Organizational teamwork starts the IT innovation process

Organizational teamwork starts the IT innovation process

Organizational teamwork starts the IT innovation process

Date: Jun 28, 2011

Bryan Smith, CIO and vice president at Volvo Construction Equipment North America Inc. in Asheville, N.C., downplays the role of the individual CIO as a source of innovation. To him, the CIO has a role in coordinating organizational teamwork, and that means making sure every team member has a role in creating an innovative environment.

"In my position, I am more of a business guy who understands information technology," Smith says in this video, which is part of the SearchCIO.com CIO Innovators series. "I don't come from the strictly IT side."

"But as part of the process," he says, "we really believe that everybody on the team needs to understand what other people are working on. You might have a subject matter expert in one area; but everybody in our organization, in my team, needs to understand what the goals are, and everybody needs to be aligned with that."

Successful organizational teamwork, Smith says, is the collective ability to manage and deal with change, or as he says, "getting out of your comfort zone." People who resist change, he says, "frequently … will take themselves out of a game one way or another because it's too uncomfortable for them."

In technology terms, integration also plays a major role in developing innovation. Application integration has enabled better ways of working with business partners, and that in turn has created new ways to innovate.

"Because it's gotten so much easier to integrate, you're not as afraid of integrating with a variety of systems," Smith says. "So, we have a dealer that has selected a non-recommended system [because] they felt like that was the right solution for them. They're a large dealer, nearly close to 10% of our North American business, [and] we certainly want to have [a] seamless, smooth transaction flow with them."

"So, what do we need to do?" he adds. "We need to get on the stick and make sure the integration points are there for the high-transaction activities to get going between us and that dealer."

Read the full transcript from this video below:  

Organizational teamwork starts the IT innovation process

Scot Petersen: This is Scot Petersen, editorial director of
SearchCIO.com, and I'm here at the Leadership Forum in Scottsdale,
Ariz. With me today is Bryan Smith, CIO and vice president of Volvo
Construction Equipment.

Bryan Smith: North America.

Scot Petersen: North America. Bryan thanks for joining us.

Bryan Smith: It's my pleasure to be here.

Scot Peterson: So, the theme of the Gartner Show here is about innovation but
also creative destruction, as they call it. What does that mean? How can
you put that into terms for us?

Bryan Smith: When I think of creative destruction, I think of the process
that either individuals or businesses go through of purposefully making a
decision to do something in a different way, even though it might be
disrupting a comfortable way of doing things today. I felt that the play
from Harvard Business School was brilliant today when they talked about
the process of how it just seems like good business strategy to move up the
value cycle and go through that process of leaving low-margin, low-value
added to the lower folks, and then they just eventually come up and leave
you in a very vulnerable position. He spoke about several companies
that had gone through that process, and I think that creative destruction is
necessary to do in companies where you get comfortable, because it becomes
so easy to [say], "Well, we've always done it this way."

A great, perfect example: I'm from Volvo Construction Equipment, and we
started several decades ago with, primarily, [an] articulated dump truck and
wheel loader and that was all we had. Now, we have purposely made a decision to
go out and to purchase excavator businesses and compact businesses and road
machinery businesses because we have decided that we need to expand into
all areas of construction equipment, targeted areas of construction
equipment, and without doing that, we would leave ourselves extremely
vulnerable to folks that would decide, "Hey, we're going to go after the
articulated business" or "We're going to go out after the wheel loader
business." We had a situation about 10 years ago where a major competitor,
Caterpillar, deliberately went after that business, and they had done a
great job of taking away a lot of market share. Had we been completely
dependent upon that, I would not be sitting here. The company as we know it
would not exist today.

But because we chose to get out of our own comfort zone, we've had other
situations, specifically in the IT area, where we have decided on purpose
to do things in a different way. For example, we just launched an online
parts application that allows working in conjunction with the dealers, [and]
allows the customers to purchase parts directly from them, to work with a
partner, DIS out of Bellingham, Wash. It is, I say, creative
destruction, because it's changing the way they're used to doing things, and
there's a resistance within the dealerships. We were coming out with this
and I thought that we were, literally, going to be selling chocolate
chip cookies to 5-year-olds. This is going to be easy. They're just going
to eat it up. And, what's interesting is that customers, when they hear
about it, they do like it. The resistance is more internal within
dealerships because it upsets expectations on sales volumes, targets for
bonuses and profitability, and what people do in their day-to-day
activities. So it's destructive and it forces you to think about things in
a different way.

