A Business Technology Place

Classic IT Challenges – Operations vs Innovation

This is the third post in a series of writings to discuss issues facing Information Technology (IT) departments. The first challenge was project work vs production support and the second challenge was prioritizing work.

IT shops vary in size, budget, and processes. But all IT shops share a common set of challenges that shape how they interact with their inter-company customer base as well as the clients of their organization. There isn’t a single answer to these common challenges and they don’t disappear after a process is put in place to address them. The manner in which IT management chooses to respond to the challenges is interwoven in the culture, processes, and services of the group.  My thoughts are more around framing the problem than presenting solutions.

Challenge #3 – Operations vs Innovation

1916 Library Truck

1916 Library Truck – Innovation or operations?

The third challenge is based on the fundamental service expectations from management and stakeholders of the Information Technology group. Some business stakeholders primarily rely on IT to keep technology equipment operating efficiently and with high availability. I call this the operations expectation of IT. The business owner is concerned about delivering some service or product for the business, not about all the details of the equipment that make it possible. I like to think of this as the invisible part of IT. If everything is working then stakeholders don’t know the group exists. But if something is wrong then everyone knows it and IT is on point to fix it. The operations side of IT is expected to reduce or eliminate costs in the business.

But some stakeholders in the business are expected to grow the business through sales and market share. For that they often need innovative solutions. They want the IT development department to be innovative and provide new solutions that offer competitive advantages or competitive differentiators. That’s a completely different mindset and skill set from the operations teams within IT. The innovation teams are expected to grow revenue for the business.

Allocating resources within IT to support these two thoughts is a challenge because most IT shops don’t have the luxury to have dedicated personnel for each function. Even within IT development, programmers are pulled between production bug fixes (operations), new functionality, or even completely new technology platforms.

This challenge is similar to the first challenge of production support vs project work. The key difference is that the innovation expectation often takes IT into new areas where they have not previously provided service. Innovation requires IT to think about new ways of doing things rather than solving a request with existing tools.

Example 1
The IT development group has a backlog of helpdesk tickets reporting software defects and another backlog of defects discovered during QA testing. A new project request is entered by the marketing department to create a new application and is expected to grow revenue by some forecasted amount. Do the production defects or the new request receive priority?

Example 2
The IT team is three days from launching a new service for a client. The data center takes a lightning hit during a thunderstorm and several pieces of equipment are lost. Replacing the equipment will take team personnel away from the project and jeopardize a schedule overrun.

The Challenge
The immediate challenge is allocating people across operational work and new innovation. But I believe the challenge goes deeper. An operations skill set and mindset are different than an innovation mindset. Innovative individuals work with shades of grey and unknowns whereas operations individuals operate with black and whites and certainties. Innovation is open to explore. Operations minimizes risk through tight controls.

Next week
Challenge #4 – Estimating Work

Fighting the headwinds and riding the tailwinds of business

Yesterday I ran my first half marathon race. The temperature was in the low 40s with winds 10-15 mph. The course layout was a four lane divided highway. We ran half the race length and then turned around and ran back up the other side. As luck would have it, the first half of the race was into the wind and second half was with the wind at my back. So you can imagine how happy I was to turn the corner and head back in the opposite direction. It was a big sling shot effect. Run The Reagan Half Marathon

I didn’t wear a music device during the race, so it was me and my thoughts. The headwinds I faced in the first half of the race had me at about a 8 minute per mile pace.  The struggle against the wind made me think of business headwinds that impede progress. In my career experience headwinds have been caused by market factors and the backside of a product life cycle that lead to year-over-year declining volumes. This type of headwind pressure erodes units and revenue so businesses must innovate to create new products or solutions.

Business has only two basic functions: marketing and innovation.” Because the purpose of business is to create something of value — that’s innovation — and then to share it with the world and inspire customers to buy it — that’s marketing. – Peter Drucker

Innovation isn’t easy, but when we get it right and can market a product or solution with success that becomes our tailwind. When I turned the corner in my half marathon race yesterday my pace quickened aided by the push of the wind. I finished the race with a per minute pace well below the 8 minute per mile pace I had in the first half. In business, when we have a market opportunities that give us success (tailwinds) we have to make sure to stride appropriately to take advantage of the situation. That may mean making adjustments to processes, organizational layouts, suppliers, or equipment to take advantage of the tailwind.

Oh by the way, my time was 1:45:49. Better than I expected!

Distance education continues to expand

The need for business innovation is constant.
I was talking to a friend this week about changes in the banking industry sparked by advancements in technology. The conversation topics included the importance of physical bank branches today and the future of branches for banks in the future. During our discussion I said that all industries must continually reinvent themselves through innovative changes.

Now I realize that wasn’t a breaking-news revelation. But within the context of our conversation it was meant to summarize the changes in business over the past several years brought on by the rapid advancement of technology. Who would have thought that brands like Borders Books and Circuit City would have hit the wall? Our banking discussion was about the impact of technology on banking transactions and why people still needed a physical branch. Many banking industry analysts are talking about this in great detail including Jim Marous and Brett King.

What about education?
New models for providing higher education are appearing now and already beginning to challenge the traditional model for education that we all know. What’s not to like about completing high school and then leaving home to grow-up and find yourself all within the safety of an educational environment? But several things are happening to challenge this model. One is the cost of a college education continues to rise and not only are many families seeking alternative ways to obtain a degree, but universities are searching for new models to help manage costs.

