The role of technology in driving innovative business models
The fundamental question we need to ask ourselves is not “What is the role of the CIO and the IT department?” This is something that is already well defined and understood. The question we need to ask ourselves is “What role should technology be playing in the business?”
Digital Business
In previous articles I addressed the questions of Must the Business Always Bypass IT When It Wants to Innovate? and Free Your Users (or They Will Free Themselves): The vexed issue of Social Media and BYOD in the workplace. Both questions focus on the challenge of responding to new business drivers coming from outside the traditional requirements and role of the CIO (and of the IT department), as we would usually understand them, based on the role and experiences of the last 20 to 25 years.
This piece asks the question “What role should technology play in business?” This is a larger question than the one currently hanging over the role of the CIO and the IT department. This is a bigger question, a question that starts by asking what role technology is will play in the new “innovative” business models that are emerging.
In short, we need to approach how technology will fit into what some call Digital Business, with fresh thinking based around a set of new and very different business requirements. At the core of this change is the pervasive nature of technology in society, which has resulted in people using technology to redefine their lives. This is not just shopping from a website; it’s a lifestyle change in where and how we find information and how we choose to act upon it.
This shift in our attitude to technology is frequently called “Consumer IT”. The reality is that people are driving the uptake and use of technology in business to do business rather than IT professionals. This was at the core of my last article, Free Your Users (or They Will Free Themselves).
In this piece I want to move on to the theme of “innovation”, currently a popular term with as many interpretations and mismatched understandings as the technology elements that go with it.
Innovation, but not as we’ve been doing it
Most IT departments pride themselves in being innovative and can rightly point to a track record in assessing and deploying year by year continuous improvements by “innovatively” adopting new technology. However that’s not what a business school would mean by their use of the term. Instead they would add two key words that provide some increased clarification: Innovation in Business Models.
This difference can be clearly expressed if we go back to the arrival of Amazon and compare it with the then US leader Barnes & Noble response to the emergence of the internet.
Barnes & Noble added a website enabling customers to order books online. For their existing business is concerned with increasing channels to market for incremental business, with the majority of the business model still being unchanged, focused physical locations carrying stock for walk in customers and browsing.
Amazon fundamentally rethought the business model of selling books and changed it from being based on bookstores with their overheads and limitations on stock carried. Amazon took advantage of ubiquitous use of technology in the hands of consumers to allow them to browse and buy in a manner that opened up a whole range of new possibilities.
You can argue that the final point in the revolution was the advent of the Kindle and dropping physically printed books for electronic editions, that truly is an ‘innovation in the business model’.
Amazon still has an internal back office carrying out processes under the best processes of IT, but its business model to find, win, gain orders and more particularly create long term customer relationships with repeat business is based on using technology “outside” the “internal” focus of operating the business associated with IT.
New business models break old assumptions
In the first article in this series – Must the Business Always Bypass IT When It Wants to Innovate? – I provided a breakdown of nineteen recognizable core business models that are frequently used as references for the possible digital business options and their innovative business models.
Source: Mark W. Johnson (2010), Seizing the White Space, Harvard Business Press
There are a number of ways to define digital business. The major points are:
It is interactive between participants to shape what is achieved.
- It is collaborative in the manner that people interact to share experiences and comment on products or experiences.
- It depends on apps, browsers and clouds.
- It occurs outside the firewall and away from the enterprises internal systems.
You can add a lot more to this list, but these main points tell us why the hard won experiences of delivering internal enterprise transactional processes safely isolated from the external world by the firewall on client-server technology simply don’t transfer well, if at all, to the new world and the support of innovative business models.
McKinsey tell us in a recently published report Bullish on Digital that 30% of major businesses have, in recognition of this, appointed Chief Digital Officers (CDOs), though there are several other titles around that equate to the same role as well with Chief Innovation Officer being the main one. You can learn a great deal more about the role and actions of a CDO at their association website CDO Club.
Does hiring a CDO change anything?
However, you are reading this as a CIO so thus far this is not an encouraging message! Let’s recognize that the CDO is effectively just another manager in the business who needs technology to make their operational and strategic requirements to happen. Okay, so they are a technology literate manager with a strong grasp of the topic, but the question is how to define roles and responsibilities within an enterprise to make it coherent and operational successful.
