How to Lead Innovation in a Midsize Enterprise

When Gartner researchers asked CIOs at midsize enterprises what digital business means to them, they ended up with more than 100 different answers.

The reality is that digital business means something different for everyone. But at the CEO level, it’s about fundamentally changing the business, not optimizing what you already have. This means IT teams need to innovate and foster a culture of innovation.

“Innovation is hard, it’s really hard,” said Christopher Mixter, Gartner Principal Executive Advisor, at Gartner 2018 Symposium/ITxpo in Orlando, FL. “Where at one point it meant productivity or enterprise resource planning (ERP), that’s not what the CEOs talk about now.”

MSEs are shifting from widgets to experiences or outcomes

On average, midsize CEOs have made promises to drive 11% growth from the digital side of the business. This requires more than a change to technologies, it requires a business model transformation. Midmarket CEOs are looking to change the business their companies are in.

Pharmaceutical is selling wellness outcomes, insurance companies are selling claims prevention. MSEs are shifting from widgets to experiences or outcomes. This means transforming the product, channel and the operations to a customer-centric operation.

Leading innovation a midsize enterprise is a two-pronged approach. First, enable the IT team and then enable the business teams.

Enable the IT team

It’s easy to make an announcement about creating a culture of innovation, only to have everyone return to the old way of doing things in the day-to-day.

To counter that, the CIO of Service King, a collision repair chain, decided to use the existing IT framework to create a culture of productization over projects. He told his team to examine any business request that came in for product opportunities. What else can you do with the widget one business unit requested? As long as they met the original request, the team was free to innovate, experiment, fail and work with whatever teams necessary.

For the past few years, the IT organization has focused on consolidating, centralizing, standardizing and creating stability. It has built a culture that is extremely risk-averse, which is not an environment conducive to innovation.

To bring innovation back to the IT team, CIOs need to:

1. Use product design principles in IT
2. Instill a climate of innovation
3. Align to customer workflows

It paid off for Service King. The IT team filed seven patents with a total valuation of about $30 million.

“It doesn’t matter what business you’re in,” said Mixter. “You’ve got to find a way to disrupt.”

Enable the business

The reality of digital business is that IT will not be able to support all the projects that the business units want to do. The good news is that most projects the businesses want to experiment with won’t scale.

To enable the businesses to innovate:

1. Encourage business experiments
2. Open channels for communication
3. Formalize architecture principles

“We’ll never be staffed and funded for all that work and we might not be the best ones to deliver it anyway,” said Mixter. “How do we empower the businesses to lead experimentation?”

General Atlantic, an equity firm, set up a series of options for the business to communicate. There was a genius bar for those groups who needed a little help. People with several successful projects became “Technologists”, and the team designed a collaboration portal across the company.

Finally, when you set business units free to experiment, make sure you establish a short, succinct framework of architecture that they need to adhere to. This might include items such as ensuring the technology is compatible and has a better user experience. As long as the technology meets a certain criteria, the business unit is free to experiment and, if they find a technology that needs to scale across the business, IT will be there to help.