Some of my friends have sent their kids to local community colleges to complete the early core classes. Then later they may transfer to a larger school away from home. More and more of my friends are keeping their kids at schools in-state because of the higher priced tuition for out-of-state students.

What about remote education delivered to you on-demand?
I recently read a Google+ post from my alma mater Georgia Tech about a relatively new startup named Coursera that is partnering with universities to provide courses online for free. Why not? We have wide spread availability of high bandwidth. We have tools to capture video and display it for common use both immediately and recorded. It doesn’t require additional physical infrastructure for schools, it’s scalable to more reach more students, and it provides reach beyond local geographic boundaries. The challenge for Coursera, as with many businesses offering the core service for free, is how to make a profit with the business model.

Remote course delivery is now an important piece of the overall education portfolio for colleges and universities and will continue to grow in the coming years. But as with Coursera, the bigger challenge of remote content delivery is not with the technology. The challenge is rooted in the business models and marketing used to attract and retain students while still making a profit.

My first-hand experience.
I was on the leading edge of distance education when I entered and completed an online masters degree from Auburn University. The program had two options to receive content: DVDs for taped class room lectures or online streaming. Exams were mailed by the school to my place of employment where a local human resources manager would proctor the exam (I reserved a conference room). I had the ability to converse with other students through online tools and email.

Watch this trend in the coming years. Look to see how universities reach students through remote delivery. Maybe the discussions about the future of the on-campus college experience are not wide spread right now, but as tuition costs continue to rise above inflation and communication technology continues to advance, competition in the education industry will continue to create alternative models.

Marketing technology thought readings 10

I participate in digital spaces by capturing, marking, and commenting on content around the internet. This is a recurring post of three links that I think others will find valuable for their thought lives.

  1. How Starbucks is turning itself into a tech company by Jennifer Van Grove of VentureBeat. I’m not a big coffee drinker in the sense that I try many different combinations. I have to put some cream and sugar for sure. (Sorry Black!) But I admire the Starbucks brand and the business they’ve created where they can charge a premium price for a cup of coffee and run a business with a hoard of loyal customers. I use Starbucks as a place for business meetings and I do enjoy the barcode app that stores a payment balance with them. This article does a great job showing how Starbucks has adapted and innovated to continue to create customer touch points as the world changes with different digital devices. A classic business school case study.
  2. Why I Like People with Unconventional Resumés by Claudio Fernández-Aráoz of Harvard Business Review.  I truly believe this is a big topic for recruiters and HR professionals who label themselves as “talent acquisition”. So many times the conversations I hear are about trying to exactly match candidates backgrounds with a job description. In fact, it’s part of the logic for the programs that scan resumes for keywords. The big idea here is to find people that can adapt, think, and remain flexible. Those are the people that perform best. Do you seek them for your team(s)?
  3. Wi-Fi and Amtrak: Missed Connections by Ron Nixon of the New York Times. As I read this article, my first thought was that Amtrak should have tested this more before releasing it to their customers. But as I think on it more I like their approach. They have released a service to their customer base and put it in the market. No, it’s not perfect. It’s a work in progress and I expect they’ll improve it through incremental improvements. I see so many projects die from “analysis paralysis” or projects that don’t get approved because the scope is too big too fast. So here’s a shout-out to incremental improvements and taking steps in the right direction.

Let me know what links you shared, tagged, or commented on this week.

Why innovation must move beyond ROI

Innovation is a darling buzzword and I still see the term used frequently in my readings. But what’s really behind the word innovation? Why do some companies seem to get it while others don’t? Innovation is defined as doing something new or doing something that already exists in a new way. Established companies want to think of themselves as innovative and like to publicize that to the public and employees. Why wouldn’t they? After all, who wants to be thought of as stale, unimaginative, or not creative?

Roman Aqueduct

I wonder what the ROI case was for the aqueduct?

Yet business is about Return on Investment (ROI). People make a business to create some product or service in exchange for money. Investors don’t give money unless they feel confident they will see a return in excess of their investment.

That’s where innovation and ROI compete

Innovation is about trying something new, something unproven, or something to improve efficiency.  It is by nature risky. ROI is about minimizing or avoiding risk. It looks for sure returns and wants to stick to what is proven. In most head-to-head battles, ROI wins out, because its the logical business conclusion.

If ROI is the only measure to initiate work then innovation will die

Companies do cross this divide. Google search, the iPod, the microwave oven are common examples of innovations that transformed and shaped our culture.  Not all ideas for innovation produce the ROI that these creations have. However, for any successful innovative idea,  groups of people were willing to make a risky investment of time, talent, and money to produce it.

So how do we become innovative?

It takes a leap of faith to pursue innovative ideas. It’s hard hard to manage and is not completed in silos. It requires a complete shift in mindset and culture. It requires an acceptance for mistakes. Innovation must have a place where it trumps what’s known to succeed. Otherwise you’ll just repeat the same pattern of behaviors until you become irrelevant.

Innovation moves beyond ROI

Innovative ideas require thought and not all of them will work. Not all of them will produce a direct financial ROI. Therein lies the hidden beauty of innovation. Its returns can be measured in things like process efficiency, reduced cycle time, customer satisfaction, profits, and employee engagement. The returns of innovation are far reaching because it moves beyond rigid rules and boundaries.

How does your company promote innovative ideas?