It has become a truism that companies need to innovate to gain a competitive edge, and in most cases it is to the head of IT that firms turn to drive this process forwards. However, what remains less clear is what actually constitutes innovation and, once that is decided, how it can be achieved.

The definition of innovation was keenly debated at a recent summit hosted by analyst firm Forrester, which attracted hundreds of IT leaders. Forrester analyst Bobby Cameron made a distinction between “game-changing” innovation and innovation that relates to “ongoing investment”. He said that innovation includes “the entire continuum”, explaining that it encompasses everything from the trial of high risk and unanticipated ideas to taking advantage of standard opportunities that are low risk and incremental.

Bacardi Martini’s chief information officer (CIO) Francois Jolles has a different view. He is currently leading a migration project that will see the company move from 40 enterprise resource planning (ERP) applications to a single SAP system. Jolles argued that this SAP implementation could not be considered innovation. Instead, he said, innovation had to be a novel idea or unique experiment.

“Innovation for us is how we keep our products longer in the barrels,” he said, referring to a new ageing process that Bacardi is using to enhance the flavour of its products.

The definition preferred by Graham Spittle, IBM’s UK Software Group vice president, is that “invention is the idea but innovation is the deployment of the idea”. This resonates with Cameron’s belief that the term innovation can mean employing new ways to harness technologies that are already available in the market.

Cameron argued that Jolles’ SAP project falls well within the bounds of ongoing investment innovation. “When the SAP system is implemented, it will give the Bacardi Martini IT department an aggregate view of all the systems, and this will have a significant impact on the business,” he said.

It is the game-changing kind of innovation that most IT chiefs struggle with, Cameron said. As a means of easing this process, Cameron put forward the concept of “innovation networks” to encourage organisations to buy new ideas from inventors, rather than spending time and money trying to develop ideas themselves.
Cameron pointed to health, beauty and household goods manufacturer Procter & Gamble, which once prided itself on its inventiveness but has since switched to sourcing its ideas from outside.

“Procter & Gamble has generated £3bn in revenue from inventions that it did not create,” Cameron said. “It realised it could be more competitive by leveraging its transformation capabilities.”

Cameron said Procter & Gamble does not purchase the inventions it uses because this would kill off the inventor’s entrepreneurial spirit. Instead, it uses a licence that only gives it the right to apply the intellectual property.

Insurance specialist Lloyd’s of London also has an innovation network in place to exploit academic research and niche technology specialists. At the Forrester event, Lloyd’s chief information office Peter Hambling described a partnership his organisation has with a university and satellite and aerial sensing specialist Inforterra to gauge the impact of the 2007 flooding on Britain using light detecting and ranging (Lidar) technology.

Maggie Miller, head of IT at Warner Music Group, said using an innovation network required trust and judgement. “IT leaders should decide which idea to adopt by a gut feeling that comes with experience,” she said. “Trust people and get them to prove their hypothesis as soon as possible. Finally, build it fast to industrial strength and kill it quickly if it doesn’t work.”

Miller said selling the idea to the business is often the biggest challenge of all. “When I was younger I thought an idea would speak for itself, but you need to gain acceptance through showing how an idea can accommodate the business case,” she said.

British Airways CIO Paul Coby said that before IT can drive innovation it must first earn the trust of the board by showing that it can deliver the basics properly. “You can go into the chief executive’s office and talk about the benefits of a service-oriented architecture, but he will never accept your proposal if the existing architecture is awful,” Coby said.

Forrester analyst Alex Cullen said the key to succeeding at innovation is organisation. “Remember it is the CIO’s job to deliver innovation and strategy, while the chief operations officer needs to ensure that everything gets done,” he said.
Cullen suggested that companies should outline to staff the issues they hope to address through innovation and then encourage them to come up with ideas.

The difficulty comes when you are trying to innovate without a formal structure in place that is geared towards harnessing new ideas, Cullen explained.

“An employee who comes up with a new idea will still need to work their regular hours as well as taking charge of the new project. Also, a lot of people who are good at coming up with new ideas are not always very good at execution,” he added.

Those in charge of driving innovation need to create a positive culture that breeds ideas, Cullen said. “Innovative environments are not the cultures that prevent staff from rocking the boat or the organisations that are run through fear,” he explained.

Firms should also tap into existing skillsets, Cullen said. He gave the example of a small car firm that had an unexpected degree of success when it asked its employees for cost-cutting ideas. “The company opened up the process so employees could see the suggestions already put forward by their colleagues.

Instead of submitting new ideas, most of the staff built on the ideas that had already been put forward, completely redefining the process and achieving great success,” he said.