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Failures must be expected in pursuit of digital innovation

A culture of innovation starts at the top. It's up to CIOs and other leaders to encourage innovative practices and to organize teams in ways that support digital innovation.

Any CIO who expects employees to innovate must create a culture that accepts and even encourages failure along the way -- something risk-averse executives understand but rarely put into practice.

"Culture is the software of the mind," said Sandy Carter, vice president of Amazon Web Services, during a session at the Gartner IT Symposium in Orlando this week. "If an experiment failing comes with a price to pay, the culture of experimentation fails."

That sentiment was reiterated time and again from prominent speakers during the Gartner conference, where IT leaders listened intently to advice on how to improve the pace of their organizations' digital innovation efforts. In fact, lagging behind in digitization topped business leaders' concerns in Gartner's Emerging Risks Monitor Report released this week.

The research firm surveyed 144 senior executives across industries and found that "digitalization misconceptions" tops the list of concerns, while "lagging digitalization" ranks second. Last quarter's top emerging risk, "pace of change," continues to rank high, as it has in four previous emerging risk reports.

Sixty percent of the survey respondents said slow strategy execution and insufficient digital capabilities were top concerns for 2019, Gartner reports. Given the high stakes of digital innovation and the changes it brings, such projects certainly merit concern. Digitization projects lead to changes to business capabilities, profit models, value propositions and customer behavior, according to Gartner.

Think like a startup

In session after session at the IT Symposium, experts shared ways to hasten innovation -- beginning with the top. It's up to CIOs and other leaders to encourage innovative practices and to organize teams in ways that support digital innovation.

One example is team size. Big teams typically slow or completely stall the testing of new ideas, Carter said. She encourages keeping teams within companies small to maintain a startup feel, where interesting ideas are encouraged and actually implemented.

Gartner analyst Mark Raskino echoed that advice during his session on digital transformation mistakes to avoid. Executing on innovative ideas is a problem for big teams, which often spend too much time planning, he said.

Gartner analyst Mark Raskino shares digital transformation pitfalls to avoid.
Gartner analyst Mark Raskino tells IT Symposium attendees that digital innovation is often slowed by big teams who spend too much time planning and not enough time on execution.

"They'll have one consulting firm come in, then they have a debate, set up a transformation program, they spend a couple of months on it, someone leaves the company, then another consultant comes in who redefines what digital is … you can see walls covered in plans that aren't being executed by anybody," Raskino told session attendees. "It's a corporate disease, you've seen it before, and it has to stop."

Lean startup thinking and taking action to create the minimum viable product gets you out of that trap, he added.

Large companies should also borrow from the startup mentality of growth mindsets -- one of the "culture recoding" requirements for innovation, Raskino said.

"Unless upper and middle management is prepared to learn new stuff, and comfortable with doing that every day, it can't expect anyone else in the organization to learn new things, and the organization becomes too stodgy," Raskino said. "The more people we can get into that mindset, the more we can shift the cultural balance."

Everyone must have 'permission to disrupt'

Jennifer Hyman, co-founder and CEO of Rent the Runway, a privately held startup now valued at $1 billion, said innovation must be everyone's responsibility.

Innovation is the responsibility of every group within the company, and every team has to be given permission to disrupt itself.
Jennifer HymanCo-founder and CEO, Rent the Runway

"Do not start an innovation team at your organization, because that team is doomed for failure," Hyman said in a keynote, where she was interviewed by Gartner analyst Helen Huntley. "Innovation is the responsibility of every group within the company, and every team has to be given permission to disrupt itself."

If a CTO or CIO is not given permission to fail, they won't come up with innovative technology, she said.

"Innovation inherently means risk-taking. It inherently means that a portion of your revenue, or your systems, are going to go down, while something else is going right," she said. RTR experienced this type of disruption during a major software upgrade last month, which caused short-term shipping delays but led to a 35% improvement in inventory availability.

Talking upfront about what is likely to suffer through the innovation process, at least in the short term, and committing to that process over the long term is critical, according to Hyman.

Jennifer Hyman, co-founder and CEO of Rent the Runway, at the Gartner IT Symposium
Jennifer Hyman, co-founder and CEO of Rent the Runway, discusses the company's Closet in the Cloud service during the Gartner IT Symposium 2019.

"Sometimes large companies give up too quickly on innovation because they expect that the growth rate of that innovation is going to take off as if they were regular divisions within the company, but true disruption takes a really long time within an organization," Hyman said. "It has to come from the top, it has to be a part of people's goals, and failure and risk taking has to be encouraged."

Indeed, innovation is about reinvention, and that could require very long-range thinking, Gartner's Raskino said. Misreading how deep the change is going to be in an industry in five to 10 years is often where executive boards make their first mistake, he told attendees.

"You have to look a long way out and bring it back to the question of, 'What competencies are necessary now and what assets do we need now, to secure that future?'" he said.

And companies shouldn't expect to obtain the assets their employees need to execute a deep transformation by pulling from their existing budgets, he said.

"[Executives] think they will be able to rob a bit from this budget and save some from the existing IT budget to do digital," Raskino said. "You can do digital optimization, potentially, within existing budgets, but if you think you are going to do a transformation, without net new investment somewhere, you're fooling yourself."

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