I consult, write, and speak on running better technology businesses (tech firms and IT captives) and the things that make it possible: good governance behaviors (activist investing in IT), what matters most (results, not effort), how we organize (restructure from the technologically abstract to the business concrete), how we execute and manage (replacing industrial with professional), how we plan (debunking the myth of control), and how we pay the bills (capital-intensive financing and budgeting in an agile world). I am increasingly interested in robustness over optimization.

I work for ThoughtWorks, the global leader in software delivery and consulting.

Saturday, January 27, 2007

The Aptitude to Innovate

Growth is back in business; it is the business imperative. Growth is fueled by innovation. And business leadership is looking to IT for innovation.

That’s good for IT. Think about where we’ve come as an industry:
  • 10 years ago, IT was part of the business.

  • 8 years ago, IT was going to reinvent the business.

  • 5 years ago, the business wanted to get rid of IT.

  • 3 years ago, the business accepted IT as a tolerated nuisance, but it kept it on a tight leash.

  • To be asked to be providers of innovation is to be invited back to the top table as business leaders. That’s a good problem to have.

    But it’s not an easy problem to solve. Because innovation is neither a managed business function nor an explicit programme of work, it defies traditional management solutions. You can’t manage innovation as you manage sales. A culture of innovation also requires new ways of working, as most organizational structures and norms simply stifle it. Unfortunately, there are also few models or patterns for introducing and inciting innovation. No surprise, then, that 3 out of 4 CEOs think they lack both organizational process and leadership to engender business innovation.1

    The open source phenomenon provides us with one reference model: global communities of people collaborating on common problems to create robust, useful and re-usable solutions to problems. But in a commercial context, the open source model is a point of reference, not a reference implementation: adopting network organization structures is disruptive and potentially disastrous, and these types of structures are orthogonal to corporate cultures and reward systems.

    Innovation is not invention. It isn’t the “eureka” moment, or the creation of new products and services out of R&D. It’s the consistent, rapid and deliberate maturation of what we have and do today. It’s evolution, as opposed to revolution. Think Ferrari evolving the F1-2000 platform to win 5 consecutive driver and constructor championships as opposed to BMW.Williams revolutionizing the FW22/3/4/5/6 over the same period (remember the tusks?) only to win the odd Grands Prix.

    To be creating and just as importantly consuming innovative solutions in our day to day requires more than simply standing-up a repository for ideas, code and artifacts, and e-mailing a URL soliciting contributions and use. Developing a penchant for innovation requires that we focus on three things: having a static cost of change, building Community, and having a mature IT Governance capability.

    Each workgroup, each team, must have a static – as opposed to exponential – cost of change. Traditional ways of working create long decision horizons: decisions made during architecture and design become hard to reverse in coding, testing and deployment. Highly coupled requirements create highly coupled code. Development is opaque. Collectively, this creates a cost of change that grows exponentially. Because everything is so highly coupled, it is difficult to ferret out clever solutions or integrate new ideas without significant disruption. By comparison, Agile practices create short decision horizons. Requirements are independent statements of need, code is decoupled, tested and always in a state of build-readiness. We have transparency in development. This creates a static cost of change, and makes it easy for ideas to be harvested and consumed. Agile practices, then, allow for a consistent supply and demand of ideas and solutions.

    Organization – particularly hierarchy – can obfuscate needs and opportunities. To drive out and consume innovation, people must also be part of a Community larger than their immediate work teams or departments. This isn’t endless committee meetings or matrix organization, this is a slow but deliberate process of grafting a network organization model into a company. This is supported by infrastructure and tools, and by aligning Community participation with individual (career) and team (delivery success) goals. This gives us the ability to communicate and collaborate as an organization, across boundaries.

    Finally, we need to call out the value of innovation, and define the context and completeness of each. Solutions must be shown to deliver business value, otherwise they’re just interesting ideas that may not be worth investment at this time. They must also be complete in scope, lest the rush toward adopting an idea create a legal, performance or quality problem that creates more harm than good. There must also be an instilled behavior of consistent sourcing, looking outside an immediate team for ideas and contribution. A mature governance capability gives us the ability to oversight and leverage innovation.

    Given the increasing rate of change in business, there is an urgency to harvest and capitalize on ideas and IP. Bringing it about is not a top-down exercise in "managing innovation" as much as it’s a corporate competency and cultural phenomenon. Bringing this about happens in stages, and forming an “innovation network” is itself a process of organizational maturation. By deliberately developing capability in Agile process discipline, developing Community and maturing IT Governance, we create an aptitude for innovation and the ecosystem to perpetuate it.

    1 Business Innovation is a Rising IT priority, but is Not Yet Matched by Action, Gartner Research, 10 December 2006.