Order Takers to Innovators

When David Behen became IT director for Washtenaw County, Michigan, the department was little more than an order-taker. And not a very good one. It was kind of like the waiter who makes you wait, then brings the entree with the mains and brings you a bottle of Grange when you asked for a carafe of the house red.

"They never brought projects in on time and always overspent," says Behen. "The IT department had no credibility."

Fast forward a few years, and that same IT department is implementing a wireless project that delivers on the county's promise to improve service to its citizens and bridges the digital divide between far-flung residents. This innovative initiative was born within that same, previously disdained IT department and stands as evidence of the organization's evolution from a reactive entity to a proactive business partner. Behen, now Washtenaw County's deputy county administrator and CIO, says he has reinvented his job, transforming it from enabler to "policy-maker and community engager".

This kind of change is hard. But when it happens, it elevates the status of IT and brings benefits to the business. Here Behen and CIOs from DePaul University, Foley & Lardner, and Pitt Ohio Express share the steps they've taken to lead IT's shift from prodigal back-office order-taker to forward-thinking partner in innovation. In August, all three were recognized by US CIO as CIO 100-winning IT leaders.

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First, Build a Foundation

When Doug Caddell became CIO of Chicago-based Foley & Lardner eight years ago, leaders within the 2600-employee law firm didn't look to IT for much of anything, let alone business innovation. Caddell spent the first few years just fixing what was broken. "We provided a basic, solid infrastructure and built back-office technology that actually worked," Caddell explains.

Then he looked for a way to help his tech-sceptical lawyers understand what IT could do for the business, adopting the credo "Build it and hope to hell they will come". So, without any formal buy-in, IT developed new Web-based revenue-enhancing systems it knew could benefit the business. "This was totally against what I learned [about delivering systems] in school," says Caddell. "But I knew if we didn't do it, we'd just be running Exchange servers and managing document management systems forever."

It worked. That suite of Web-based technologies enabled the firm to boost revenue and garnered it a CIO 100 honour in 2006. Better yet, it began to transform IT's role. When the firm's executives created a team to develop new ways to increase business with existing clients by cross-selling legal services — the Client Share initiative — IT was invited to the very first meeting. Lawyers, says Caddell, have always "kept the clients to themselves, even if there were attorneys in other areas — like M&A or bankruptcy — that might have other services the client needed". It's the "eat what you kill" mentality, he says. But the Client Share system that came out of that meeting enables lawyers to share clients and this year earned IT another CIO 100 honour.

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"After years and years of trying to get IT involved from the inception, we finally succeeded," says Caddell. And this in turn has made IT more effective. "For a change, we were able to understand what the objectives were from the very start and make suggestions on ways we could help," says Charlotte Logullo, an internal IT consultant who's still involved in all Client Share meetings, setting business strategy and not just IT plans. For Vince Kellen, who took over as CIO at DePaul University almost five years ago (he is now VP of IS), transforming IT meant setting technology aside for a while.

"IT had just installed an ERP system at a lot of cost," says Kellen. "It was perceived as a black hole of money."

The malady, Kellen knew, was the lack of a comprehensive IT strategy and an architecture to support it; the cure would be a service-oriented architecture (SOA). But Kellen needed time to make his case and time to build the SOA (for information about building a business case for an SOA, see How to Get the Most from SOA). "Change begins with talking," says Kellen. "You have to talk. And keep talking. And keep talking."

Kellen's biggest problem was the guy who hired him. His method for managing his demanding and results-hungry boss? "I kept my list of goals in one pocket and my resignation letter in the other," says Kellen. The SOA took three years to complete (the first two were spent building a proper organizational structure, assembling a management team and laying the philosophical groundwork for the change) and won a CIO 100 award.

"You have to carve out that window of time where the executives leave you alone to get this done," says Kellen.

