ARC205: IT Innovation: What It Is and How to Get More of It
SESSION CODE: ARC203 IT Innovation: What It Is and How to Get More of It David Chappell Principal Chappell & Associates Agenda Examining IT Innovation The i3 Model Incremental and Conceptual Innovation Encouraging IT Innovation
IT Users IT Creators Top Ten Innovations in the Last 30 Years From the Wharton School of Business 1. Internet, broadband, Web browser, and HTML 2. PC/laptop computers 3. Mobile phones 4. E-mail 5. DNA testing and sequencing/Human genome mapping 6. Magnetic Resonance Imaging (MRI) 7. Microprocessors 8. Fiber optics 9. Office software (spreadsheets, word processors)
10. Non-invasive laser/robotic surgery (laparoscopy) Examining IT Innovation: The i3 Model Defining Terms The word innovation means lots of different things Our topic here is effective IT innovation, defined as: A change, based on information technology, that brings value The value part is important Its not an innovation until theres value The i3 Model
Innovations three aspects Idea Implementation Create a new concept Make the idea usable Infusion Deploy the
implementation The i3 Model Some observations Ideas are overrated We venerate ideas, but theyre just the first I Implementation and infusion are just as important Example: The spread of GUIs Whats hard is recognizing good ideas Innovation requires infusion, not diffusion Because most people resist change
Applying i3 IT creators and IT users Two categories of IT innovator organizations: Information technology creators Examples: IT vendors, open source projects Information technology users Examples: Retailers, manufacturing firms, financial services firms, governments Both go through their own i3 process And the two processes are connected Illustrating i3 IT creators and IT users
Information Technology Creator Idea Implementation Infusion New technology Information Technology User Idea Implementation
The goal: Creating business value for IT users Infusion Value What Infusion Means For an IT creator IT Creator Idea Implementation
Infusion Marketing and sales IT Users Idea Idea Idea Idea Idea Implementation
Infusion Implementation Infusion Implementation Infusion Implementation Infusion Implementation Infusion Describing IT Users A simple model IT User
Business Process Customers Service Product What Infusion Means For an IT user IT Creator Idea Implementation
Technology change Infusion IT User Idea Implementation Infusion Business change
Better business process Better product or service Creating Value with IT Value = technology change + business change Google Search Technology change: PageRank algorithm Business change: Auctioning search terms
Amazon on-line retailing Technology change: Web technology Business change: The improved business processes the Web made possible Off-shore software development Technology change: Cheap fiber networks Business change: A geographically distributed software development process i3 Decision Points Idea Implementation
D1 Which ideas are worth implementing? Infusion D2 Which implementations are worth infusing? Examining IT Innovation: Incremental and Conceptual Innovation
A Simple Model of Technology Task, Architecture, Components Users have a task they want done The architecture of a technology defines how various components work together to accomplish that task Component Component Component Component Task
Component Users Component Architecture A Simple Model of Technology An example architecture and components: Web technology The original components focused on the task of accessing documents Later components allowed creating applications for other tasks The architecture allowed these changes
User Incremental and Conceptual Innovation Definitions Incremental innovation Improving components in an existing architecture Examples: HTML 5, SharePoint 2010 Conceptual innovation New architectures for addressing existing or new tasks Examples: Web technology Word processing software
Incremental Conceptual Incremental and Conceptual Innovation An IT user example: ATMs Example: ATMs were a conceptual innovation that has had incremental innovations added to it A conceptual innovation is often followed by many incremental innovations that add or improve components Letting ATMs accept deposits with no envelope
Incremental The invention of ATMs Conceptual Incremental and Conceptual Innovation Getting more of each For incremental innovation: Understand the solution well Youre trying to improve the components in an existing architecture Close observation of how those components are used is valuable
For conceptual innovation: Understand the problem well Youre trying to create a new architecture, perhaps with new components Close observation of the task that people want to do is valuable And perhaps new tasks that they might want to do Why is Conceptual Innovation So Hard? Incremental innovations are: Easier to see You can identify problems with the current components Easier to get through the i3 process Processes are already in place for implementation and infusion
Conceptual innovations are: Harder to see Creating new architectures (especially with new components) is difficult Hard to get through the i3 process Processes likely arent in place for implementation and infusion Encouraging IT Innovation: IT Users The Benefit of an Innovation From competitive advantage to cost of doing business First firm in an industry
implements innovation Competitive Advantage to Firm Second firm in the industry implements innovation Third firm in the industry implements innovation Time The Benefit of an Innovation Providing business value
