Innovating without blowing the budget?

It's a business truism that success comes through growth and -- but how can you innovate in your use of technology without risking funding, reputation, and your entire infrastructure?

If you mention the concept of innovation to the majority of chief information officers, they are quite likely to run rapidly down the corridor, screaming loudly as they do so and firing off pink slips behind them. The mere notion of trying something new has become anathema to many IT managers, driven partly by the spendthrift nature of many late 1990s expansion programs and the subsequent reining in of budgets to the point where merely keeping current systems running is difficult enough without attempting a little experimentation. The flipside of the well-known aphorism "no-one ever got fired for buying IBM" -- that plenty of people got fired for trying out something new -- remains evident across the industry.

This is an interesting response given that innovation is endlessly paraded as the lifeblood of the technology industry on a vendor level. This was starkly demonstrated during Microsoft's long-running antitrust case with the US Department of Justice, where the mantra "We live for innovation" was repeated endlessly (and, apparently, successfully).

Microsoft has continued to talk up its capacity for innovation, albeit often in rather broad terms. "Part of what we're seeing in innovation now is taking the world of structured data, like a directory or a customer relationship management system, and the world of documents and bringing those together," Bill Gates told a recent meeting of financial analysts.

While you might not be inspired by the thought of better-structured CRM, market watchers agree that the IT industry is overdue for a new round of fresh ideas. "The technology economy has shown pronounced growth cycles over the past 50 years, alternating with periods of technology digestion when growth slows," writes Forrester analyst Christopher Mines. "We are in such a digestion period right now; history strongly suggests that another growth wave of IT innovation will begin in 2007 or 2008."

The importance of innovation is also widely recognised. "A focus on cost cutting and efficiency has helped many enterprises weather the downturn, but this approach will, in the end, make them obsolete," Gartner points out in a white paper on the topic. "Only the constant pursuit of business growth can ensure survival."

Yet despite this, much business use of technology is anything but innovative. One consequence of centralisation and consolidation is that many large enterprises are running essentially the same core applications in essentially the same way, and thereby minimising their opportunities for expansion. Just how creative can your approach to inventory management become when you're using identical software to your competitor?

Interestingly, the same problem isn't always evident in smaller companies. Ray Ozzie, founder of Groove Networks, creator of Lotus Notes and now chief technical officer for Microsoft, pointed out earlier this year that small companies can often act in an innovative fashion because they are not held back by central policy restrictions. "The tables have turned, and enterprises have become the laggards," Ozzie noted.

A recent Deloitte survey of small and medium businesses identified that creating a culture of innovation is a critical factor in growth, and found that 80 percent of such companies believed they would be able to commercialise the results of such innovation.

"A culture of innovation can be established by having simple mechanisms in place within the business to actually capture innovative ideas and then turn these ideas into commercial realities," says Deloitte director Karina Collins. But just like starting yoghurt from scratch, growing such a culture is not without its challenges. While there may be a multitude of new technologies to explore, how can you decide where to start?

The best approach
One clear stumbling block for IT innovation in larger companies is the need to communicate that vision from the technology executive level to wider management. This is particularly difficult in verticals where innovation is not a major element of the culture on any level. Gartner analyst Dale Hagemeyer points to the consumer goods sector as a prime example.

"For more than 20 years, consumer goods manufacturers have introduced new products around an 'efficiency model' that doesn't disrupt engineering, plant production and ERP (enterprise resource planning) systems," Hagemeyer wrote in a recent Gartner commentary paper. "What has emerged is a series of 'flanker products' in new flavours, colours, and features with minimal breakthrough innovation."

That lack of innovation has been in part driven by necessity. "Consumer goods manufacturers have traditionally been able to grow at about the same rate as the population because there is only so much wallet share or 'stomach share'. Going forward, innovation will be necessary for company survival." The same could be said of many other sectors (look at the telecommunications market, for instance, where the packaging and pricing of services is now far more important than basic quality, which is taken for granted).

How can the IT department contribute to a new process of growth and eliminate the stagnation? One critical strategy is to embrace the notion of innovation (and stop running down the corridor).

"To understand IT's ability to deliver business value to the enterprise, CEOs should focus on what Forrester describes as innovation capacity: the potential for the IT function to support new products, processes, and opportunities," write Forrester analysts Laurie Orlov and Andrew Bartels. "Successful companies will grow their IT innovation capacity by focusing on how IT is sponsored, operated, and governed."