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Next, Reorganize Your Department

Kellen also needed time to address his own organization's concerns. His staff believed it couldn't do the ERP upgrade without spending millions on external consulting. But after interviewing all 100 employees, Kellen came to a different conclusion: "We had plenty of people, some managers and some worker bees, with 10-plus years of experience, wickedly sharp minds and passion for pushing the future. We had everyone we needed."

But they just weren't where Kellen needed them to be. So he started on the org chart, devoting nearly a year to the effort. "The biggest element to enable innovation is the organizational design piece," says Kellen. "We spent 10 months in intense organizational design thought, and most of that was spent coming up with bad ideas."

Kellen finally organized the department around 14 crafts ("mutually exclusive, knowledge-intensive areas"), created a rotating team of five managing directors to coach the craft leaders who would serve six-to-nine-month terms, placed IT salespeople within the university, consolidated five IT departmental budgets into one and put a managing director in charge of it all.

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Not everyone was pleased. "You had the optimistic types, the young aggressive employees, who were jumping for joy," explains Kellen. "Then you had the sceptical crowd, saying: 'Uh-huh, where have we heard this before?'" The organizational and architecture design was done by the true believers; the sceptics critiqued and honed the plans. "The goal," Kellen says, "was to give everyone a voice."

It was a tortuous process, largely because Kellen eschewed cookie-cutter solutions in favour of a more agile organizational design built around idiosyncrasies. "It drove HR nuts," he says. "But we worked through it." Four years in, IT has shifted. "Now we're very focused on the future," he says.

Behen of Washtenaw County took an even more drastic approach. When he became IT director, he fired everyone on his staff of 45. Half left for good; the rest applied for 34 jobs with new descriptions. The idea was to get the most qualified, enthusiastic people on board. Behen attracted outside talent by offering salaries comparable to private-sector ones and selling the value of public service. By 2004, "it really started clicking. We started expanding services to local units of government," says Behen. "Because we had a top-notch IT department, I could go out as CIO and start working on big, innovative projects."

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Then, Look Outside Your Enterprise

One of those projects was Washtenaw's wireless initiative. Like most transformative innovation, the idea came from outside. In fact, it came over a cup of coffee Behen had with a local software entrepreneur. Roughly two-thirds of the county did not have broadband access, and telecom companies weren't likely to cover much more of its 1865 square kilometres. The Ann Arbor area had value for vendors, but there was no ROI for them in the more rural, western area. Behen left convinced the county should offer wireless to all. He began talking to stakeholders inside and outside of government. Within 18 months, he had worked a deal with a local contractor to trade free wireless connectivity for access to municipal and county assets on which to place their broadcast equipment. The county board of commissioners gave its blessing, and the project was under way.

Kellen's idea to move DePaul to a Web-services environment also came from looking outside — in this case, to vendors.

"Distributed computing historically has been difficult," Kellen says. "Web services promised to make it much simpler, which would mean IT agility and nimbleness." In 2003, there was little movement toward SOA in university environments. But Kellen, a former Internet consultant, knew software vendors were investing in the technology. "If that's what they're spending R&D on, that's what the future is going to look like," he says. "It was a no-brainer."

DePaul is now one of the leaders in the use of Web services in higher education. Says Kellen, "We're insisting on it for everything." SOA itself is opaque to university leaders, but they like the results. "They want us to get their work done," says Kellen. "And we're doing that faster."

Looking outside his enterprise also worked for Scott Sullivan, vice president of information technology and services for Pitt Ohio Express. He got a call from his boss, the owner of the private $US244 million less-than-truckload (LTL) carrier, who wanted Sullivan to explore mobile computing and figure out how it would fit into Pitt Ohio's business. Sullivan looked outside trucking to what was going on in the parcel delivery space. "FedEx and UPS give their customers real-time status of their deliveries," he says. "We wanted to apply that to the LTL industry." The PeopleNet effort, begun within Pitt Ohio's IT business systems group, didn't stay there for long. Now, Sullivan says, "We're breaking down paradigms. We're one of the few in this industry able to track where a shipment is at any given time within the supply chain."

