Transcript David Chappell Chappell & Associates www.davidchappell.com ARC204 Agenda Examining IT Innovation Encouraging IT Innovation: IT Users Encouraging IT Innovation: IT Creators.

David Chappell
Chappell & Associates
www.davidchappell.com
ARC204
Agenda
Examining IT Innovation
Encouraging IT Innovation: IT Users
Encouraging IT Innovation: IT Creators
Top Ten Innovations in the Last 30 Years
According to the Wharton School of Business
1. Internet, broadband, Web browser, and HTML
2. PC/laptop computers
3. Mobile phones
4. E-mail
5. DNA testing and sequencing/Human genome mapping
6. Magnetic Resonance Imaging (MRI)
7. Microprocessors
8. Fiber optics
9. Office software (spreadsheets, word processors)
10. Non-invasive laser/robotic surgery (laparoscopy)
The i3 Model
Innovation’s three aspects
Idea
Implementation
Create a new
concept
Make the idea
usable
Infusion
Deploy the
implementation
The i3 Model
Some observations
Ideas are overrated
We venerate ideas, but they’re just the first “I”
Implementation and infusion are just as important
Example: The spread of GUIs
What’s hard is recognizing good ideas
Innovation requires infusion, not diffusion
Because most people resist change
Applying i3
IT creators and IT users
Two categories of IT innovator organizations:
Information technology creators
Examples: IT vendors, open source projects
Information technology users
Examples: Retailers, manufacturing firms, financial
services firms, governments
Both go through their own i3 process
And the two processes are connected
Illustrating i3
IT creators and IT users
Information Technology Creator
Idea
Implementation
New
technology
Infusion
Information Technology User
Idea
Implementation
Infusion
The goal:
Creating business value for IT users
Value
What is Research?
An aside
Research
is doing
this
without
thinking
about this
IT Creator
Idea
Implementation
Infusion
IT User
Idea
Implementation
Infusion
Value
What Infusion Means
For an IT creator
IT Creator
Idea
Implementation
Infusion
Marketing
and sales
IT Users
Idea
Implementation Infusion
Idea
Implementation
Infusion
Idea
Implementation
Infusion
Idea
Implementation
Idea
Implementation Infusion
Infusion
Describing IT Users
A simple model
IT User
Process
Customers
Service
Product
What Infusion Means
For an IT user
IT Creator
Idea
Implementation
Infusion
Technology
change
IT User
Idea
Business
change
Implementation
Infusion
Better
business
process
Better
product or
service
Creating Value with IT
Value = technology change + business change
Google Search
Technology change: PageRank algorithm
Business change: Auctioning search terms
WalMart supply chain management (SCM)
Technology change: SCM software
Business change: The improved processes (and low
prices) this software made possible
Off-shore software development
Technology change: Cheap fiber networks
Business change: A geographically distributed
software development process
i3 Decision Points
Idea
Implementation
Infusion
Value
D1
Which ideas are
worth
implementing?
D2
Which
implementations
are worth
infusing?
Business Benefit of an Innovation
From competitive advantage to cost of doing business
First firm in an industry
implements innovation
Competitive
Advantage
to Firm
Second firm in the industry
implements innovation
Third firm in the industry
implements innovation
Time
Categorizing IT Spending
Strategic vs. utility
Window of
differentiation
Competitive
Advantage
to Firm
Strategic IT
Utility IT
How CIOs Succeed
Getting more than a passing grade
CIOs can get an A if they
focus here
Competitive
Advantage
to Firm
CIOs can at best get a
C if they focus here
Strategic IT
Utility IT
Innovation Strategies
Some options
Window of
differentiation
Leader:
Strong in Idea,
Implementation,
and Infusion
Fast follower:
Strong in
Implementation
and Infusion
Straggler:
Not strong in any I
The Kinds of People Required
To successfully implement the i3 process
Idea
Strategic
(Business
knowledge,
IT knowledge,
creativity)
Implementation
Transformational
(IT development
knowledge,
execution skills)
Infusion
Persuasive
(User knowledge,
communication
skills)
Value
Operational
(IT operations
skills)
How strong an IT user organization should be in
each category varies with its IT innovation strategy
Innovation Ideas
Products and services
IT User Organization
Business people
typically
generate ideas
for these
IT people can
help generate
ideas for these
Products/services with no explicit IT content, e.g., shampoo
Products/services with explicit IT content, e.g., Web site
Innovation Ideas
Business processes
IT User Organization
IT people and
business people
must generate
ideas for these
together
IT people can
generate ideas
for these
Processes supported by IT, e.g., manufacturing
Pure IT processes, e.g., software development
Business and IT Working Together
Facing the challenge
It requires people from different cultures to
work together
Both sides have to respect each other
Both sides have to value the other’s input
IT people must learn the business and business
culture
They’re not going to come to us
The sole purpose of our job is to help the business
Enabling Process Innovation
Embedding processes in software
A better business process that’s embedded in
software can be replicated rapidly across an
organization
Processes for which software provides the most
benefits:
Apply across a large part of the company
Are consistent and precise
Have built-in enforceability
Can be monitored
See Andrew McAfee and Erik Brynjolfsson, “Investing in the IT That Makes
a Competitive Difference”, Harvard Business Review, July-August 2008
Enabling Process Innovation
Write code or buy a package?