It's important to recognise that not every project can be a guaranteed success. "All new business growth strategies are risky; no one knows if they are going to work," Gartner points out. "The trick is to find the one world-beating idea among dozens of duds. The only way to do this is to test ideas using strategic experiments." Identifying where innovation can be a useful contribution and where it will just lead to unexpected complexity is also an important step.

One useful approach is often found in the deployment of the most conventional IT projects: working one department or sector at a time.

When rolling out a speech recognition platform, the Australian Taxation Office deliberately focused on individual projects rather than trying to speech-enable everything in site.

Recognising a new idea
Inspiration can come from unexpected sources. When planning new uses for technology, it always pays to spread your creative wings as far as possible. "Gather ideas from many sources," Gartner advises. "Creativity thrives on eclecticism, and ideas for growth can come from anywhere. That's why it's important to engage people who have a wide range of views and experiences."

You might not even need to look any further than the games console in your lounge room. One project, currently being carried out by the Cooperative Research Centre (CRC) for Construction Innovation in Queensland, is looking at ways to combine 3D gaming technology with existing computer-aided design (CAD) packages to change the way in which architects design buildings.

"The associated plans could be studied interactively by planners, builders, suppliers, residents, even traffic authorities or environmentalists," says Stephan Egan from the CSIRO's Division for Manufacturing and Infrastructure Technology (CMIT), which is participating in the research.

Elsewhere in the CSIRO, the group's Molecular and Health Technologies division is working on Hidden Image Technology (HIT), which promises to allow manufacturers to minimise counterfeiting by imprinting invisible characters on labels or other packaging. The "tags" can't be seen in normal light, but instantly become visible when viewed through a specific filter. "The digital encoding of the hidden image is complex, impossible to copy, and able to be added to existing packs or cartons without changing designs," explains project leader Peter Osvath.

It doesn't take too much imagination to see how such models could be extended into other areas of business. ID cards that can't easily be duplicated could be a useful addition to security-sensitive businesses, for instance.

Innovation need not be earth-shattering in its immediate scope to have an eventual impact. In one recent example, IBM has been working with the US National Geographic society to improve data collection methods for its Geographic Project, which maps DNA samples to provide a better indication of human population patterns over time. While the idea of exploring DNA sounds suitably high-tech in a CSI kind of way, IBM's assistance was on a more pragmatic level: moving data collection from its roots in people taking down observations via pencil and paper to a more digital model.

"The task of gathering genetic and associated data into a combined format that is usable by scientists and researchers remains daunting in its complexity," says Ajay Royyuru, a senior manager at IBM's Computational Biology Centre and one of the key staffers on the project. While that might seem like an obvious development, turning it into a concrete reality requires considerable patience.

In a similar vein, one project at National ICT Australia (NICTA), the government-backed IT research institute, is examining the eye movements and head position of drivers during accidents, with the aim of minimising accidents caused by a lack of alertness on the job. Again, it isn't difficult to visualise other potential applications. Injury rates in factories could be reduced by tracking the movements typical of someone exhausted or not concentrating. Even in white-collar environments, tracking systems could identify poor posture and other behavioural cues associated with repetitive strain injury.

At its most basic, innovation is finding a way to do something better, using what technologies you have available. A good example of this is a NICTA project that is aiming to exploit wireless networking -- a familiar technology -- in a quite unexpected way. The Water Information Network will use a custom wireless networking system to track water utilisation on farms, making it possible to use scarce resources more effectively. Again, this kind of tracking approach could be adapted for other industries and supplies.

Of course, success can be a difficult thing to measure. Most casual observers would agree that Wi-Fi technology has quickly been an enormous success, but that hasn't necessarily translated into the most obvious commercial operation -- Internet access for people on the move.

A Gartner survey of 2000 business travellers found that just 25 percent in the US and 17 percent in the UK regularly made use of Wi-Fi. The problems? Even those who use Wi-Fi find it too expensive, and not always available in useful locations. At the same time, Wi-Fi has proven ideal for business and home networking. Thus an innovation which appeared set to benefit telecommunications companies now appears poised to be taken over by the community at large -- and used in ways that no one would have originally dreamed of.

The lesson in all of this? When innovating, it pays to expect the unexpected.

This article was first published in Technology & Business magazine.
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