1. CIO as Innovation Leader - Innovation Mechanism-
October 28, 2007
Akihiro Kuroda IBM Business Consulting Services
Taro Kamioka Hitotsubashi University
IBM Confidential

2. Japanese CIO’s Thoughts on Innovation (1/2)
1. CIO’s Roles & Responsibilities (R&Rs)
Japanese CIOs’ perception is that they have 2 major R&Rs for innovation. They believe they need more organizational power to lead innovation.
R&Rs
Promoting/leading cross-functional innovation by building “mechanisms”
“CIOs should lead innovation which is cross-functional or which involves external partners.”
“CIOs should build mechanisms to lead innovation effectively. In addition, CIOs need strong support by Business Units (BUs).”
Sending out value-added information
“Showing technology-driven innovation examples is a big value of CIO.”
US/EU CIOs only: Connecting wisdoms of various kinds of people for ideation of new business models
Issues
So as for CIOs to lead innovation, they believe they need more organizational power with new performance evaluation standards
“Leading innovation means responsibility. Traditional evaluation standards for CIOs & IT departments (QCD of routine work) hinder innovation.”
“Perception of CIO’s R&Rs by top management has to be changed.”
IBM Confidential

3. Japanese CIO’s Thoughts on Innovation (2/2)
2. Innovation Targets
The purpose of innovation is to win in business competition. Thus, innovation should be made for what needs to be differentiated, while agile/low-cost/safe operations based on integration/standardization are sufficient for other areas
The current situation is that operational innovation is the majority (Confirmed only with CIOs of the manufacturing & utility industries)
3. External Partners
In addition to outsourcing of non-core areas, strategic partnership in core areas is increasingly important so as to obtain skilled resources and methodologies
“Innovation can be stimulated, by utilizing networks of external wisdoms.”
“Consultants made a great job in transforming our IT organization.”
4. Human Resources
Key to business innovation is an organization which puts together BU people with a sense of IT and IT people with that of business
Skill Development:
“Core competency for the new R&Rs of a CIO dept. (IT, business, strategy, etc,) should be defined first. A big change of their mindset is also required.”
“Leading innovation is a good experience of a CIO, who should become a business executive.”
2. Innovation Targets
IBM Confidential

4. Japanese CIO’s Thoughts on Innovation (1/2)
1. CIO’s Roles & Responsibilities (R&Rs)
Japanese CIOs’ perception is that they have 2 major R&Rs for innovation. They believe they need more organizational power to lead innovation.
R&Rs
Promoting/leading cross-functional innovation by building “mechanisms”
“CIOs should lead innovation which is cross-functional or which involves external partners.”
“CIOs should build mechanisms to lead innovation effectively. In addition, CIOs need strong support by Business Units (BUs).”
Sending out value-added information
“Showing technology-driven innovation examples is a big value of CIO.”
US/EU CIOs only: Connecting wisdoms of various kinds of people for ideation of new business models
Issues
So as for CIOs to lead innovation, they believe they need more organizational power with new performance evaluation standards
“Leading innovation means responsibility. Traditional evaluation standards for CIOs & IT departments (QCD of routine work) hinder innovation.”
“Perception of CIO’s R&Rs by top management has to be changed.”
IBM Confidential

5. Two Types of Activities/Mechanisms for Innovation
In addition to (A) activities to realize each innovation, it is of critical importance to (B) establish innovation foundation (a set of “mechanisms”) for a company to realize effective innovations continuously
New Business
Business Model (Current)
Innovation
Business Model (Future)
Plan Do
Check
Fulfillment
Policy
Targets
Bullets
Strategic Positioning
Operations
Plan Do
Check
Fulfillment
Policy
Targets
Bullets
Strategic Positioning
Operations
Plan Do
Check
Fulfillment
Policy
Targets
Bullets
Strategic Positioning
Operations
Conversion to Create New Customer Values
(A) Realization of Each Innovation （Ideation & Implementation of Each Innovation)
(B) Establishment of Innovation Foundation
New Markets & Customer Segments Development
New Products & Services Creation
Operational Transformation
Revenue Structures Reformation
Innovation Management
Innovation Processes and IT
Innovation Organization and Human Resources
IBM Confidential

6. Elements of Innovation Foundation
Check
New Business
Plan Do
Fulfillment
Policy
Targets
Bullets
Strategic Positioning
Operations
Innovation
(A) Realization of Each Innovation （Planning and execution of each innovation)
Operational Transformation
New Products & Services Creation
New Markets & Customer Segments Development
Revenue Structures Reformation
(B) Establishment of Innovation Foundation
Innovation Organization and Human Resources
Innovation Processes and IT
Innovation Management
Conversion to Create New Customer Values
Business Model (Current)
Business Model (New)
Innovation foundation is essential to realize innovation continuously. A CIO organization is capable of leading its establishment.
Innovation Management　　
Innovation Producer Innovation leader with business/IT skills and leadership
Incubation Management Platform Management system to coordinate innovation and existing business
Innovation Processes and IT
Ideation Process Established process to collect and integrate various kinds of wisdoms
Collaboration Platform Mechanisms for information sharing and collaboration
Resource Channels for: (1) Partnership with best-practice companies (2) Collaboration with R&D organizations
Execution Platform Flexible business processes, PMOs, and IT that enable quick realization of innovative ideas
Innovation Foundation
Innovation Org. & HRs　　
Innovation Center Organization that is responsible for promoting & leading innovation
Intrapreneur Enablement Mechanisms to obtain or develop innovative human resources
IBM Confidential

7. Innovation Promotion with an Innovation Center
Establish competitive advantages in the company’s core business areas through technology-driven innovation
Objective
Roles & Responsibilities
Establish and maintain innovation mechanisms
(B) Lead innovation projects
(C) Establish and make the most use of collaborative relationship with external partners and BUs
(D) Prioritize projects and supervise IT implementation
Board of Diectors
Innovation Center
Center Director
(A)
(C)
(D)
Alliance & Partnership
Innovation PMO
IT Dept.
Innovation Producers
(B)
External Partners
Research Companies
Lead innovation projects from ideation to implementation
Collaborate with external partners and BUs
Business Partners
BUs
Customers
R&D
Sales & Mktg
Mfg & Logistics
Controls
Provide market research, best practices, customer needs, and innovation ideas
Provide business needs, BU strategies, and innovation ideas
Assist in business case creation, pilots, and business maximization
IBM Confidential

8. Thank you.
IBM Confidential

9. Wide-Sense Definition of Business Models
A business model is a bird’s-eye view of how a company creates customer values in terms of markets/customers, products/services, and delivery mechanisms. It also includes strategic positioning, such as scenarios of value creation and differentiation.
Vision & Mission
“Profitability, Growth , Stability”
Which direction do we proceed?
Policy
Plan
Where do we differentiate ourselves and make money?
Value Creation Scenario
Differentiation Scenario
Management Issues
Strategic Positioning
Bullets
Operations
Targets
Check
Fulfillment
How to do it? Do
Bullets
Operations
Targets
Markets
Customer Segments
Products
Services
Processes
Strategy, Product Planning, R&D
Sales, Mktg, Production, Logistics
Organizations, HRs/Skills
Business Rules & Standards IT
Business Model (Wide Sense)
IBM Confidential