In fact, a recent study found that 55 percent of survey respondents said their environment will be changed ‘significantly’ -- 20 percent actually said it will be ‘completely transformed.’ Such major transformations can lead to significant competitive advantages, as long as the IT goals are clearly articulated, according to the findings from a Harvard Business Review (HBR) market study and associated report that was sponsored by Red Hat, Inc.
The apparent benefits extend beyond the traditional commercial enterprise. For example, a $650 million innovation project at a large State Government agency is returning $4.7 billion in additional tax revenue – that’s a 7:1 return on investment – by deploying online self-service offerings and becoming more sophisticated in their use of taxpayer data.
The HBR survey respondents also said that IT-enabled innovation would change the way employees do their work (48 percent significantly changed; 15 percent completely transformed), the company’s products/services (46 percent changed; 11 percent transformed), and business models (42 percent changed; 13 percent transformed).
Why Some Organizations Surge Ahead of Peers
For the few “Innovation Accelerators” that lead their industry, the numbers are significantly higher. A case in point; 70 percent said their approach to customer engagement and insight would be significantly changed, and a full third say it would be completely transformed.
The HBR analyst and report author claims that this revelation is very important, and directly translates to the specific projects that these survey respondents expect to engage in over the next three years.
Innovation Accelerators Share Six Characteristics
- Their commitment to technology-driven business innovation starts at the top, with the CEO.
- Their approach to innovation is structured and managed -- but they value speed over perfection and cut through bureaucracy.
- They value diversity of thought and experience, collaborating fluidly across functions, hierarchy, and traditional corporate boundaries.
- Their CIOs are significantly more likely to spend their time on activities that are strategic to the business.
- They have strong IT departments that actively and productively contribute to the corporate innovation agenda.
- They are more likely to invest in and reward innovation.
According to the assessment performed by the HBR report authors, while these six traits can help build a road map for organizations seeking to harness IT for digital business transformation, there are a number of barriers to overcome.
The most common barriers to success include functional silos, rigid ideas about roles and responsibilities, calcified processes, outdated compensation structures, and technology infrastructures that were not designed to support the kinds of open and agile customer-engaging systems required today.
Detailed Profile of an Innovation Accelerator
Already, rapid developments in IT best practices are having a dramatic impact on all aspects of commerce. The HBR research suggests that organizations that make a strong commitment to IT-driven business innovation will accelerate their digital transformation in several key areas – such as, how they engage with and understand their customers, new business models, the development of new products or services, and how employees perform their work.
The HBR analysis has uncovered that these Innovation Accelerators are significantly ahead of their competitor’s IT innovation efforts – including the extent to which they have successfully commercialized internal IT initiatives.
The research also reveals that the Accelerator success begins with a commitment from the CEO that is shared by the company’s cross-functional leadership team. It includes taking a structured approach to ensure that innovation occurs throughout the organization without bogging it down.
Innovation Accelerators are inclusive, valuing the perspectives, knowledge, and ideas of diverse people and groups, both inside and outside the company. They have multifaceted CIOs who focus on business strategy and innovation -- plus, they identify opportunities for competitive differentiation.
They have IT departments that support new business ideas and opportunities with access to the best-fit technology, knowledge of the business, and the right technical skills. And, they proactively invest in and reward meaningful and substantive innovation.
In summary, HBR suggests that CIOs now have a strategic mandate to innovate. The ones who accelerate won’t wait for permission but will lead their organizations into what will likely be a very different, business technology-driven future.
They will be a key part of the CEO’s strategy execution team; designing the open, agile, and customer-engaged organization that will create new value and a distinctive competitive advantage that’s built upon a rock-solid digital business foundation.