Q: What are the biggest obstacles organisations face when it comes to innovation?
Three things: culture, culture and culture. This manifests in different ways in different organisations but at its root, it’s culture that tends to hold you back the most. Innovation requires a discovery mindset, continuous improvement and a collaborative environment.
In large organisations these ingredients, which are essential for innovation, get managed out – usually by well-meaning but misguided managers who think that being big means you need to “grow up” and be more “professional”. Usually they are simply applying the heuristics that have served them well to get them where they are today. Plan the work and work the plan. Deliver on-time, on-budget and the agreed scope. Unfortunately this is an oversimplification of what it takes to innovate – and focusing on these will ultimately hold your organisation back.
Innovation is inherently complex, and the value is in the variability. Stripping this out leaves only the low-risk, on-time, on-budget, on-scope stuff where there is little value left. Don’t worry though, either your competitors or a disruptive startup will show you the way. You had better hope that you are fast and agile enough to copy quickly and keep up :) If not, blame the culture — it’s usually this that is holding you back.
Q: Why is it that organisations fail to innovate?
Not for lack of trying, usually! There are many examples of incumbent organisations that were at the top of their game and developing the right technologies – but they just couldn’t see how the new technology would enable completely new and usually much larger markets. They have to be prepared to disrupt themselves. This is not something that middle managers in particular are incentivised to do. There’s a great story about eBay redesigning their site to focus on brands. The guy tasked with developing a roadmap for this instead took a team off site for two weeks and developed a fully functional prototype. Screw the roadmap, they just got on and built it. The reason? He felt that if he gave middle management time to regroup and consider this more fully that they would kill it off, or at least slow it down significantly. It was this innovation, which came from a focus on value and speed, that led to eBay’s $50 billion dollar turnaround.
Q: How does aligning business and IT strategies help companies to innovate?
There is really no such thing as an “IT Strategy” anymore. Software is eating the world, but it has already completely consumed your strategy. Ask yourself: If you wanted to make any meaningful change in your business could you do that without making some software change?
One thing I am clear on is that your IT is always going to be somewhat messy. If there is a tradeoff to make between “tidy technology” or doing the thing that customers need, the latter should always win. I’d suggest that you forget about aligning I.T. and the Business – it’s a red herring; what you really need to align is your development teams to your customers. An organization’s capacity to develop innovative products and services is incredibly scarce. Not only should you invest to make that as fast and agile as possible, but you should also make sure it is completely focused on the jobs-to-be-done that customers hire you for. Anything that gets in the way of that is slowing you down.
Of course, it helps if your approval and funding processes, your PMO and portfolio approach are designed with modern management methods in mind too. This is where you tilt the playing field to improve your chances of winning in the market. The key factor in this is speed: not just for time to market, but also for quickly iterating and discovering value. Coupled with this you need a way of focusing on a limited number of ideas that have asymmetric payoffs. How can you discover, nurture and speed up the delivery of value – and do so in way that limits your downside, but exposes you to unlimited upside potential.
Having said all that, strategy doesn’t count for much if the culture isn’t there to support it (see above). As Drucker says: “Culture eats strategy for breakfast”.