But I would argue that while it might be a little uncomfortable,
unfortunately we're like latecomers to this, and we have some entrenched
competitors that have had dysfunction for an extended period of time.
We're coming in late, but we need to do it. But this is a good example of
that type of stuff -- that if you don't do it, somebody else will. Along with
creative destruction, I like to say "eating your own," because if you
don't do it, if you can come up with the idea of how you can take business
away from existing product, you can be for sure that a competitor has
thought about that or, if they haven't, they will soon.

Scot Petersen: So what do you think is the CIO's role here?

Bryan Smith: In my position, I am more of a business guy who understands
information technology. I don't come from the strictly IT side and I think
it is my responsibility as a chief information officer to constantly pose
the "What If?" question. Have you thought about this? Have you thought
about that? To be surveying the landscape and looking at what other
companies are doing. Not necessarily from the construction equipment space,
because we're not cracking atoms all the time, but to look at what are
consumer goods doing? What is the IT industry doing? And to bring those new
ideas in. To say "Hey, have you thought about this, have you thought about
that? Could we do this? Could we do that?" or "Here's some potential
solutions if we do it this way." In my position, it's my responsibility to
do that.

We're going through a process right now where we're moving the business
from Ashford, N. C., to Shippensburg, Penn., which is about
an hour south of the Harrisburg area. I'm working directly with my
president, who said. "Help us through. I want you to drive through Phase 1
and now through Phase 2," and so I had to go and research on what's happened in
various areas. How did other companies do this? How do you work with
relocation companies for this? HR's already got their domain and finance
has got their domain, but what I have tried to position my area is the area
of saying, "Hey, here's innovation. Here's a new way of doing it. Here's
what the marketplace is saying," and I want to be -- I positioned myself and
my departments to be the go-to areas for problem solving. OK, you got a
problem with this. Let's see what we can do to fix it. Got a problem with
that? Let's see what we can do to fix it. You name it, we can work on it.

I look at the CO's remit as being fully within that. Certainly, I have
spent more than my fair share of time in project meetings and managing
budgets, and that's important to do. Absolutely, that's the blocking and
tackling you have to do, and the cost reduction and the period we went
through from the collapse of Lehman, until really the middle part of last year
was a very tough time for the construction equipment business, and so our eyes
were very focused on the SG&A cost within our organization, and IT's a big
piece of that and we need to drive it down. And at that particular time,
that's where I put the focus. But now, we can breathe a little bit. OK,
you've taken a lot of the costs down. Keep the costs savings, perfect. Now
bring back some of the budget and let's put it into innovative activities
that can drive the business and drive the top line and continue to take the
costs down.

Scot Petersen: Sure. So, do you see this as more of initiating the ideas
or enabling, or is there some of both?

Bryan Smith: I would say it's about half and half. With the ubiquity of
information out there today, frequently other executive team members have
had at least tangential exposure to different areas of technology. So, it's
not going to be that I'm going to propose something and it's going to be
huh, never even thought or heard of that because technology and
innovation's brought about by technology. They're covered in BusinessWeek
and the Wall Street Journal. It's not like they keep this hidden away
anymore. Maybe 15 years ago nobody would've known about it, but people
know about these innovations now. So sometimes I'm instigating, going, "Hey,
we can do things differently." Sometimes I'm enabling, saying, "OK, you've
already decided. Now here's what you want to do. Now, here, let me help
you," maybe guide it in little bit different direction. It's a bit of both.
You're kind of always posing the "What If," but on the other side, several
times, or many times the business knows. We want to do this. OK, let me
help you do it in the most cost-effective and efficient manner to attempt
to get as much the business value as possible.

Scot Petersen: Sure. So you talked a little bit about comfort zones. How
do you create a culture where everybody wants to participate in innovation,
despite what the cost may be and the way they always do things?

Bryan Smith: I wish I knew. Certainly I've been through different phases in
my career, where different individuals have come along that didn't want to
be taken out of their comfort zone, and that's frequently tough to deal
with. I'm not the only one, I've talked to other peers and, frankly, it's
not only in what we classify as IT in Volvo Construction Equipment is
processes and systems. That's what my official title is: vice president of
processes and systems-CIO. I put CIO in there because nobody really knows
what the hell vice president of processes and systems does, but as part of
the process, what we do is, we really believe that everybody on the team
needs to understand what other people are working on. You might have a
subject matter expert in one area, but everybody in my team needs to
understand what the goals are and everybody needs to be aligned with that.

Resistance to change is, you deal with it, but frequently those people will take
themselves out of the game one way or another, because it's too
uncomfortable for them. But you run into the resistance because this is the
why we've always done it. Some aspects of the company don't necessarily
feel, at times we feel in our organization in North America, don't always
feel the sense of urgency that we do because we have a dealer that's
complaining about a customer who's having a problem and his product went
down and he can't lay the hot mix on the road. He can't work at the
transfer station for the waste management account, whatever. You name it.
But the dealers feel that sense of urgency and we're only one phone call
away, so they can get to us pretty quickly. Now, if you're trying to push
that up the line even further, because it's a larger issue and we need
support at a global level, sometimes the feeling is that that level/sense
of urgency is not always there. I think it is. It's just that the dealer
feels it more than we do and we feel it more than the global folks do.