Window of
differentiation
Leader:
Creates custom
software
Fast follower:
Creates custom
software (or
customizes an
early packaged
application)
Straggler:
Adopts standard packaged application
Enabling Process Innovation
The importance of software development
A firm that’s better at software development
can deploy better processes more quickly
To get better at process innovation, get better at
creating custom software
Without this, it’s hard to lead
Measuring Value
IT users
IT Creator
Idea
Implementation
Infusion
Must be
measured by
business people
outside the group
that did the
project
IT User
Idea
Implementation
Infusion
Measuring value accurately and honestly is
essential for getting more innovation
Value
Why Talk About IT Users First?
IT creators must understand how their users
innovate, i.e., the IT user i3 process
It’s a prerequisite for creating successful new
technologies
The link between an IT creator’s idea and an IT
user’s value can be:
Very strong in start-ups
Much weaker in large technology companies
Evaluating Technology Ideas
What is important?
IT Creator
Idea
Implementation
Infusion
New
technology
IT User
Idea
Implementation Infusion
Idea
Implementation
Infusion
Idea
Implementation
Idea
Implementation Infusion
Infusion
New business ideas
The best technology ideas are the ones that can combine
with many new business ideas in many IT users
Evaluating Technology Ideas
Some examples
Web technology: Very important
It combined with many business ideas in many firms
Search: Very important
It combined with one business idea in many firms
Workflow engines: Moderately important
They’ve combined with several business ideas in some
firms
Functional languages: Not important
They’ve combined with few business ideas in few
firms
Getting More Innovation
Creating Start-up Mind
Start-up people maintain a tight connection
between new technology and business value
Start-up people aren’t bound by the traditional
constraints of a business
Start-up people don’t face career destruction if
an idea fails
Start-up people have clear and direct incentives
for success
Incentives for IT Creators
Getting them right is critical
In many IT creators, the incentives are distorted
What matters in product groups is technical
coolness and the respect of peers
But customers care about their problems, not
your technology
The incentives for IT creators should reflect this
Measuring Value
IT creators
A proxy for IT
user value
R&D spending
IT Creator
Idea
Number of
patents
filed
Implementation
Infusion
Profit
IT User
Idea
Implementation
Infusion
Value
Top Ten Innovations in the Last 30 Years
A reprise
1. Internet, broadband, Web browser, and HTML
2. PC/laptop computers
3. Mobile phones
4. E-mail
5. DNA testing and sequencing/Human genome mapping
6. Magnetic Resonance Imaging (MRI)
7. Microprocessors
8. Fiber optics
9. Office software (spreadsheets, word processors)
10. Non-invasive laser/robotic surgery (laparoscopy)
What’s Your Narrative?
IT-based innovation is fundamental to making
our world better
And every part of the i3 process matters
We work in the most important profession in
the world
About the Speaker
David Chappell is Principal of Chappell & Associates
(www.davidchappell.com) in San Francisco, California. Through his
speaking, writing, and consulting, he helps people around the
world understand, use, and make better decisions about new
technology. David has been the keynote speaker for many events
and conferences on five continents, and his seminars have been
attended by tens of thousands of IT decision makers, architects,
and developers in forty countries. His award-winning books have
been published in a dozen languages and used regularly in courses
at MIT, ETH Zurich, and other universities. In his consulting
practice, he has helped clients such as Hewlett-Packard, IBM,
Microsoft, Stanford University, and Target Corporation adopt new
technologies, market new products, train their sales staffs, and
create business plans. Earlier in his career, David wrote
networking software, chaired a U.S. national standards working
group, and played keyboards with the Peabody-award-winning
Children’s Radio Theater. He holds a B.S. in Economics and an M.S.
in Computer Science, both from the University of WisconsinMadison.
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