IT innovation is more important than ever in a time of economic crisis. But how can CIOs continue to do more with less and at the same time be pioneers in the field of IT innovation?
In this expert video interview, James A. Champy, author and chairman of consulting at Perot Systems Corp., discusses the critical role IT plays in innovation and why IT must become an enabler to the business to be successful. In the video, Champy offers examples of companies that are leveraging IT to be competitive and also ways some industries are successfully innovating in today's economic crisis.
Champy is responsible for providing direction and guidance to Perot Systems' team of business and management consultants. He is also the author of numerous books, including Outsmart! How to Do What Your Competitors Can't. For a preview of his latest book, Inspire! Why Customers Come Back, download the free chapter, "What Could Be More Inspiring Than Simplifying Complexity?
Read the full text transcript from this video below. Please note the full transcript is for reference only and may include limited inaccuracies. To suggest a transcript correction, contact firstname.lastname@example.org.
James Champy: IT innovation in a time of economic crisis
Karen Guglielmo: Hello, my name is Karen Guglielmo, Executive Editor for
SearchCIO.com. I'm joined today by James Champy, Chairman of Consulting
for Perot Systems and author of numerous books including Outsmart! the
Competition and Inspire! Why
Customers Come Back. Today we'll be discussing IT's role in innovation
and how they need to become a principle enabler to the business to be
successful. So let's get started.
Karen Guglielmo: What would you say is IT and technology's role in outsmarting the
James Champy: Look, I think it's principally around enabling companies to operate in
fundamentally different ways. I've described that as changing the business
model of the company and I think this is a uniquely important time for
technology because we now have the maturation of ubiquitous technology
infrastructure. If you read the cases I've written about in both Inspire!
and Outsmart!, what you'll see are companies that would not have existed
without technology. So technology is no longer a service, IT is no longer
a service function, it's the principle enabler of many businesses.
Karen Guglielmo: OK, and I know you talked, or I have heard, all about how IT is
really doing more with less all the time and still focusing on keeping the
lights on. So how can they be pioneers and be innovative if they're still
doing more with less?
James Champy: Look, you've got to do both. I actually believe that the 'keeping
just the lights on' is a critical part of keeping the business running. But
I believe IT, particularly CIOs, have to be much more integrated and work
with their business partners. I think fundamentally about what is the
nature of the product and service this company is offering? How does that
product and service improve and change over time? How does it get to
market more quickly? How do the fundamental operations that produced that
product or service change around technology? So it's much more now a
combination of technology and process.
Karen Guglielmo: OK. Can you also give some examples? I know you've highlighted
some in your new book about companies that have leveraged IT to enable the
James Champy: Yes, yes. You know, I'd say Karen, about 80% of the companies I
wrote about are technology-enabled companies, and when I began the research
for the series of books I didn't start out with that initiative. There's a
company I write about called Sonic Bids, which is basically the online
agent for about 150,000 performers, independent entertainers. And links
those entertainers with promoters and people who are in need. That
business model could not have existed without technology. There's a
company called PartsSearch, you know, that solves the problem of what are
you going to do when you lose your TV remote. There are millions now, I
think it's 8 million parts to consumer electronics, and PartsSearch is
basically organized and cataloged all of that and helps you replace those
parts. There's a company called Zip Cart that I write about in Inspire!.
A wonderful business model of a company that thinks about itself as being
the shared ownership business for vehicles. It's information technology
that allows that company - which now has 5,000 vehicles out there,
principally in urban centers - to operate with just 250 people.
Karen Guglielmo: Wow, that's small.
James Champy: It is, it is. The company is big, the number of people that run it
Karen Guglielmo: They're doing more with less.
James Champy: Absolutely.
Karen Guglielmo: Clearly. I also wanted to ask you about customer service. You've
talked about the importance of that and you even said that a lot of
companies think they do well in that area but still fail. So what are some
innovative things that the companies that do succeed in customer service
James Champy: Look, I think particularly this is true of companies that are
technology savvy. Customer service requires a combination of high tech and
real high touch. I think companies that try to minimize the contact with
customers because they think they can do it through technology are making
a very serious mistake. They should actually be using technology to
increase the efficiency with which they interact with customers and the
quality with which they innovate and the productiveness. I'm writing the
next book in the series, it's called Deliver!, really how companies do more
with less about a company called Zappos, you may know it if you buy shoes.
Karen Guglielmo: Yes, of course.
James Champy: I mean Zappos actually encourages its service people to be on the
phone longer with customers. That's the way in fact they sell. If you
look again at PartsSearch, that I mentioned earlier. You know PartsSearch
is a company that has very sophisticated service people answering phones
helping people find the right part that they're missing or if they've lost.
I wrote about a company called SmartPak that deals with the problems of
the health and well-being of horses. All of the service people at SmartPak
are trained in veterinary medicine. And again, it's the combination of
information technology and really smart service models that allow companies
to engage customers and inspire them in ways they've never done before.
Karen Guglielmo: Now we know the importance of customer service, and I wanted to ask
you about process improvement. I know in some of your previous books you
obviously emphasized the importance of processes, but would you say that
process has at all gone by the way side in place of speed to market or
innovation? Or not necessarily?
James Champy: Look, speed to market and innovation require processes that have
been fundamentally rethought. So I believe process and rethinking process
is more important today than when I wrote the re-engineering book with Mike
Hamber in the early 1990's. You know, when we wrote that book we didn't
have the information technology infrastructure to allow processes to
change, to allow speed to market to happen as it does today, to enable
innovation as we can today. So, look, process is an integral part of
improving business performance, and I actually believe, Karen, that only,
I'd say 20% to 25% of the process changed for an average company. Only 20%
to 25% process change has taken place that will eventually take place.
Karen Guglielmo: Wow, that's an interesting figure.
James Champy: That's a long way to go.
Karen Guglielmo: That is a long way to go.
James Champy: By the way, I see a lot of business models that I am inspired by
because they're so efficient, they've been so well-designed from a process
perspective. Again you read the Outsmart! book, you read the Inspire! book,
you'll see companies that are doing just extraordinary things but yet I see
companies every day, every week that still have a very long way to go.
Karen Guglielmo: Yeah, very long way. I have one final question for you. You did
say that innovation comes in a time of crisis.
James Champy: Yes.
Karen Guglielmo: Can you give some examples of how this happens or how IT
organizations or CIOs can do this, again, when they're doing more with
James Champy: The best example, as I mentioned earlier this morning, is in the
publishing industry. This is a time of crisis. Nobody in the business is
making money. I think I can make that statement categorically. I don't care
what the label of that magazine, or the newspaper says, because
nobody is making money. So this is the time where I find publishers for
example, who only paid attention to content, never really technology,
actually talking to their CIOs and saying, 'Amazon is coming out with a new
Kindle here with a larger format for our newspaper. What do we do about
If you're in the magazine business and you have no advertising, what
is the future for the digital version of the magazine? In fact, in the
publishing business, I believe that content will be produced digitally
first and then move into print. That's the way, interestingly, the current
book, Inspire!, that's how we put the book out there. We published it
on Kindle and then came out with the print addition. I think
increasingly, we'll see with major publications, that are daily, or weekly,
or even books, that the content will be produced digitally first. But we
need to develop the business models, the income strength, we need to find a
way to capture revenues to allow the industry to operate. That's the
best example of industry crisis that now looks to innovation.