But I feel like the resistance to change, especially in Volvo Construction
Equipment, has changed dramatically. We have a new CEO who came in several
years ago and he's initiated a whole bunch of different projects and we've
laid off, since the downturn, we've laid off approximately 25% of our
global workforce. So the folks that remain are focused and they recognize
that the comfortable time that we've gone through for an extended period is
not the way that reality is any longer and, yes, we're a Swedish company,
and we care about the employees and we respect the individual but we also have
a business to run and it is critical that you have a sense of urgency to
begin to change these things and to address them.

Scot Petersen: What technologies are out there that's really causing you
to change the way you run your organization, your IT organization?

Bryan Smith: It's two things in general. We're all talking about mobile
devices, and looking at how that is really something that can change the
business. Looking at how much easier it is to integrate with business
partners, than it was. We have a recommended dealer management system that
we recommend our dealers that are organizationally, financially ready to
implement. We recommend that, and we've been recommending that product
for, approximately seven years. Historically, one of the reasons why
they didn't want a huge variety of systems to integrate with, and we
recommend one and, because it's gotten so much easier to integrate, you're
not as afraid of integrating with a variety of systems. So, now we've got a
situation where not many dealers have been migrating their business systems
in the last several years because they can't afford it but we've also gone
through the advance of technology where it's so much easier to integrate
than it was.

So we have a dealer that has selected a non-recommended system. They felt
like that was the right solution for them. They're a large dealer: nearly
close to 10% of our North American business. We certainly want to have
seamless, smooth transaction flow with them, absolutely. So what do we need to
do? We need to get on the stick and make sure the integration points are
there for the hard transaction activities that go in between us and that
dealer. Because it's so much easier to do than it was 10, 15 years ago, I
think that's another piece that's really been influencing us. And I guess a
third would be the advent of social technologies, and how that is really
given everybody their 15 minutes. I'm not sure that everybody needs their
15 minutes but it's given it to them anyway and how do we really manage
that? Because, while part of our remit was historically a plant, that plant
was closed about a year ago. Operations consolidated into Shippensburg and
south-central Pennsylvania, but more of the focus, I guess, on the last 18
months or so have been much more of the sales side, and what can we do and
obviously social media has become a buzzword, at least in my business at
present. So, those three things right there.

Scot Petersen: What about social media internally? Do you use those?

Bryan Smith: No. Not yet. Now, everybody has their own site and you see a
level of customization of that, but I think we're probably looking at the
white collar, maybe 15% have added anything at their site, of any specific
information about that. What I see is, as potential, is the adoption of some
of the cloud technologies for use internally and we've adopted YouTube as
our standard for posting videos for communicating with the press, dealers,
customer, whoever. We got our own space there. We do it there.

Scot Petersen: Is it branded Volvo there?

Bryan Smith: Yeah.

Scot Petersen: Does it look like you're in YouTube?

Bryan Smith: Oh, no. It's both. Both of them. But that's what most
corporations do. You have a corporate presence there, and I see that those
types of technologies are really the way you make it part of the solution,
rather than part of the problem. That was initially, I guess, I've got see
a guy tomorrow evening or Wednesday. One of the things he does want to talk
about is, in his dealership they have blocked access to YouTube because he
says 99.9% of the material there is completely irrelevant to distribution,
than to people that work in my business, so I don't want to give them
access at all. Point. Not going to disagree. There's plenty of garbage on
YouTube. But you also have to say that we're basically delivering tons of
video for almost nothing, other than content development. And so, I want to
go buy, or develop some other way to do this, we're going to have to pay
for it? Hard argument to make.

But I see, when you take other things like other tools, whether you say
it's a YouTube, or even presence on Facebook. I think another tool that has
potential internally, to work for large multinationals is LinkedIn. I'm not
completely sure of exactly how to do it, but the power of it, I think,
could potentially add some real value. Long answer to the short story is
no, we're not doing very much at all internally. I mean, internal people,
you do see some internal blogs and the use of different type of web forums
to communicate back and forth but, it's really the early days.

Scot Petersen: We've been talking with Bryan Smith, vice president and CIO
of Volvo Construction Equipment North America at the Gartner CIO
Leadership Forum. Thanks, Bryan.

Bryan Smith: My pleasure. Thank you.

Scot Petersen: I'm Scot Petersen, of SearchCIO.com. Thanks for watching.

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