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Finally, Share the Risk

Innovation carries risk. The bigger the change, the bigger the risk. For Behen, the biggest risk with Washtenaw's wireless initiative was the very scary one that it just wouldn't work. The county wanted to lead the effort, but just because it was out front didn't mean it had to go it alone.

The key was getting others involved, including the University of Michigan, which put its own people on the project. "If you're going to do something this extensive, with multiple stakeholders, you not only need to get buy-in, you need to get them to put forward some kind of resources," says Behen.

Washtenaw is on track to cover the county by early 2008. It will help bridge the digital divide that separates big government and small towns in the area, and will result in further business innovation. "We've talked to top-seven automakers, hospitals, software companies," says Behen. "They've all got plans spinning off of this."

Pitt Ohio's Sullivan is always concerned about the risk of IT-driven initiatives. "I'm leery of innovating from the IT side," he says. "You have to bring the business along." His mobile computing project started out with plans to pilot the systems in the company's Pittsburgh terminal. Sullivan built a cross-functional business team to get to proof of concept and worked with terminal employees to refine the system. Within the first year, drivers and dispatchers were so happy with the system that they asked to keep it even if it didn't go enterprise-wide.

Meanwhile, project leaders discovered that customers wanted the new capabilities . . . yesterday. And not just in Pittsburgh. Other departments, from safety to vehicle maintenance to finance, indicated more could be gained if the PeopleNet application were integrated with other core systems. What began as an exploration into how one off-the-shelf product could be applied to existing business processes turned into a transformational integration project. And the time frame for the mobile implementation shrank from 18 months to less than six. "There was tremendous risk in that," says Sullivan. "Logistically it seemed impossible." But the project had morphed from IT R&D to business necessity.

"It was more than IT with skin in the game," says Sullivan. "The business units wanted to make it successful. That's the key to innovation."

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SIDEBAR: Seven Highly Effective Ways to Kill Innovation (and Seven to Make Sure You Don't)

Find out if you or your company is guilty of squashing good ideas and their growth

By Diann Daniel

Innovation may be the obvious business mandate, but plenty of companies are guilty of creating a culture where a good idea has as much opportunity to take root as most of us have of winning the lottery. What gives?

For starters, the creative process can be fragile and requires support and nurturing. That can be tough in today's fear-inducing environment of rapid technological change and marketplace competition — but it also makes innovation essential. So take a journey through our list of innovation killers, and find out if your company is crushing good ideas or allowing growth and change to flourish.

Trusting that innovation will take care of itself is like believing a vegetable garden will just happen to appear in your yard one day. Innovation requires the investment of time and money, and it requires a process to support it, according to Thomas Koulopoulos, founder of the innovation consultancy Delphi Group. Like a garden — a fragile and time-consuming endeavour — the innovation process requires a place for seeds (or ideas) to root. It also requires weeding, protection against predators, and consistent nurturing and care.

Attention to innovation is a requirement in today's world, says Koulopoulos. Even in industries where the margins are slim — such as manufacturing and sourcing — innovation is a must. "Here's the irony," he says. "Even though I might find that I cannot afford to take a big risk, that doesn't mean that somewhere on the globe I won't be challenged." As an example of how vulnerable standing still makes you, he points to the American auto industry, now failing in its battle against foreign carmakers; the competitors did think it was important to innovate.

Innovation tip: Lobby for the importance of innovation, and the dollars and owners to support it.

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Innovation killer #2: Tell everyone to "think outside the box," hold a brainstorming session, then call it a day.

Great ideas are the seeds of innovation; they are not innovation itself. "Everyone [for example] has the idea for a book in their head," says Koulopoulos, "but there's a huge gap between 'book in the head' and the laborious process of writing the thing."

Invention and innovation are mistakenly synonymous in so many people's minds; but they are different and you need both. Koulopoulos points out that companies that get innovation right have a holistic view of innovation and create a culture to ensure that it flourishes. This means a process to support innovation is created, implemented and communicated so that everyone knows how it works and is able to participate.

