I recently attended the MIT Sloan CIO Symposium for the second time. It is an annual one-day conference, held on the MIT campus. I attended a session, Positioning IT as an Innovation Engine, led by Martin Reeves, Senior Partner, Boston Consulting Group. Panel members include: Ananth Krishman, CTO, TCS, Daxi Li, Chairman Chinese Association for Science and Business, Roy Rosin, VP of Innovation, Intuit, and Marco Orellana, CIO Codelco.

Martin said that this panel operates on the assumption that IT can drive innovation.  This is still an issue at many firms. So he asked the panel if IT does drive innovation. Roy said that the essence of innovation today is to fail fast before investing a lot in the wrong direction. The CIO can be a big part of this.  Get things done quickly to fail fast.  The challenge is how to get into the right data to test ideas, how to set up a Web site quickly or do a prototype.  Intuit uses IT to both create innovation and to run the company. For example, need to understand customer problems on such issues as how get billing processed faster.  IT can help here.

Daxi said IT can drive innovation.  CIOs play an important role in Chinese companies in innovation. For example, one Chinese company, a consortium from 19 universities, is expanding into new markets. IT can help collaboration between the parties and make processes more efficient.

Ananth discussed the gap between the potential of IT to drive innovation and what actually happens. Companies expect IT to drive innovation while making things run smoothly.  If you do not do this part, you are not credible in the innovation space.  Expectations are also around proving the platform for innovation and bringing things from the latest technologies.  The credibility to introduce new technologies in dependent on success in the first two expectations.  In his firm, they have separated the functions so the CIO runs things and the CTO does the other two, more innovation focused functions.

Martin raised the information overload issue.  How do you shift through all the ideas that are generated? Ananth said he used to have to sort through the 30,000 new ideas that were suggested by employees. Now there is more control over this process but he still wants to capture the wisdom of crowds.

Roy said that innovation requires collaboration and accessibility. He looked at existing tools but found them to create silos. So they built their own tool, Brainstorm. I have reviewed it (see Intuit Brainstorm Offers Innovation Management). It is built around the notion of subscriptions so you see only the areas you want.  They also look at the energy as many people circle around a topic.  This is a signal to pay attention.

Martin said after awareness comes experimentation. For example, he said that some people will buy a Google ad word just to see if there is interest.  In another example, their Turbo Tax people found that about 25% of people who get tax refunds do not have a bank account to receive it electronically, So they loaded the cash into a debit card and did hundreds of thousands of these rapidly through technology to meet this customer demand.

Daxi gave an example of a Chinese wind power company that wants to tap into wind at 10,000 meters high where it is much stronger. It could provide much of the world’s power needs. But how to access this power?  It will be very expensive to test. IT allows for simulation to test ideas at a much lower cost.

Roy said that much of the innovation is a change management issue.  Metrics come into play here, both project specific metrics and overall metrics.  You need to pick what to measure, what to make visible, what to celebrate. This can change the culture of the company.

Ananth said there are metrics for incremental improvements such as ROI. Then there is innovation that is transformational and affects the entire company. These need program style measures such as time to market.  For the truly disruptive innovations he measures things like failure rate and expenses. What is the throughput of new ideas? Also how does do the ideas affect the overall market?

Martin asked what culture needs to be in place for IT driven innovation? Daxi said that in China the CIO role is like an IT manager.  He said that Chinese companies need to be able to establish a culture that encourages risk. Roy said it is about how to take intelligent risks and celebrating things that effect leading indicators and not simply rewarding large impacts on current revenue.

One questioner noted that only one member of the panel was actually a CIO. He asked if you need to set up a separate function to support innovation while IT is running the business.  This was the case for two of the panel members. This seems to be an issue in many companies from what I heard today.

Roy pointed out that there are many types of innovation: product, marketing, commercialization, process. IT plays a different role in each. He pointed about the need to create slack in processes and mentioned an example using Quickbase to create process innovation for P&G. I reviewed another Quickbase example for XM Radio (see Changing Organization Behavior at XM Radio through Enterprise 2.0 and QuickBase). Putting transparency into the process was the big innovation here and that was enabled by an enterprise 2.0 technology.  I think that using enterprise 2.0 tools is a way the companies can drive process innovation. Firms were IT plays a leading role in adopting these enterprise 2.0 tools provide a chance for IT to drive innovation if it focuses on this opportunity. If IT supports ways for the firm to capture process innovations that emerge and makes them easier to share and adopt, it can drive this type of innovation.

The audience said that money was less of a barrier to innovation than culture.  Another big barrier was an obsession with efficiency so lessons are not learned.