A little over two years ago I wrote in my CTO blog on the Capgemini site about this topic around the title “Inside-Out” versus “Outside-In”. The ideas in the post appeared in a full Capgemini white paper at the beginning of 2012 entitled The Cloud; Time to Deliver which is available on Slideshare. Rather than rewrite the paper here, can I suggest that this white paper should help you to understand and build a realistic approach that combines both. More recently an interesting update on Inside-out and Outside-in, linked to SAP and ERP, has been posted on the Capgemini Capping IT Off blog site.
Innovation in technology vs. innovation in business model
So let’s end with a summary of what this means and the link to the opening paragraphs of this blog about “innovation” in the IT operations versus “innovation in business models”.
Firstly “Inside-out” defines the traditional role of IT in providing the systems to support the “internal” or “inside” the firewall operations, with a secondary focus on providing a limited and controlled set of accesses externally, or “outside” the firewall. The new business models depend on using technology externally or “outside” the firewall, with a secondary concern to provide limited access internally, or “inside” the firewall.
If we now apply this to cloud technology “innovatively” then its role in conventional IT in “Inside-Out” is to improve the virtualization and flexibility of computing resources by enabling greater efficiency in operating Client-Server enterprise IT.
Conversely cloud computing in “Outside-In” is the ability to obtain and use flexible computing resources that exist outside the firewall and are safely separated from the enterprises own systems. In addition the role and type of use required is unlikely to be client-server based; instead it will use the browser and app model.
The first is innovation in using technology to enhance the current operations and business model and the second is innovation in the business model based on being able to use technology in entirely new ways than was previously possible.
Source: Andy Mulholland
In the next article I plan to go into this more deeply by introducing how Enterprise IT should be planning, deploying and operating an Enterprise Platform to successfully underpin an Outside-In Digital Business with an auditable set of management tools. To wet your appetite for this I suggest you might like to take a look at the Open Group who are widely respected for their work in developing the TOGAF (The Open Group Architecture Framework) architecture methodology for Enterprise IT, and are now starting to address the need for what they call Platform 3.0. Why 3.0? To differentiate from the term Web 2.0, which was popular some years ago.
What role do you think technology will play in the new digital businesses that are emerging? What role do you think the IT department will play? And what opportunities do you think that this creates for technology professionals?
In the future we will have relationships with our homes
By Ross DawsonToday I was interviewed on The Daily Edition about the homes of the future.
Click on the image to watch a video of the segment.
The future of homes is a very rich topic that goes far beyond the usual chatter about internet-enabled refrigerators and integrated entertainment, and we weren’t able to cover much in a TV panel format.
However the main point that I made is that in the future we will have a very real relationship with our homes. Now homes are somewhere that we reside, and while we can shape them to our personalities, it is not currently a two-way relationship.
As we move forward, our relationship with our homes will comprise many elements.
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What to Do When Your Business Model Changes
By Andy MulhollandThe role of technology in driving innovative business models
The fundamental question we need to ask ourselves is not “What is the role of the CIO and the IT department?” This is something that is already well defined and understood. The question we need to ask ourselves is “What role should technology be playing in the business?”
Digital Business
In previous articles I addressed the questions of Must the Business Always Bypass IT When It Wants to Innovate? and Free Your Users (or They Will Free Themselves): The vexed issue of Social Media and BYOD in the workplace. Both questions focus on the challenge of responding to new business drivers coming from outside the traditional requirements and role of the CIO (and of the IT department), as we would usually understand them, based on the role and experiences of the last 20 to 25 years.
This piece asks the question “What role should technology play in business?” This is a larger question than the one currently hanging over the role of the CIO and the IT department. This is a bigger question, a question that starts by asking what role technology is will play in the new “innovative” business models that are emerging.
In short, we need to approach how technology will fit into what some call Digital Business, with fresh thinking based around a set of new and very different business requirements. At the core of this change is the pervasive nature of technology in society, which has resulted in people using technology to redefine their lives. This is not just shopping from a website; it’s a lifestyle change in where and how we find information and how we choose to act upon it.
This shift in our attitude to technology is frequently called “Consumer IT”. The reality is that people are driving the uptake and use of technology in business to do business rather than IT professionals. This was at the core of my last article, Free Your Users (or They Will Free Themselves).
In this piece I want to move on to the theme of “innovation”, currently a popular term with as many interpretations and mismatched understandings as the technology elements that go with it.
Innovation, but not as we’ve been doing it
Most IT departments pride themselves in being innovative and can rightly point to a track record in assessing and deploying year by year continuous improvements by “innovatively” adopting new technology. However that’s not what a business school would mean by their use of the term. Instead they would add two key words that provide some increased clarification: Innovation in Business Models.
