McLaren CIO: 7 Tips On Encouraging Digital Innovation And Working With Shadow IT

McLaren Technology Group has been a leading innovator in the competitive world of Formula One racing since 1963. Over recent years the fast-growing company has diversified into new business areas, including high-performance sports cars and consulting based on its real-time sensing and telematics expertise.

In a a recent web seminar hosted by Eric Kavanagh, CEO of The Bloor Group and sponsored by SAP, McLaren CIO Craig Charlton explained how his team supports "discontinuous innovation" in these new businesses.

I encourage you to watch the interview yourself, but here's Craig's top advice* on how to address key challenges of leading IT in a fast-growing technology and engineering company.

How do you implement an Internet of Things strategy?

You focus on how you can differentiate in your business, rather than the technology:

"We've actually been collecting data from the cars for about 27 years. The internet of things and connected cars is something we've been doing for a long time! And with that, we've collected now over one trillion data points, which is an unbelievable amount of data. The challenge with that is finding the insights in it. If you can't extract the information you want from it, it's irrelevant."

"This is an area we are working very closely with SAP and looking at some of their clever in-memory technology and hopefully we'll have some more news about that later in the year."

"I actually like the way SAP think about IoT, which is "outcome-driven applications." It's about thinking how are you going to change the game using IoT.

"IoT is a term that's used a lot these days, but if you decompose it, it's essentially some form of sensing, some sort of data communication, some sort of data collection, and then some form of analytics and application on top. The stack is pretty similar depending on whichever business vertical you're in. So the differentiation point is then trying to understand what you're trying to achieve."

"Is it trying to make a car go faster around the track? Is it trying to understand what components are failing in a McLaren automotive car so you can start to do predictive maintenance and the car can book itself in for a service? And with autonomous driving in the future, drive itself there while you're at work and bring itself back. It's those kind of things that I think is where the focus should be."

"Everybody you talk to these days says they are doing IoT, but you've got to dig in and understand what's the unique value-add that each of these organizations can bring. Like I said, I think SAP have a very interesting way of doing it."

How do you foster a culture of "game-changing" innovation?

You make sure people can fail, and encourage unconstrained thinking:

"Change is embedded in the DNA of McLaren. If you take a look at the Formula 1 car: we're changing that every week. It's a prototype car. Change is just part of McLaren's culture."

"It starts with with the philosophy of how McLaren operates... and that runs through to IT as well. It's not just about deploying it and running away, it's about understanding your products, and understanding much more deeply how they're going to benefit your colleagues in the organization"

"I've always been a believer that if you throw smart people at a problem they will come up with a good answer. And if you look around McLaren, we've got a lot of very very smart people."

"But that's just part of it... In addition to that you need to give them the freedom to try things out, to experiment and fail fast. If there's a culture of risk aversion and punishment if you fail, you're never going to foster innovation. So you have got to give people that space, reward it, and make sure people are comfortable to be able to try things out."

"It's something that I learned a long time ago: with incrementalist thinking, if you just keep changing a little bit here and there, you're not going to get a massive amount of change."

It's as simple as stopping people and saying 'OK, have you thought about this in a completely different way? If you were unconstrained, how would you do it? Let's take those constraints away for a second and just talk about what is possible' - and then we'll worry about the money and the resources."

"For me, that's how you've got to try to bring this to life. It's about how are you going to create the game-changers."

How do you train and support your users so they feel competent and confident with changing systems?

The human touch is still very important:

"There's been a big move over the last few years to push things out to end user support, because if you can use your phone and download an app, then you should be able to do that at work as well."

"I think [this can] can work in certain areas. But if you're making significant changes to how somebody's doing their daily work, what you want to do is make IT simple and accessible for them."

"A great example: we're rolling out some cloud-based solutions right now, and we're still using floor-walkers -- we're still going to have people walking around, helping someone: 'Do you know what you're doing, how it's going to work, do you know how it's going to change?' -- and not leaving their desk until that person's happy that they can actually do that."

How is in-memory a change agent for you?

It's not just about speed, it's about new ways of working:

"I think we're still learning about in-memory. Some schools of thought say 'it's about moving it from physical disk to in-memory, and it's faster.'

I think that's one way to look at it. But if we use the example of how SAP HANA works, it's fundamentally changing the data structures that you work with. Because you can tear through massive amounts of data quickly, you're moving to a situation now where you don't necessarily need data warehouses and you don't need to be batching data up for data processing. So you can do business-level reporting on the fly, straight from your transactional solutions."

"So that's not only just speed, it's also simplifying the technology landscape and taking cost out of the technology landscape as well. For me, the penny dropped on that six or seven weeks ago and I thought 'this is something that is truly revolutionary' in how things can change from an IT point of view"

How do you deal with Shadow IT?

Don't resist it, work with it:

"If you go back to 2010 or 2011, IT was easier then, I think. As a CIO it was more of a control game: 'were going to do it this way, let's get on with it'. If you have that attitude today you're dead as a CIO. If you look around an organization, you'll probably find people that know more about technology than you or people in your organization."

"It's now about embracing that creativity and work. You can't let it go wild -- you still have to have a certain level of governance in place, but one of the approaches we talk about in McLaren is 'you can't stop somebody doing something unless you've got a credible alternative'.

And if we don't have a credible alternative in IT, what we should be doing is working with the individual who has brought that idea to life, and figure out how we can take that to corporate standards."

"So it's about how do you get that credible alternative quickly, or how you take that solution that somebody's been putting in place and make it the credible alternative."

"It's a different way of thinking.. and if you do play the control game, what you find is that people will do it anyway -- so you're never going to win"

How should CIOs communicate around strategic changes?

Don't sugar-coat the difficulties -- it will bite you in the end:

"If we're trying to change some difficult things that involve investment, that involve major organizational change, you've got to be upfront about it."

"I've seen so many times that people say 'Oh, it's going to be OK, don't worry, it'll be fine' -- you're far better off saying 'actually, it's going to be three months of hell, it's going to be difficult, and then when we come out we'll be back to where we were. It's much better to be upfront and honest if you're doing major change activity"

How do you pick the right technology partners?

It's about being open in your goals, making money for them, and the relationships:

"I can't be successful as a CIO by relying only on my internal organization. I need to have strong partnerships: technology partners, service partners, that can help me deliver what we're doing"

"In a traditional CIO sense, you go through a process of going out to market through the strategic sourcing process, etc. and then you look at the standard things like cost, service match, culture etc."

"There are two or three things you've got to get right. One is that you're technology partners have to be making money out of any process. If you're going to screw them into the ground, you're going to lose."

"Secondly, you need to set the stall out in terms of what you're trying to achieve with that technology partner and how they can actually match you -- geographically, organizationally, and in terms of what your strategic objectives are. I think that is very, very critical."

"Thirdly, it's about relationships. It's about making those strong relationships with the people in the organization that you're going to work with, so that you can have the real discussions when things are good and when things are bad."

"With SAP, we've got a long-standing relationship, over 19 years... We nurture that, we make sure that they're making money, and we make sure that the partnership works well."

For more details behind McLaren's 5-point IT Strategy, please read these longer descriptions of the interview:

• Explaining McLaren Technology Group's 5-Point IT Strategy
• McLaren CIO on Digital Transformation, Hybrid Environments, Shadow IT And More

* [some quotes lightly edited for legibility, my emphasis]