Special Feature
Part of a ZDNet Special Feature: Tech Budgets 2022: A CXO's Guide

Innovation is hard. Here are five ways to make it easier

CIOs can struggle to find cash for research and development, but committing money to creative endeavours keeps employees engaged, customers happy and bottom lines healthy.

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With money tight and many other demands competing for a slice of the IT department's project budget, it can be tough to make room for research and development, especially with no guarantee of success.

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However, analyst Gartner says CIOs who want to help their organisations grow should focus more of the budget on spending that enables innovation. So what's the best way to do that? Five CIOs give their top tips for making the most of an investment in innovation.

1. Find the right balance between risk and creativity

Gary Delooze, CIO at Nationwide, says his organisation has seen great success from setting up experiments, be they technical proof of concepts or novel examples of business and technology teams working side by side for a sprint and trying something new. He encourages other digital leaders to embrace creative thinking, too.

"When I talk to a lot of CIOs, one of the key challenges comes back to this balance of risk versus innovation," he says. "That's especially true in financial services. There is a control culture and a risk management culture that is very strong because of the risks that we manage on behalf of our customers."

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Delooze says his organisation has to work within those control frameworks. He says finding the right balance between risk and innovation is about the ability to try new things that might create value, while also recognising that there are controls and frameworks that his team has to work within.

"I think the challenge that we've been navigating through is how can you do both? How can you successfully experiment, innovate to create value, but do that in a way that you can then safely adopt and implement the results in the business? And I think for a lot of CIOs in financial services, we're all facing that same challenge of balancing those two things."

2. Make sure any new product is usable and functional

Rich Corbridge, CIO at Boots UK, says CIOs and their business peers can sometimes be a bit risk-averse when it comes to experimentation. He thinks of his own organisation's interactions with customers, and his former role as a healthcare CIO, and says that there can be a good reason for this risk aversion.

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Corbridge says organisations that want to experiment often develop minimal viable products (MVPs), which can be introduced and improved over time with feedback. While the development of MVPs is an accepted industry practice, their use in highly governed sectors, such as pharmaceuticals and healthcare, is more problematic. 

In these sorts of situations, where governance around innovation is tight due to the potential impact on the health and wellbeing of the customer, Corbridge suggests 'minimal' is perhaps the wrong word. Instead, any new product must be usable and functional, so that the people involved in its creation can test it safely and improve its features.

"In some specialist cases, low-level prototyping doesn't really give you enough lessons around the things that you're doing," says Corbridge. "I think there's a part there for me around the fact that, as CIOs, we have to know how to take the risk far enough, so that we can give service and learn."

3. Find a way to help your team experiment safely and appropriately

Paul Coby, CIO at Johnson Matthey, says his business spends about £200 million a year on research and development. "It is a very innovative place," he says. "My challenge was to lock into that spirit. You don't tell our scientists about how to do an experiment; they know -- and they could they could teach us a thing or two, and do."

Coby pioneered the use of innovation labs in his previous role as CIO at John Lewis Partnership. In the case of Johnson Matthey, he is particularly pleased with the firm's JM-LEVO Formaldehyde portal, which is an analytics and communication tool that helps customers proactively manage and adapt plant operations. Various parameters, such as temperature and performance, can be tested, tweaked and optimised.

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Those experiments produce significant cost and energy savings in the real world. While this creativity produces big benefits for Johnson Matthey and its customers, Coby recognises other CIOs are more restricted when it comes to R&D. He encourages IT leaders and their staff to grab every opportunity to be creative.

"If you're in another place, which doesn't have that sort of culture, then you're probably building innovation from scratch," he says. "I think that the key thing I'd say -- both at John Lewis and here -- is that experimentation is a lot of fun. You're very privileged. The business is giving you some money to experiment safely and appropriately."

4. Prove the long-term benefits of innovation to the board

Graeme Hackland, CIO at Williams F1, doesn't believe most CIOs are risk-averse. He says tech chiefs are working hard to create the headspace for their people to get creative, and they're also giving the opportunity for people outside of IT to contribute. But when those experiments take place, they must be run quickly.

"We've been looking at the model of taking 48 hours to try something," he says. "If it doesn't work, park it. You can come back to it later when things have advanced and have another 48-hour crack at it. But don't spend weeks and months applying resources to it -- at Williams, you should be focused on car performance."

Hackland says experimentation costs time and money -- and that's a challenging issue, especially in the high-pressure sport of motor racing, where success is judged on the track: "Innovation needs funding. It needs people's time. In our case, it needs the ability to go and buy some stuff that might not add to the performance of the car."

CIOs who are looking to source funding for creative projects must show the board that, while innovation might cost money in the shorter term, it can produce long-term benefits, says Hackland: "It means your people are learning, they're engaged, and they're not just doing lights-on, which I think is really important. They're getting to play with new technologies."

5. Keep an eye on the market and an open ear to customers

Warren Breakstone, managing director and chief product officer for data management solutions at S&P Global Market Intelligence, says CIOs must recognise that innovation becomes less risky if the IT organisation maintains a strong connection with the market and the people that matter.

"That's not just the way to mitigate risk, but that's the way to maximise upside. Innovation comes from understanding the markets, the trends, your customers, and to some extent your competitors. So being out in the market and being visible is essential," he says.

When you're making those connections, Breakstone says the most important tip is to give the people you speak with the opportunity to talk about their challenges. Keeping an open ear during these sessions will allow your organisation to see how experimentation might work.

"There's nothing more powerful in client interactions than the power of an open-ended question. You'll find opportunities -- and the more of those conversations you have, the more you'll start to connect the dots," he says.