This difference can be clearly expressed if we go back to the arrival of Amazon and compare it with the then US leader Barnes & Noble response to the emergence of the internet.
Barnes & Noble added a website enabling customers to order books online. For their existing business is concerned with increasing channels to market for incremental business, with the majority of the business model still being unchanged, focused physical locations carrying stock for walk in customers and browsing.
Amazon fundamentally rethought the business model of selling books and changed it from being based on bookstores with their overheads and limitations on stock carried. Amazon took advantage of ubiquitous use of technology in the hands of consumers to allow them to browse and buy in a manner that opened up a whole range of new possibilities.
You can argue that the final point in the revolution was the advent of the Kindle and dropping physically printed books for electronic editions, that truly is an ‘innovation in the business model’.
Amazon still has an internal back office carrying out processes under the best processes of IT, but its business model to find, win, gain orders and more particularly create long term customer relationships with repeat business is based on using technology “outside” the “internal” focus of operating the business associated with IT.
New business models break old assumptions
In the first article in this series – Must the Business Always Bypass IT When It Wants to Innovate? – I provided a breakdown of nineteen recognizable core business models that are frequently used as references for the possible digital business options and their innovative business models.
Source: Mark W. Johnson (2010), Seizing the White Space, Harvard Business Press
There are a number of ways to define digital business. The major points are:
It is interactive between participants to shape what is achieved.
You can add a lot more to this list, but these main points tell us why the hard won experiences of delivering internal enterprise transactional processes safely isolated from the external world by the firewall on client-server technology simply don’t transfer well, if at all, to the new world and the support of innovative business models.
McKinsey tell us in a recently published report Bullish on Digital that 30% of major businesses have, in recognition of this, appointed Chief Digital Officers (CDOs), though there are several other titles around that equate to the same role as well with Chief Innovation Officer being the main one. You can learn a great deal more about the role and actions of a CDO at their association website CDO Club.
Does hiring a CDO change anything?
However, you are reading this as a CIO so thus far this is not an encouraging message! Let’s recognize that the CDO is effectively just another manager in the business who needs technology to make their operational and strategic requirements to happen. Okay, so they are a technology literate manager with a strong grasp of the topic, but the question is how to define roles and responsibilities within an enterprise to make it coherent and operational successful.
A little over two years ago I wrote in my CTO blog on the Capgemini site about this topic around the title “Inside-Out” versus “Outside-In”. The ideas in the post appeared in a full Capgemini white paper at the beginning of 2012 entitled The Cloud; Time to Deliver which is available on Slideshare. Rather than rewrite the paper here, can I suggest that this white paper should help you to understand and build a realistic approach that combines both. More recently an interesting update on Inside-out and Outside-in, linked to SAP and ERP, has been posted on the Capgemini Capping IT Off blog site.
Innovation in technology vs. innovation in business model
So let’s end with a summary of what this means and the link to the opening paragraphs of this blog about “innovation” in the IT operations versus “innovation in business models”.
Firstly “Inside-out” defines the traditional role of IT in providing the systems to support the “internal” or “inside” the firewall operations, with a secondary focus on providing a limited and controlled set of accesses externally, or “outside” the firewall. The new business models depend on using technology externally or “outside” the firewall, with a secondary concern to provide limited access internally, or “inside” the firewall.
If we now apply this to cloud technology “innovatively” then its role in conventional IT in “Inside-Out” is to improve the virtualization and flexibility of computing resources by enabling greater efficiency in operating Client-Server enterprise IT.
Conversely cloud computing in “Outside-In” is the ability to obtain and use flexible computing resources that exist outside the firewall and are safely separated from the enterprises own systems. In addition the role and type of use required is unlikely to be client-server based; instead it will use the browser and app model.
The first is innovation in using technology to enhance the current operations and business model and the second is innovation in the business model based on being able to use technology in entirely new ways than was previously possible.
Source: Andy Mulholland
In the next article I plan to go into this more deeply by introducing how Enterprise IT should be planning, deploying and operating an Enterprise Platform to successfully underpin an Outside-In Digital Business with an auditable set of management tools. To wet your appetite for this I suggest you might like to take a look at the Open Group who are widely respected for their work in developing the TOGAF (The Open Group Architecture Framework) architecture methodology for Enterprise IT, and are now starting to address the need for what they call Platform 3.0. Why 3.0? To differentiate from the term Web 2.0, which was popular some years ago.
What role do you think technology will play in the new digital businesses that are emerging? What role do you think the IT department will play? And what opportunities do you think that this creates for technology professionals?
