Posts Tagged ‘innovation’

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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.

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Posted in information | 2 Comments »

How IT Can Help Uncover New Products

Monday, March 23rd, 2009

IT Departments Have The Data Needed To Uncover New Products

IT Departments Have The Data Needed To Uncover New Products

“Alignment”, “Innovation” – arrgh! Who in the world of IT is not sick of hearing these two words used over and over again? Yes we’d like to be able to help out the rest of the business, but our IT budgets are being slashed left and right. We don’t have either the staff or the budget to launch a big new program to collect whatever data is needed in order to tell the company which direction it should go in. Or do we?

It is in the nature of any IT department to collect data on our customers. We already have disk pack after disk pack of historical data about everyone who ever showed even the slightest interest in one of our company’s offerings let alone how much information we have on our existing customers.

In that data lies the secret to how IT departments can help the rest of the company uncover new products. Ranjay Gulati, James Oldroyd, and Phanish Puranam are three researchers who have been studying this problem and they’ve made some interesting discoveries.

Harrah’s is an owner of several casinos. Their IT department has historically collected reams of data on their customers in order to support targeted direct mail campaigns and attempts to increase customer loyalty.

However, it was not until the IT department took a closer look at the data that they had already captured about their big spenders (“whales” in casino speak) that they realized that they had the answers that they needed in order to redesign their casinos in order to position games where they would get these customers to play even more.

The Royal Bank of Canada faced a problem – its consumer credit division  needed to have more customers. The IT department went back and took a look at the credit card applications that they had rejected in the past. What they discovered is that many of these people had improved their credit scores since being rejected. This gave the bank a great set of potential card holders to go after.

Clearly all IT departments are sitting on more customer data than anyone ever believed. Now we just have to figure out how to make that data work for us. It turns out that there are three principles that provide the core for doing this correctly. We’ll talk about them next time…

Does your IT department store enough information on your customers? Have you ever gone back and tried to put that data to use? Were you successful? Leave me a comment and let me know what you are thinking.

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Welcome To 2009: Does IT Matter This Year?

Monday, February 9th, 2009

Lots Of Firms Invest In IT, But Does This Make Them Competitive?

Lots Of Firms Invest In IT, But Does This Make Them Competitive?

I’m not sure if you remember, but way back in 2003 Nicholas Carr wrote a piece for the Harvard Business Review called “IT Doesn’t Matter“. Man o Man did this set off a firestorm in the IT community – it was sorta like someone calling your sister ugly. However, time has passed since then and so perhaps it’s a good time to stop for a moment and ask ourselves, was Carr right after all?

Carr’s point at the time was that the tools of  IT have become so standardized and available to everyone that IT can no longer provide a company with a competitive advantage. At first glance, it looks like he’s got a good point here.

What do we spend most of our time on today? Keeping things up and running, meeting legal compliance issues, and trying to reduce IT costs. Sure doesn’t seem like there is a lot of innovation going on there.

The arrival of Cloud computing and web-based services such as Salesforce.com seem to drive the point home even further – anybody can get their hands on the same sets of IT services. So are we just technicians these days?

Well hold on just a moment, all may not be as bleak as it seems at first. Jeanne Harris over at Accenture is the author of a book called Competing on Analytics: The New Science of Winning in which she makes a couple of good points.

It turns out that some companies know how to use IT to get value. Some don’t. If you average out all companies, then you end up with a result that says that companies don’t get much value from IT. Harris points out that what Carr seems to be missing is that many firms do get a lot of value out of IT because they know how to use it.

