Innovation Needs to Be Governed

By Brian P. Watson  |  Posted 05-19-2008 Print Email

Many of the governance processes needed for innovation haven't caught up to the enthusiasm voiced by business leaders. "Just having a CEO with passion isn't enough" says Marla Capozzi, an associate consultant with McKinsey and co-author of the firm's report. "Innovation needs to be governed more broadly."

In a February research report, Forrester principal analyst Bobby Cameron likened innovation to a "near-meaningless cliché," as business executives say they want to do more of it, but don't know exactly what they hope to achieve. "You get a lot of interest in innovation and a lot of noise about it, but in reality, it's not there," Cameron says. "A lot of executives say innovation is important to them, but they don't try to make their internal organization produce--or don't expect it to produce. CIOs say innovation is at the top of their list, but when you look at where they're focusing, it's not on innovation."

Forrester's report offers a roadmap for CIOs to influence and drive innovation in five steps that are similar to those FedEx uses to solicit, evaluate and implement new ideas. When asked which companies tend to get innovation right, Cameron cited FedEx.

"They're the result of the merger of four companies, so they have four companies' worth of back office," he says. "They're driving this integrated front end. Fred Smith made the choice to have this integrated front-end approach to the channel, maintaining standalone P&Ls. Carter and his guys have been able to innovate some of the best technology anywhere."

To overcome obstacles that hinder innovation, FedEx CIO Carter urges IT executives to use their unique perch to push ideas that help the larger business. Technology tends to be a "lens" into the business, he says, which gives CIOs an opportunity--perhaps a greater one than other executives have--to peer deep into the business to spot areas that need improvement.

However, inherent pitfalls remain. Without strong CEO support and advocacy for innovation, the creative forces inside a company can quickly be silenced. Even if the CEO plays the role of evangelist, the CIO must partner with the boss to create and drive the innovation machine.

These executives also have to staff up, bringing in the best creative minds possible and exposing employees to the pressing needs of the business. The CEO and CIO have to justify the overall investment and show solid returns. Above all, they need to make the innovative spirit a core component of the corporate culture.

FedEx does this through its Purple Pipeline Program. Each year, 40 to 50 workers are selected for a six-month management course, based on their performance and leadership potential. After that, they're rotated through a series of positions and departments to give them a broader view of the company's operations and needs.

Sherry Aaholm, FedEx's executive vice president of IT and overseer of the program, says it's common for a software development manager to shift to network operations, and vice versa. The two teams work to compensate for the swapped worker and to train the new one. (Click here more on the Purple Pipeline Program.)

Despite the obstacles to innovation, there is a reason for optimism. Since the most successful innovation programs emanate from the top of the corporate ladder, there is more hope today than ever before, says Eric Sigurdson, who leads the information officer practice at executive search firm Russell Reynolds Associates. That's because today's CEOs, as well as their successors, have experienced a number of technological innovations in the workplace, so they understand the positive effects technology can have on business.

"CEOs have been around disruptive technology and they get it, so it's no surprise that they're challenging their CIOs to get the company to [innovate]," says Sigurdson. "It's the right time."

Also see:

Rob Carter on Getting Executive Buy-In

Building the Innovation Process

How FedEx Trains Workers to Innovate

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