The age of self-creation: why ethics must be central to how we create the future
By Ross DawsonOne of my flurry of media appearances over New Year was on the Sunrise show, talking about what to expect in 2014.
Click on the image to see a video of my interview.
We discussed emerging consumer technology trends, shifts in retail, and the idea of “self-creation”, which was one of my 14 themes in our 2014: Crunch Time report.
As I wrote in the report about the theme:
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The top 30 Thought Leaders in crowdfunding
By Ross DawsonThere is no doubt that crowdfunding has been one of the major trends evolving over the last couple of years in particular. It has caught the imagination of the public, and already had a large impact on how artists, startup ventures, and many others consider their funding options. The trend of crowdfunding has a long, long way further to go.
Israeli-based equity crowdfunding platform OurCrowd has just launched a list of the top 30 influential thought leaders in crowdfunding, those who have shaped how the industry is seen and understood.
They commissioned Evolve Inc to do the study, which took into account “a variety of factors including social footprint, popularity among industry insiders, engagement frequency, citations by influential writers in venture finance and other factors” to create a ranked list of the top 30 influencers from a pool of 800 people studied.
The top 5 are Perry Chen of Kickstarter, Naval Ravikant of AngelList, Slava Rubin of IndieGogo, Ben Horowitz of Andreessen Horowitz and Fred Wilson of Union Square Ventures, followed by a variety of entrepreneurs, regulators, politicians, media commentators, academics, and others.
I made the list (just!) at #29, probably mainly due to the success of my book Getting Results From Crowds and the crowdsourcing workshops I’ve been running around the world over the last couple of years.
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Why children (and adults) need to be on social media or get left behind
By Ross DawsonYesterday the West Australian newspaper began a five-part series on children and social media, beginning with a feature article introducing the topic.
The article’s title, Get online or ‘be left behind’ quotes an interview with me. It is very easy for journalists to focus on the negative when covering children and social media, so I’m very glad they took a more balanced stance.
The article began with an introduction to the issue, to the point of mentioning that English secondary school Eton has banned Snapchat. It goes on:
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Today Show: What to expect in the year ahead
By Ross DawsonEarly on January 1st this year, after a great New Year’s party and no sleep, I went into the studio to talk about what we should expect in the year ahead. The video is below
A few notes from what I discussed:
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Awesome video: we are building transparent machines of business exploiting society
By Ross DawsonThis fabulous video brings together a succinct telling of the privacy story of today with some exceptional 3D graphic animations and great sound. Watch it! (preferably full screen)
Transparent Machines™ from beeple on Vimeo.
In the Privacy section of our 2014: Crunch Time report we wrote:
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On the importance of energizing holidays for entrepreneurs
By Ross DawsonI have just returned from holidays in Jervis Bay, a stunning region set in a marine national park a few hours drive south of Sydney. It is one of those places scattered around the world that feels magical in some inexpressible way.
Image credit: Hadi Zaher
It was just a one week holiday, my first proper break in the last year, which has been perhaps the most intense year in my life. Victoria and I did take a little time off between this last Christmas and New Year but I ended having to do a some urgent client work and many interviews including Sunrise, Today, and Morning Show over New Year so it wasn’t a real holiday.
Switching off
During the holiday I was almost completely switched off from digital world, with limited connectivity where we were staying helping me avoid more than very briefly glancing at email or Twitter every day or so, though I did need to respond to a couple of enquiries.
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5 Tactics to Deliver More By Doing Less (and Doing Better)
By Alistair LloydYour future service delivery model is simpler than you think
It’s good to be popular. Interest in technology and how it can help your organization continues to grow. There are increasing pressures on you and your team to respond to business change while also playing an active role in transforming the company. There is just one hitch – you need to be able to do this with a reduced budget.
This is not a new problem for CIOs. Each budget cycle finds your operational and capital costs robustly challenged. This dilemma – mounting business demand with a shrinking supply of resources – is not yours alone. It is a whole-of-business problem.
The opportunity for you is to use this dilemma as the basis to establish five practices which will allow you to do something that seems to defy logic – deliver more, of better quality, by doing less.
1. Refresh your city plan
In 2000 The McKinsey Quarterly published an article titled “The Paris Guide to IT Architecture” which used city planning as a metaphor for enterprise architecture . This concept was simple to understand and powerful as a communication tool throughout the business.