Window of differentiation Competitive Advantage to Firm Time Innovation Strategies Some options Window of differentiation Leader:
Strong in Idea, Implementation, and Infusion Fast follower: Strong in Implementation and Infusion Straggler: Not strong in any I The Importance of Copying Being good at copying a competitors innovations is important The majority of ideas in your industry wont come from you
Doing this requires: Having the right processes in place Such as an effective software development process A culture that can accept intelligent risk Competent people At least for Implementation and Infusion The Kinds of People Required To successfully implement the i3 process Idea
Strategic Implementation Transformational (Business knowledge, IT knowledge, creativity) (IT development knowledge, execution skills) Infusion Persuasive (User knowledge, communication skills)
Value Operational (IT operations skills) How strong an IT user organization must be in each category varies with its IT innovation strategy Business and IT Working Together Facing the challenge IT-based innovation requires people from different cultures to work together Both sides have to respect each other
Both sides have to value the others input IT people must learn the business and business culture Theyre not going to come to us The sole purpose of our job is to help the business Measuring Value IT users Must be measured by business people outside the group that did the project
IT Creator Idea Implementation Infusion IT User Idea Implementation Infusion
Measuring value accurately and honestly is essential for getting more innovation Value Encouraging IT Innovation: IT Creators Why Talk About IT Users First? IT creators must understand how their users innovate, i.e., the IT user i3 process Its a prerequisite for creating successful new technologies
The link between an IT creators idea and an IT users value can be: Very strong in start-ups Much weaker in large technology companies Evaluating Technology Ideas What is important? IT Creator Idea Implementation Infusion New
technology IT User Idea Idea Idea Idea Implementation Implementation Implementation Implementation Infusion
Infusion Infusion Infusion New business ideas The best technology ideas are the ones that can combine with many new business ideas in many IT users Evaluating Technology Ideas Some examples Web technology: Very important It combined with many business ideas in many firms Search: Very important
It combined with one business idea in many firms Workflow engines: Moderately important Theyve combined with several business ideas in some firms Functional languages: Not important (so far, at least) Theyve combined with few business ideas in few firms Getting More Conceptual Innovation Creating Start-up Mind Start-up people maintain a tight connection between new technology and business value Start-up people arent bound by the traditional constraints of their industry or their market
Start-up people dont face career destruction if an idea fails Start-up people have clear and direct incentives for success Incentives for IT Creators Getting them right is critical In many IT creators, the incentives are distorted What matters in product groups is technical coolness and the respect of peers But customers care about their problems, not your technology The incentives for IT creators should reflect this Measuring Value IT creators
A proxy for IT user value R&D spending IT Creator Idea Number of patents filed Implementation Infusion
Profit IT User Idea Implementation Infusion Value Final Thoughts Top Ten Innovations in the Last 30 Years
A reprise 1. Internet, broadband, Web browser, and HTML 2. PC/laptop computers 3. Mobile phones 4. E-mail 5. DNA testing and sequencing/Human genome mapping 6. Magnetic Resonance Imaging (MRI) 7. Microprocessors 8. Fiber optics 9. Office software (spreadsheets, word processors) 10. Non-invasive laser/robotic surgery (laparoscopy) What We Do Every era has its defining technology:
1800: Steam power 1880: Electricity 1925: Internal combustion engine Today: Information technology Innovators in an eras defining technology create the future We work in the most important profession in the world About the Speaker David Chappell is Principal of Chappell & Associates (www.davidchappell.com) in San Francisco, California. Through his speaking, writing, and consulting, he helps people around the world understand, use, and make better decisions about new technology. David has been the keynote speaker for events and conferences on five continents, and his
seminars have been attended by tens of thousands of IT leaders, architects, and developers in more than forty countries. His books have been published in a dozen languages and used regularly in courses at MIT, ETH Zurich, and other universities. In his consulting practice, he has helped clients such as Hewlett-Packard, IBM, Microsoft, Stanford University, and Target Corporation adopt new technologies, market new products, train their sales staffs, and create business plans. Earlier in his career, David wrote networking software, chaired a U.S. national standards working group, and played keyboards with the Peabody-award-winning Childrens Radio Theater. He holds a B.S. in Economics and an M.S. in Computer Science, both from the University of Wisconsin-Madison. Resources
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North America 2011 kiosk located at registration Join us in Atlanta next year 2010 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION. JUNE 7-10, 2010 | NEW ORLEANS, LA
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