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The Role of a Chief Innovation Officer

February 10, 2014

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by John V. Jazylo, Partner

Definition
A Chief Innovation Officer (CINO) is the designated person in a company who is primarily responsible for managing the process of innovation in an organization, as well as being in some cases the person who “originates new ideas but also recognizes innovative ideas generated by other people – both internally and externally.”

The CINO is responsible for managing the innovation process inside the organization that identifies strategies, business opportunities and new technologies and then develops new capabilities and architectures with partners, new business models and new industry structures to serve those opportunities. The CINO should focus on breakthrough innovation. Successful innovative officers focus on delivering the key principles behind innovation – leadership, creating networks, harnessing idea development, leveraging the right incentives and building/managing an effective, transparent and efficient innovation process.

Innovation Position: CIO vs.CTO vs. CMO vs. CINO
Traditional CIO activities centered on infrastructure and costs (including application development), a model built on the historical role of CIO as gatekeeper of technology and protector of corporate information assets. Despite clear evidence that the world is changing, many organizations retain a narrow view of the CIO role. For this reason, it is valuable to learn from innovators willing to share their lessons.

Data presented in a Gartner report, called the 2013 CIO agenda, implies that CIOs tend to look inward toward IT rather than outward to customer needs. The report lists three top CIO strategies:

  • Delivering business solutions
  • Improving IT management and governance
  • Improving the IT organization and workforce.

This data tells us that CIOs prioritize efficiency over delivering strategic value or building relationships with IT customers. Although efficiency is certainly important and necessary for successful IT, a CIO fixated on internal IT operations risks losing the opportunity to develop deep connections with IT business partners and customers. Viewing cost reduction and efficiency as the primary role of IT is an old-school approach that devalues the CIO and reduces IT’s relevance to the business.

Comparing IT budgets to the growth of overall technology spending in the enterprise highlights this pattern of devaluation. According to Gartner, IT budgets have been relatively flat over the last years, with little expectation of substantial change going forward. At the same time, broader expenditures on technology in the enterprise have increased substantially outside IT, shifting to lines of business and functions such as marketing. In other words, even as technology grows, the scope of IT control and impact is decreasing.

The CTO Phenomena
Not to overly complicate matters, there is also the role of the Chief Technology Officer who is primarily concerned with the long-term and big picture issues. The CTO has more of an external focus (product commercialization) developing innovative products and services, whereas the CIO has more of an internal and operational focus (support role) in most companies. Another way of stating the distinction between CIO and CTO is that the former solves operational problems through acquiring and adapting existing technologies, while the latter usually overseas development of new technologies. That being said, there often is overlap between the roles of CIO and CTO and many large organizations have both positions.

The CMO comparison
While CIOs emphasize process and efficiency, research shows that chief marketing officers care about success, relationships, and building value. When Forrester Research asked chief marketing officers about skills and competencies they value, strategy and people emerged first:

  • Visioning and strategic thinking
  • People management/team development
  • Being the voice of the customer in the organization
  • Listening to/interacting with customers
  • Relationship building with senior executive team.

Comparing these world views makes clear that CIOs emphasize operational efficiency while CMOs seek to build connections with management and customers. Given this, it is hardly surprising that IT struggles for relevance while marketing grows its own technology budget independent of IT. And, thus, shadow IT thrives while IT itself cries.

The Innovator
First and foremost building and retaining IT relevance requires being deeply in touch with your customers, what they are demanding, and what the value proposition is for them. We are in an experience economy and you want that experience to be seamless. Today, that experience is highly enabled by technology.

Innovative CIOs, a growing number, recognize the fact that operational excellence and innovation are prerequisites for IT to engage the business at a strategic level. For innovative CIOs, strategic opportunities arise when IT delivers results without incident, hassle, or drama.

However, not everyone agrees that CIOs should have a broad role within the business. Respected industry experts believe that infrastructure/application development remains the CIO’s primary mandate. As a bridge between IT and the business, the CIO should focus on today’s infrastructure while figuring out what the organization will need 10 years out.

Based on extensive conversations with innovative CIOs, here are several points of advice

  • To gain efficiency and lower costs, productize IT services with repeatable processes and technology automation
  • Operational excellence creates credibility, which is a gateway for any CIO who desires strategic conversations with business leaders. If the IT organization does not deliver core projects on time and within budget, the business will not take you seriously
  • Getting close to customers and engaging around their goals, needs, objectives, and strategies is the surest means to achieving and maintaining IT relevance.

Chief Innovation Officers (CINOs)
Lead their companies’ efforts to find and develop ideas for new products. They also work to ensure that other executive officers recognize and support initiatives to encourage innovation. Typically, their background involves product development or marketing. Most importantly, they are familiar with the process of turning fresh ideas into great products. Here is their roadmap:

Process
Chief innovation officers are not responsible for developing ideas themselves; but establish a process that enables other people to contribute. They may, for example, establish an internal website where any employee can contribute ideas for improving existing products or developing new ones. They also ensure that each idea is evaluated, with the most promising suggestions advanced for further development. They also monitor customer feedback, service requests and product review sites to identify recurring problems that require an innovative solution.

Sourcing
Ideas for innovation can come from outside the company. As such, chief innovation officers maintain relationships with universities and organizations that conduct research in areas of interest to their company. They may sponsor research projects or negotiate licensing agreements to use the research findings. Large organizations may provide facilities for start-up companies or independent developers to use their product development resources to take promising ideas forward. The AT&T Foundry, for example, allows independent technology developers to use its company facilities and collaborate with specialists. The result is that the company gets a constant source of ideas for new products.

Support
Chief Innovation Officers identify projects that have strong commercial potential and allocate budgets to test them in the market. They may develop prototypes and carry out small-scale tests in selected geographical areas or with selected customers. They use feedback from the tests to evaluate the response to the prototype and decide whether to take the project forward. If the tests provide positive feedback, they develop a business case, champion the new product and ensure that it receives adequate development and marketing resources for success.

Collaboration
To ensure that good ideas become the next generation of new products, chief innovation officers collaborate with all levels of the organization. They work with research and development teams to ensure that their efforts reflect customer needs as well as innovative thinking. As ideas move through the development phase, they work with product and marketing managers to ensure that the products get to market as quickly as possible so that they generate revenue and provide a return on investment. Chief Information Officers also work closely with senior executives to ensure that innovation aligns with corporate strategy and receives adequate funding.