Innovation tip: Create a formalized process for ensuring that ideas are nurtured.

Technology should support the role of innovation, not lead it, says Koulopoulos. This is because innovation is first an issue of corporate culture, concerning things like rewards, inspiration and motivation.

In any situation, you get two activities — the invention and the innovation, or the actual process of innovating. Koulopoulos draws a hard line between the two and says technology's role falls after invention. IT should be involved with implementing the technology that best supports the innovation process. For example, many companies are turning to vendors that offer idea management technology, such as iBank and Brightidea.com.

Innovation tip: Realize — and convey — IT's role in the innovation process.

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Innovation killer #4: Create an obstacle course for ideas.

Guaranteed way to kill the innovative spirit? Model your processes on Kafka's The Trial or your typical parking clerk's office.

Bureaucracy and Byzantine processes discourage enthusiasm and participation. In a teambuilding game conducted by the Improv Asylum, participants quickly find out that saying yes or at least a positive version of no creates a more participative, stronger team. Conversely, when employees' ideas are treated with derision or disrespect or the process is confusing and difficult to navigate, enthusiasm will likely deflate. That's just what Koulopoulos found when he surveyed 374 senior IT execs; 22 percent of respondents reported losing interest in championing their idea due to internal process and bureaucracy.

Innovation tip: Make the innovation process transparent and clear-cut, and create ways to support the entire company's involvement.

Ever watched a new idea shot down at time-warp speed with a derisive "that won't work"? Chances are the naysayer was one of the more entrenched execs. "This is the single greatest trap companies fall into," says Koulopoulos, "and it's a people issue: When you've invested yourself [in how things are], the last thing you want is for them to change."

But not being open to change is a big mistake, he says. Take the newspaper industry's initial refusal to acknowledge (and take advantage of) the disruption by the Internet. As a consequence, ad sales, newspapers' primary source of revenue, flatlined in 2006, according to the 2007 "State of the News Media" report by Project for Excellence in Journalism.

"I hear [a] lot of people talk about how media has less integrity — we're not editing, etcetera," says Koulopoulos. But, he points out news and media are being consumed differently, and the gap between the pre-Web model of media and the increasingly interactive version of it will only widen. So are you going to stick to your "values" about the way things should be? Or do you respond to change and the need for innovation? Certainly the internal resistance can be difficult to overcome, but few companies can afford to cling to the past, he says.

Today's world requires companies to become more like a Gillette, which is "not afraid to eat its young", says Koulopoulos. He says that the company will invest enormous amounts of money in developing products that will compete with existing ones, for one simple reason: If Gillette doesn't innovate on its products, someone else will.

Innovation tips: Study stories of people and companies that took risks. Also: Learn why fear of change is hardwired into our bodies.

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Innovation killer # 6: Hand over the good ideas to the Legal and Accounting departments.

Ideas are fragile, easily broken or squashed. On the surface, giving the care of those ideas to Legal or Accounting may make sense, since one of the greatest issues with inventions are legal ones. And there are financial considerations as well.

But those with the most influence over the idea process must be the innovation champions, and that emphasis must come from the top, says Koulopoulos.

Innovation tip: Create support and ownership for innovation at management's uppermost tiers.

Failure-tolerant management was the third most important ingredient in creating an innovative culture, according to CIO's innovation survey; it came in at 25 percent. There's a reason why this factor is so important.

No doubt you can build an iterative process and lessen the cost of a failure, says Koulopoulos, but the bottom line is the market is fickle and you can't predict what will happen.

Here's the scary truth: You will fail sometimes. Like a child learning to ride a bike, you simply cannot move ahead without taking a few knocks. The question is: Are you the kind of organization that can embrace innovation in spite of that?

Innovation tip: What doesn't work out is merely a learning experience and therefore fodder for the innovation cycle. Use case studies, research and other support to show naysayers why learning experiences are a must in today's corporate environment.