Lesson 8 -  Leading Technology-Enabled Innovation

Strategic IT experimentation are a series of trial & error changes pursued along various dimensions of strategy, over a relatively short period of time, in an effort to identify & establish a viable basis for competing

Strategic experimentation is defined as series of trial-&-error changes pursued along various dimensions of strategy, over a relatively short period of time, in an effort to identify & establish a viable basis for competing. Strategic experiments are inherently risky in nature & often involve a multiyear bet within a poorly defined industry that has no clear formula for making a profit. Value propositions are difficult to predict & the activities that lead to profitable outcomes are unclear.

IT experimentation occurs when bizes experiment with new products & services that are predominantly technology enabled. Such experimentation, such as trying new products, is new terrain for the IT function & requires new collaborations. Thus, strategic IT experimentation occurs within a larger org.al framework of innovation to support an org.'s need to reinvent its products & services.

On bgc.perspectives enabling technology innovation is described as: "Technology-enabled innovation comes in many flavors. It can mean using advanced analytics to improve decision-making, employing digital technologies to retool manufacturing, and harnessing mobile capabilities to improve marketing, to name just a few. The crux in all cases is the creation of a platform that can be leveraged repeatedly to deliver impact. In our experience, technology platforms can bring benefits in at least four areas: cost and timeline reduction, often though automation; business transformation; the enhancement of process; and, most significant, business model innovation through the creation of new types of products and services."

McKenn and Smith (2012) list two types of business innovation: sustaining & disruptive

Sustaining innovation improves an existing product or enhances an existing service for an existing customer. Sustaining innovation leaves org's in their comfort zone of established markets, known customers, & realizable biz models.

In contrast, disruptive innovation targets non-customers & delivers a product or service that is fundamentally different from the current product portfolio. To be successful, the disruptive innovation must meet 2 basic requirements: it must create value as perceived by customers, & it must enact mechanisms to appropriate or capture a fair share of this new value. Disruptive innovation can be devastating to an org..

Forms of organizaional change

• Continuous change is defined as frequent & relentless change within the org..

• Punctuated equilibrium assumes that long periods of small, incremental, change are interrupted by brief periods of discontinuous, radical change. In this case, change is primarily seen as rare, risky, & episodic.

Organizational change can create buisness innovation.

Innovation comes about through org.al change. It is only through change that the org. is able to improve how things are done, what is done, & for whom. This does not require continuous change in the org., as some aspects must remain the same for things to get done. However the sustainability of org's requires biz innovation that can only be enacted through org.al change.

Conditions for strategic IT experimentation to be successful.

1. motivate: establish rewards for strategic IT experimentation
2. support: create infrastructure to support experimentation
3. direct manage innovation strategically

Motivate: Establish rewards for strategic IT experimentation. Experimentation is risky, so experimentation & innovation do not flourish without intervention. Creating an innovation-enabled org. is a 2fold task: provide incentives & rewards to support experimentation & risk taking, & make it everyone's job. Good ideas are good ideas, & experience shows that they are as apt to originate at the customer interface as they are within the laboratory or the executive ranks.

Support: Create infrastructure to support experimentation. Offering rewards for experimentation sends employees the signal that experimentation & innovation are encouraged & will be recognized. This provides the motivation for individuals to experiment, but org's need to provide support for such experimentation. Over time, the combination of recognition & support builds a culture of innovation.

Direct: Manage innovation strategically. Most managers believe that experimentation never fails as long as there has been learning. Learning is strategically important for the org. to be successful. Companies need to provide motivation & support for individuals to experiment freely but also provide direction for these activities.

Ways businesses can avoid failure when transitioning an initiative from strategic experiment to business innovation:

1. focus on achievable targets
2. dont rush into market
3. be careful with "cool" technology
4. learn by design

Focus on achievable targets. Strategic IT experiments should be manageable & targeted but, at the same time, built so they can scale up easily. Management can then decide to exp& the experiment if the experiment is deemed successful.

Don't rush to market. Positive results from an experiment should be viewed as justification for further experimentation, but not as an affirmation to rush an innovation to market.

Be cautious with leading-edge technology. Because IT experimentation deals with technology, it is sometimes easy to be misled by very new & untested technology. The customer may not underst& what the technology does, may have no need for the things that the technology does, &/or may not find the technology appealing.

Learn by design. The goal of an experiment is to learn. Experiments may conclude that nothing was learned. In these cases, insufficient controls were often designed into the experiment to enable the org. to ascertain after the fact what had happened. Thus, the first step in a strategic IT experiment should be to identify the critical Q.s that need to be answered then design these into the experiment.

Four stages of the innovation process used by to market a new product or service.

1. Idea - informal & formal processs 
2. Proof of concept -  teams assigned to market i
3. Trial or pilot stage - contained production exposure
4. Transition stage - go to market stage

Idea. Ideas are generated through informal as well as formal processes, & the sources of ideas often vary. Ideas must meet certain requirements in order to pass to the next stage, incl. specific & targeted objectives that address core biz offerings, technical measurement, & identification of biz sponsors & champions.

Proof of concept. At this stage, teams are assigned to specific ideas in order to conduct the proof of concept. Testing is done within a formal or informal laboratory setting using typical controlled experimentation. The process is very agile & adaptive, & the original idea can morph substantially. The entire proof-of-concept stage often occurs over a short time. Requirements for passage to the next stage include addressing issues of intellectual property protection as well as providing a service description for the new idea.

Trial or pilot stage. This stage consists of contained production exposure as the idea is exposed to the market in a limited & measured way. A market segment is defined, & select customers are offered the chance to experiment with the test product or service. Measurements are taken to reveal marketing/br&ing issues, financial price points, & operational impacts. The trial/pilot occurs within a limited window, but occasionally it is extended. In addition to favourable results, requirements for the next stage include complete product designs, & biz & system requirements. Many ideas are killed at this stage.

Transition stage. This is the go-to-market stage, & the idea now enters the full system development life cycle to ensure that the new product or service is industrial strength. Many shortcuts, which served well enough for the pilot, must now be engineered to meet production st&ards.

 Strategies for governing & overseeing innovation centres:

Insulate. This strategy creates innovation centres as places where all lines of biz can come together to address common problems. The key benefit of this approach is the ability to foster synergies across the biz in the belief that innovation is best nurtured away from the mainstream biz.

Incubate. Companies that follow this strategy place their innovation centres within specific lines of biz (LOBs). Forcing innovation to be housed within a single LOB often leads to IT experimentation focused on real problems & opportunities, as well as committed local ownership. These sites are considered to be effective for soliciting, vetting, & sharing ideas &/or opportunities. In org's lacking the formal support of an innovation centre, ideas require a sponsor to marshal support & turn them into realizable products &/or services.

References

Austin. R.D., Nolan, R.L. & O'Donnell, S. (2009). The Adventures of an IT Leader. Boston: Harvard Business School Publishing Corporation. 

McKeen, J.D. & Smith, H.A. (2012). IT Strategy: Issues and Practices (2nd ed.). New Jersey: Pearson Education, Inc.

Riegel, M., Taylor, A., & Zablit, H. (2015, December 2). Enabling Technology-Enabled Innovation. Retrieved April 23, 2016, from https://www.bcgperspectives.com/content/articles/growth-lean-manufacturing-enabling-technology-enabled-innovation/