” with our reports. A good example of this would come from the Royal Bank of Canada.

A few years ago the bank implemented a system that when a customer was overdrawn on a check, the system would do some credit / overdraft history checking in order to determine if a courtesy overdraft should be granted.

The information on the system and the data that it used was distributed in the bank and an ATM product manger happened to read it. He realized that a similar system could be created to provide overdrafts for ATM customers. The bank spent about $100,000 to implement this new service and since then has made millions off of it.

Allowing staff to not only see the output of an IT department, but also the information on the data that was used to create that output allows more people to find ways to reapply the data in ways that you may have never thought of.

When your IT department produces reports, do they include any information on the data that they used to create the report? Has anyone ever been able to use this “metadata” to identify a new use for the data? Was that new use valuable to the company? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , , , , ,
Posted in information | 2 Comments »

How Toyota Can Teach IT To Keep Things Fresh

Monday, December 15th, 2008
Toyota Has Several Ways That It Uses To Keep Employees Engaged

Toyota Has Several Ways To Prevent Processes From Becoming Stale

Despite all the talk about innovation these days, we know how things really are. It’s way too easy for us to set up IT processes and procedures that we use to run our IT shops and then over time they become part of a larger “That’s The Way We Do Things Here” culture.

The problem with this is that over time things change. Solutions that were once the best way to do things may no longer be the correct way to be doing something. However, we get caught in our ways and that starts to slow the whole IT department down and then the whole company.

Toyota has found a way around this problem that we can all learn from. They’ve come up with innovative ways to keep their IT employees constantly thinking about how the company can reach out and get new customers, enter new market segments, enter new geographic regions. Additionally, employees are challenged to consider better ways for the company to go after competitors, as well as how to create new ideas and come up with new and better practices.

How does Toyota accomplish all of this? One way is that they set nearly unattainable goals for the company. These goals are what push the company to overcome its existing routines and achieve new levels of performance. One such goal is stated as delivering “a full line in every market”. This is nearly impossible for Toyota (or any car company) to do, but it does a great job of making all employees feel as though they are working together to achieve a common goal.

Toyota’s goals are vague – on purpose. Goals like “create a cleaner car” don’t have clear, nailed-down requirements. By doing this Toyota ensures that employees won’t be able to look at a goal and say to themselves “that goal doesn’t apply to me”. Instead, vague goals result in multiple departments ending up working together in order try to achieve the goals.

What’s interesting about Toyota’s cars which are sold globally is that they aren’t modified to meet local needs. Instead, Toyota takes the time to customize its products to meet the level of consumer sophistication that is found in each country.

IT needs to adopt this way of thinking: how can we modify the way a user interacts with an application to reflect what department they are in? Finance may need sophisticated reporting tools, but sales probably does not.

One of Toyota’s greatest strengths is that it has built a culture in which there is an eagerness to take risks. This excitement about trying new ways to accomplish tasks is what allows Toyota to overcome those things that are blocking it from achieving its almost impossible goals.

Unlike so many other companies, Toyota is not constantly “betting the farm” on massive new projects. Instead, they have adopted a process by which they come up with big plans that they then go about implementing by taking a series of small steps.

This approach coupled with a philosophy of never giving up has allowed Toyota to be successful. When Toyota was developing an environmentally friendly car, they had a lot of failures – engines wouldn’t start, batteries died, etc. However, they never gave up and the Prius was eventually created. Even this car is not the final result, but is rather a stepping stone towards where Toyota wants to get to.

Toyota’s embrace of experimentation has not been done willy-nilly. Rather, they have a structured process called Plan-Do-Check-Act (PDCA) that is baked into their business processes. What makes Toyota different is that employees are encouraged to speak up when something fails or when they run into a unsolvable problem. Toyota’s culture of open communication has a great deal to teach all IT departments.

Does your IT department encourage employees to try new approaches to problem solving? Have you created an environment in which employees feel free to speak up when they run into a problem that they can’t solve? Do you consider your goals to be achievable or impossible? Is this a good thing? Leave me a comment and let me know what you are thinking.

Tags: , , , , , , , ,
Posted in innovation | No Comments »