Enterprise Innovation and Integration

This article, authored by James Cash, Jr., Michael Earl, and Robert Morison, discusses that innovation and integration are important contributors to growth in an organization.  Innovation involves bringing new products, processes, and models to the business that customers value.  Integration entails having parts of the organization work together to improve business performance and identify opportunities for improvement.  Within an organization, CIOs and the IT function are often central to these innovation and integration initiatives.  Innovation and integration are often “unnatural acts” for many large organizations, and the development of technology-enabled agencies is a means to make these initiatives natural within the organization, enabling growth in these areas to help keep the organization competitive.  The article recommends the formation of two technology-enabled agencies: a distributed innovation group (DIG) and an enterprise integration group (EIG).

DIGs and EIGs both provide leadership within an organization through targeted expertise and effective communication, with a focus on adding customer value.  Members of both groups need to have strong business, IT, and relationship management skills, and know the organization well.  These groups do not need to be large and members may be pulled from operations to be a part of these groups for a couple of years and then return to operational roles within the organization.  Both the DIG and EIG require adequate funding and commitment from the top levels of the organization to be successful.  While the groups’ missions differ, with the DIG focusing on new and innovative initiatives and the EIG concentrating on better coordination of the organization, both ultimately contribute to the organization by enabling it to grow and evolve.

Distributed Innovation Group (DIG)

The DIG promotes innovation within an organization in several key ways.  The group scouts for ideas with potential within the organization, including both new ideas and new ways of looking at current ideas.  The DIG also looks outside the organization for emerging technologies and applications, facilitates participation in idea forums, acts as a center of innovation expertise, publicizes innovations with potential and their progress, and serves as an incubator and funding source for early development of innovative ideas.

Having a DIG within an organization allows for increased cultivation of innovation by allowing one agency to take charge of innovative efforts, avoiding duplicate spending in groups across the organization that could dilute progress.  The DIG does not replace any existing research and development (R&D) or other agencies in an organization, but works with these agencies to maximize their performance.  Members of the DIG should have significant knowledge of business and IT processes and work with the agency full-time.  The group might report to the CIO or a business-unit or R&D executive; or, if innovation is very important to the corporate agenda the group might report to the CEO.

IT plays a significant role in fostering innovation and there are IT capabilities important to a DIG group.  The group must have an understanding of emerging technologies and future trends and application development methods, being able to create robust business simulations, as well as have a facility with technology for information dissemination and collaboration.  Other IT professionals in the organization also have roles in the innovation process.  These include providing technology tools and infrastructure to support innovation initiatives, providing skilled technical people for substantial innovation initiatives, and rapidly incorporating new innovations into the corporate infrastructure.

Several organizations have already successfully implemented innovation groups.  Proctor & Gamble started their Connect and Develop program in 2000 in response to a corporate challenge to increase new product ideas coming from outside the company to 50% by 2010.  The group was able to increase new product ideas coming from outside the company from 15% in 2000 to 50% in 2007.  During this time, R&D productivity doubled, the innovation success rate more than tripled, and the company’s innovation portfolio more than quadrupled.  Another corporate example is Royal Dutch Shell where corporate and business unit “GameChanger” teams fund innovations that would otherwise be abandoned.  Ten percent of the R&D budget for the company goes to GameChanger initiatives, and as many as 30% of Shell’s R&D projects come from GameChanger initiatives.

Enterprise Integration Group (EIG)

An EIG helps to institute horizontal processes across silos to improve an organization’s performance in the view of their current and potential customers.  For an EIG to be effective it should manage the corporate portfolio of integration activities and initiatives and serve as the organization’s center of expertise in process management and improvement.  The EIG should also provide staff for major business integration initiatives, be responsible for enterprise architecture, and anticipate how operations could work in a more integrated manner in the future.

An EIG should be developed to fill in any gaps an organization has in key horizontal integration capabilities such as governance, relationship management, program management, architecture, process skills, and change leadership.  Members of an EIG should have a broad understanding of the entire business, have experience with enterprise-system implementation and information architecture, and have strong coaching and relationship-building skills.  The EIG often reports to the COO or CIO, and may report to the CEO if horizontal integration is important to the strategic agenda.

There is a skill set important to the role of an EIG, much of which can be found in the IT function of an organization.  These skills include familiarity with concepts and methods of business process design and improvement, experience with cross-functional systems implementation, competence in analyzing architecture, expertise in information management, and experience with program management.  The EIG must also have a talent for relationship management as that is essential to gaining commitment from others in the organization to make integration efforts happen.