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When I look at annual reports of public companies, I often read the CEO comments about creating shareholder value through organic growth and through acquisition. However, I think the CIO’s greatest responsibility in creating value — and where the CIO actually can add value — is leading that growth agenda through innovation.

In today’s world, technology is often at the center of innovation.  IT-enabled innovation can help differentiate a company’s product or service whether it is technology-based or delivered using technology.  In our service dominated economy, technology-driven process innovation can enable more effective delivery of consistent services.

In the May 2012 issue of Harvard Business Review, Ken Favaro, David Meer, and Samrat Sharma of Booz and Company developed an organic growth assessment for the CEO. The article, “Creating an Organic Growth Machine,” identified questions the CIO also can use to demonstrate executive-level leadership in driving organic innovation throughout the enterprise. The key question is: Does my company have distinctive enterprise-level capabilities that enable operating units to achieve more organic growth than our competitors do?

The CIO who runs an agile IT organization has the potential to create that powerful enterprise-level capability. I have found the corporate IT center can enable agility in operating units by creating an efficient platform, providing mentoring to units to speed agile adoption, and developing a project management framework that is founded in the nimble approach. However, while the center can provide frameworks, expertise, and tools, local implementation still is critical to operating unit success.

How Does Agile Discipline Support Growth?

In the book 10 Rules for Strategic Innovators: From Idea to Execution, authors Vijay Govindarajan and Chris Trimble characterize innovation as strategic experiments: “The essence of strategic experiments is that much more is unknown than known. No amount of research and planning can resolve the unknown in advance.” They go on to say, “the winner is not necessarily the company that starts with the best plan. Rather, it is often the one that learns and adapts the quickest.”

Isn’t this the essence of agility? One only needs to review the breakthrough “Agile Manifesto” for software development to answer this question. Specifically, I’d like to point out 3 of the 12 principles in the manifesto:

Agile Principle Applicability to Innovation
Welcome changing requirements, even late in development. Agile processes harness change for
the customer’s competitive advantage.
If strategic experiments are more about the unknown than the known, having a technology process that welcomes changing requirements is crucial to success.
Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter time scale. If the winning company is the one that learns and adapts the quickest, shortening the time scale and delivering tangible deliverables is the way to go.
At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly. Again, strategic innovation is about learning fast. Agile enables rapid learning at the team level, where it counts most.

“Large established companies can beat startups if they can succeed in leveraging their enormous assets and capabilities,” Govindarajan and Trimble also point out. The truth is smaller organizations can compete today without spending scarce capital funds. Smaller organizations can leverage the cloud to spin up environments quickly for innovative initiatives. However, large companies have the advantage if they put their resources to good use. That is especially true when creating technical environments that support innovative efforts. The CIO can create a sandbox environment that team members can leverage quickly to experiment with new technology. Large organizations can invest in an on-demand infrastructure that operating units can grab for their strategic, agile experiments.

As Govindarajan and Trimble assert: “Success depends more on an ability to experiment and learn than on the initial strategy.” CIOs can demonstrate executive-level leadership and create growth in their organizations by creating enterprisewide capabilities. An agile approach to technology and creation of an on-demand sandbox environment can make those capabilities innovative.

via CIO = Chief INNOVATION Officer.

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