Like the city you live in, enterprise business systems have:
When facing spending pressure refresh your city plan and use this as a conversation piece to discuss what parts need to be refurbished, reused or rebuilt. With this improved understanding of your organization’s existing solutions and services you will be able to lead an informed discussion on where future investments should be made.
2. Using scarcity and necessity to your advantage
Both scarcity and necessity are cited as drivers for creativity. The HBR Blog network published opinion pieces in 2011 arguing the case for each. This article states that “deliberately imposing scarcity” was a catalyst for creativity. However, a complementary view is that innovation is most likely to be effective when there is a clear problem to solve.
As a CIO the problems for you and your team to address are not always well defined. Your challenge is to make them clear.
Lead your team and C-level peers through cycles of refining demands and reducing these down to a discrete, achievable set of goals. Challenge your team to respond with solutions which use the technologies and capabilities already at their disposal. Take a leaf from the Apollo 13 playbook – figure out how to fit a round peg into a square hole. You will enable your team to deliver against a more focused set of requirements by leveraging existing investments.
3. Standardize your skill sets
Standardized work practices and continuous improvement are the basis of lean manufacturing. In manufacturing this leads to reduced task time, streamlined work sequences and reduced inventory. In a service delivery environment – such as IT – the opposite approach is more common. Efficiency improvements in IT often rely on the introduction of new technology, the creation of more complex processes, or the duplication of data. These “improvements” are costly to implement and maintain.
Take the lead offered by best practice in materials management and apply lean thinking to your IT service delivery.
Reduce the number of technology platforms you support by applying architectural principles that encourage reuse and identify single solutions for common business functions.
Consolidate the technologies underpinning your business, such as database, infrastructure and client solutions.
Refine the skills and capability of your team members so that you are giving them the best opportunity to excel in their tool of choice, instead of having to relearn a new way of delivering services each time.
4. Don’t be too efficient
In 1984 Eliyahu Goldratt and Jeff Cox published “The Goal” which told the story of a manufacturing plant manager facing an ultimatum – improve productivity and profit, or go out of business. While he makes good progress on improving material availability and eliminating bottlenecks, the protagonist encounters an unexpected problem. The removal of gaps and delays caused the equivalent of peak hour gridlock. Productivity began to slide and targets were missed.
This can also occur in IT services and project delivery.
If the space between changes is too small, your team members are constrained as their work is too tightly packed. There is no buffering between major projects, and the minor changes that slip in between them.
To improve the flow, create space between projects and major production releases. Give things time to settle down. Bundle associated groups of changes into their own release. The result will be a consistent flow of delivery work that doesn’t get tangled by being full to capacity.
5. Dining on elephants
How do you eat an elephant? Easy – one bite at a time. It’s a classic kids joke as well as being sound advice for managing large capital budgets in the grown-up world of business.
Future budgets for major projects will come in irregular waves and will be hard fought. There will be high expectations of the projects that support the business trend towards austerity and controlling your non-discretionary “MOOSE” (Maintain and Operate the Organization, Systems and Equipment) spend.
With limited investment in new and improved technologies your portfolio of major projects will be under close scrutiny. Your response should be to design an approach to funding and implementing projects in a tiered, modular manner.
Break your portfolio into three levels – long term strategic programs, medium term tactical projects, and short term operational response initiatives.
Be ruthless in the governance and decision making that drives which projects get funding and which get set aside.
Break the projects into smaller pieces; each piece should deliver a positive business outcome, and should build upon the piece implemented before it.
In this manner you can control three things.
Delivering more with fewer resources, and to a better level of quality, may seem an impossible goal. However, this is exactly what will be expected of the CIO of the Future, and all of your C-level peers.
As you lead discussions with your colleagues, bring with you these five talking points to share:
In your experience what are the primary levers of doing more with less?
Are you expected to deliver more, with less? How do you go about this?
Launch of 2014 Crunch Time report: 14 domains hitting the crunch and responses
By Ross DawsonAt the end of each year we share some thoughts about current trends and what to expect next year and beyond.
Some of our past frameworks include Trend Blend 2007+, Trend Blend 2008+, Map of the Decade: 2010s, Zeitgeist 2011, 12 Themes for 2012, and 2013 – Life Next Year and Beyond: Appearing and Disappearing.
Today Future Exploration Network launches our 2014: Crunch Time mini-report. It explains why we are reaching Crunch Time, the implications, descriptions of 14 domains in which we are hitting the crunch, and how we need to respond.
The graphic slideshow of Crunch Time is embedded below. You can also read the full text in one page at 2014: Crunch Time on the original posting on the Future Exploration Network website.
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