Given all of this, here is a quick list of firms that “get” IT and have been putting it to good use. Yes, the components that they are using are available to everyone, it’s how they are using it that makes the difference:

  1. Walmart: has used IT tools to create set of a supply chain management applications that has allowed it to grow to occupy the top spot on Fortune’s top 500 list of largest firms.
  2. FedEx: used IT tools to create an integrated package tracking system that allowed it to offer greater visibility to its customers and thus zoomed by UPS to become the world’s biggest cargo airline.
  3. Citibank: used the new technology of ATMs to double its share of the New York City market back in the early 1980′s.
  4. American Airlines: used its inside IT resources to create the SABRE computerized airline reservation system that went on to become an industry standard.
  5. Harrah’s Entertainment: IT has been used to create their Total Rewards customer tracking database and their Fast Cash real-time incentive gambling management program.
  6. Toyota Motor Corp: IT has been used to create their just-in-time supply chain and its associated management systems.
  7. Exxon Mobile Corp: IT is being used to help search for the oil and gas deposits that are becoming increasing hard to find.
  8. Proctor & Gamble: IT provides the analytical tools that are needed for data mining that is required to track product sales and adjust pricing and promotions.
  9. Boston Red Sox: use IT to perform sophisticated data analysis of players, stadiums, other teams, and salaries in order to remain competitive.

Well there you go. In the end, Carr makes a good point – lots of IT shops are making the investment into IT hardware and software; however, they aren’t getting any real benefits from this investment. However, there is a subset of firms that are using those generic IT parts to build tools that help them to be highly competitive.

Does your firm do a good job of using the IT resources that you have? Which of the firms that I listed do you think has made the best use of IT? Who did I forget and leave off of my list? Leave me a comment and let me know what you are thinking.

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Posted in business advantage | 8 Comments »

Creative Abrasion: How To Build Innovation Into IT

Thursday, January 22nd, 2009
A discussion about innovation reveals how far we've come and how far we have to go.

A discussion about innovation reveals how far we've come and how far we have to go.

While trolling the Internet over the holidays, I came across a write-up of the Unstructure Event held that was held Orlando, Florida, USA on 17 Nov & 18 Nov 2008.

Unstructure is basically a platform for open discussions on a wide range of business topics. They had a face-to-face meeting back in November. What caught my eye is that they spent some time discussing one of my favorite topics, IT and business innovation.

If you need a great quote on how IT leaders need to behave, you can always count on Nelson Mandela:

“A leader… is like a shepherd. He stays behind the flock, letting the most nimble go on ahead, whereupon the others follow, not realizing that all along they are being directed from behind” – Nelson Mandela.

During Unstructure conference, Linda Hill from the Harvard Business School, ran a panel that included four panelists from companies such as Cisco, Powerwave, Smiths Medical and another academician from Carnegie Mellon.

The panel’s primary focus was on trying to answer the question “How can an IT department unlock innovation within the organization?”

Sure, a manger can tell / force the people who work for him/her to do things and that will cause things to occur. However, a true leader can create a world that people want to belong to, to harness talent and diverse slices of genius of people around who need to affirm individual identity and allow them to contribute to the larger goal. That’s the difference between a manger and a leader.

I think that Linda Hill hit it on the head when she said that: There is a need for collective work through creative abrasion, creative agility, integrative problem solving, sense of belonging and civic engagement. Amplify differences and leverage them as resources even though it does not feel good. A person needs to feel a part of a community to want to give them his/her slice of genius, else it makes them vulnerable.

Linda also said that: Innovation happens when artistry blends with Engineering. It takes both sides of the mind, and different disciplines or specialists working together to breed innovation.  When Imagination meets Engineering Precision, this makes for a positive impact and changes the way the world lives, works, plays and Learns.

From an IT point-of-view, the question is will technology play a role? We all know that the answer is yes! The next wave of innovation will be captured through collaboration and connecting ideas inside out and outside of the IT department.

As much as we’d all like to have our IT departments be known as being innovative, the question remains: how? Speakers on the Unstructure panel said that innovation cannot be nurtured in a streamlined process. An example of this was  the campaign run by Barack Obama in the elections where several new channels were used to run the campaign.

Good discussions all around – my hat is off to the the folks over at Unstructure. It appears as though it’s still not clear how we can transform an IT department into a smooth running innovation machine. However, we seem to be asking the right questions and we are making progress in working towards finding an answer that will work for us all.

Do you feel that your IT department is innovative? Do you have a way of using creative abrasion to make sure that nobody gets “too comfortable” with the way that things are? What steps are you taking to make your IT environment more open to innovative thoughts? Leave me a comment and let me know what you are thinking.

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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.

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