Chapter © 2009 Pearson Education, Inc. Publishing as Prentice Hall

How IT is being used for Strategic IT experiments? New products and services technology enabled – Electric Car, Solar Power New innovation Alliances with functioning departments Occur in the larger framework of organizational innovation Used to drive a new business venture Are not just experiments with IT 10-2

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Comes about through organizational change Frequently involves experimentation Is necessary for long-term organizational survival 10-3

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Sustaining Innovation – improves a product or service for existing customers. (Software companies) Disruptive Innovation – targets non- customers and delivers a product or service that differs from the current product portfolio. It must create and capture new value. (Apple) 10-4

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Continuous Change Frequent, relentless and endemic to the firm. Punctuated Equilibrium assumes long periods of incremental change, interrupted by brief periods of radical change. Exercise: Provide examples of companies who use continuous or punctuated equilibrium techniques? 10-5

© 2009 Pearson Education, Inc. Publishing as Prentice Hall A series of trial-and-error changes pursued along various dimensions of strategy, over a relatively short period of time, in an effort to identify and establish a viable basis for competing. (Nicholls-Nixon, Cooper and Woo, 2000) Highest-risk, highest-return category of innovation and requires a unique managerial approach. (Govindarajan and Trimble, 2005) (Kind of like gambling) 10-6

© 2009 Pearson Education, Inc. Publishing as Prentice Hall IT thus plays a key role in Innovation & change (Blackberries, Iphones, Ebay, VOIP) IT’s role can be considered as a facilitator or enabler of innovation Syncrude’s Strategic Experimentation with Windows 2000 Pilot, User Pilot and Windows NT 10-7

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 10-8 Figure 10.1

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 1. Idea stage 2. Proof of concept stage 3. Trial or pilot stage 4. Transition stage 10-9

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Generated through informal or formal processes (Brainstorming) Must include specific objectives that address pain points or core business offerings Exercise: In groups come up with a business idea for a technology company in line with their key competence?) 10-10

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Teams are assigned to specific ideas. Testing is done within a formal or informal laboratory setting using controlled experimentation. Ideas may morph into other ideas

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Idea is exposed to market in a limited and measurable way. (Syncrude Windows 2000) Measurements are taken to evaluate results. If successful, requirements for the next stage are defined

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Idea now enters full system development life cycle (SDLC IBM) Short-cuts (DUCT tape solution) must now be engineered to meet production standards

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Motivate: Establish rewards for strategic IT experimentation and risk taking Support: Create infrastructure to support experimentation. Direct: Manage innovation strategically

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Experimentation is risky so we need some incentives. Incentives and rewards must be provided to support experimentation. Doesn’t need to be a big reward Some IT employees relish from playing with new technology 10-15

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Infrastructure is needed to support IT innovation and experimentation. Some organizations create formal centers (or laboratories). Intranets are being used to solicit new ideas. Financial support is frequently provided through internal venture support

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Insulate – Create innovation centers where all lines of business can come together to address common problems. Seeks to take advantage of synergy. (IDEO) Incubate – Innovation centers are placed within lines of business. Seeks to focus on specific problems or opportunities. (Duncan McNeil Centre – NAIT) 10-17

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Strategic IT experimentation must be directed from top management to ensure it’s relevance. Link experimentation and innovation to customer value. Customer doesn’t know what it needs! Recommend an idea. (Remember “Being Proactive”) 7 – habits? Link experimentation to core business processes. Use venture funds to guide strategic initiatives

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Make greater use of innovation resources. Focus on new business models. Explore new/disruptive technologies. Focus on penetrating new markets. Leverage cross-organizational capabilities. Streamline decision making. Focus on opportunities that scale

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Focus on achievable targets. Focus on built to scale for production Don’t rush to market. Upgrade or clean install (Syncrude) Be careful with cool technology. NAIT smart projectors and pens Learn by design. (“Failure is futile”) is it? 10-20

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Strategic IT experimentation can lead the IT function to: become more customer centric embrace new skills work collaboratively with business units IT will be able to use strategic experimentation to spin good ideas into gold