The CIO and Business Transformation

For this month’s blog, I decided to bring our readers some insights from a recent Harvard Business Review publication – “Business Transformation and the CIO Role”. The publication brings out the large number of areas where the CIO in a company can perform a very significant role in innovation and business transformation. Don’t get me wrong, it is not the CIO alone who can be an agent of innovation in the company – but this publication was about the role of the CIO – and this is what I aim to discuss.

As an example of the gains that are possible, the publication discusses the case of a US State (it doesn’t say which) and points out that simply by building a more accurate taxpayer address data base, the government was able to ensure that 1.5 million pieces of mail regarding taxes due that were previously undeliverable were delivered correctly and the State was able to realize – $4.7 billion in additional tax revenue. What the CIO and his team did was use every possible database to centralize all taxpayer data and update it using data from the postal service. The total exercise cost the state a fraction of the huge benefits it netted. It now keeps this data updated all the time to ensure that the tax base is considerably increased. Who says that the government doesn’t care?

In another example, analysis showed that real estate could add value to a business instead of being a cost centre. Analysts use a large number of factors like energy costs, supply chain constraints and others to help a client decide the best place to locate a new plant. This effectively ensured that the plant was ready for the future.

The study identified three kinds of companies as far as innovation went. There were ‘innovator accelerators’, ‘ad-hoc innovators’ and the ‘not bothered’ kind. The innovators were identified by the following traits –

  • The top level leadership of the company – starting from the CEO – are totally committed to business innovation.
  • These companies follow a structured and managed approach to innovation; it is not an accidental event. These companies go for speed rather than perfection and minimize bureaucracy
  • Such companies encourage diverse thought processes and welcome collaboration across functional boundaries
  • The CIOs of such companies are very involved in the innovation process. The IT departments also contribute significantly.
  • Such companies reward innovators amongst their personnel

How do these innovating companies benefit? The greatest benefits are to be found in the following areas –

  • Improved customer engagement and customer understanding
  • More effective business models
  • Better products and services
  • More effective business processes

Companies where innovation is not a priority score significantly less than the innovating companies on all these counts.

The biggest take away from the Harvard study is that innovation can be a structured and managed process rather than being a one off event. How does your company approach the issue? Is there a process in place or do you rely on occasional individual brilliance?

You can view the full HBR publication here (PDF, 523k).

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