Milestone Group Quarterly: January 2004
Articles
OpEd:
Tom Davenport on Business vs. Technology Innovation
What came first: the new technology, or the ideas about how to use it for business advantage? What’s more important in driving business performance—technological innovations, or new business and management innovations? Certainly the world would have us believe that Silicon Valley, Route 128, and other technology R&D centers are the incubators of business innovation. But I would argue that without some business ideas in place for what to do with those technologies, they won’t sell and they won’t produce value. Sometimes the technology comes first and sometimes the idea precedes the technology, but if both aren’t present, little of any commercial value will ensue.
There are many examples of the synergy among ideas and technologies. If your organization is implementing CRM technology, it’s a good bet that it really wants stronger customer loyalty and better customer service—ideas that have been banging around business for the last couple of decades. If ERP is on the technology agenda, then process improvement or reengineering are—or should be—on the business agenda. If a portal is being put in place, the chances are good that someone in the organization believes that knowledge management is necessary. If you’re busy attaching RFID devices to pallets and packages, someone has laid the groundwork with ideas on supply chain optimization and just-in-time inventory.
New business ideas are thus the opposite side of the coin of new technologies. Any technology executive who wishes to advance a slate of emerging technologies should become very familiar with the process of fostering new business and management ideas within organizations. Most of them are already familiar with technological innovation, but know little or nothing about how managerial innovation is created or implemented. These ideas come not from R&D labs, but rather from business schools, consulting firms, journalists, and practicing managers. In the remainder of this article, I’ll describe the key roles in the process.
There are four key roles involved in the process by which business and technology ideas take root within organizations. One is that of the CEO and executive management; I won’t focus on them here except to say that eventually they must buy into an idea for it to have any major impact and acceptance within an organization. They rarely create the ideas themselves, however. In the case of technology-oriented ideas, it must often be the job of IT executives to make senior executives aware of new business and technology ideas, and to help them decide whether to proceed on them or not.
The most central role in helping ideas take root, however, is the person who brings them in, modifies them to suit the organization, and shepherds them through implementation. I call them “idea practitioners” because they put ideas into practice and in turn have developed a “practice” of making ideas real. Ideas are cheap and plentiful, but to implement them is often very difficult. In many cases, idea practitioners are idea creators and translators as well as users. They take risks and often use substantial amounts of hard-earned social capital to advance the ideas they care about.
Who are these people? Some are senior executives, even CEOs. But the original adherents and evangelists of business ideas are usually found lower in the organization. They’re heads of operational business units and business functions, planners and strategists, and even individual contributors. They get things done through passion and persuasion more than power.
Many idea practitioners have spent at least some time working with IT in their early jobs—programming or being an analyst. Because the last few decades have been those in which IT came to fruition in business, there were considerable opportunities to innovate. The IT-oriented idea practitioners, of course, have an extremely important role to play with regard to technology-enabled business ideas. They may be the only source within organizations that can understand both the technology itself, and the role it can play in business change.
While the idea practitioners are the most important aspect of the business innovation process, there is another group of people who also play a significant role in idea-driven business change. These are the management writers and theorists often called “gurus.” Ranging from Nobel laureates to semi-reputable popularizers, these people undertake varied forms and types of research and then proceed to broadcast their news. They usually get too much of the credit for business innovation, and I’ve tried to redirect some of it to idea practitioners. Yet it would be far more difficult for the practitioners to enact their practice without the rhetoric, structure and legitimization that gurus offer.
Some gurus are more IT-focused than others, of course. In the research for a recent book, my collaborators and I applied some objective criteria to identify the business gurus with the greatest impact. Out of that list, several have a strong IT focus, including (present company excepted):
- Bill Gates (who, by virtue of his books, is a guru by our method)
- John Seely Brown
- Don Tapscott
- John Hagel
- Esther Dyson
- Patricia Seybold
- Andy Grove
I have listed several gurus who live and work in Silicon Valley, but in our findings, most do not. And Stanford and Berkeley, institutions that have fostered a great deal of technological innovation, are relatively weak in bringing about business innovation.
Finally, there is the role of the IT vendor. These people have as their primary objective selling IT hardware, software, or services, but they may find it helpful to embrace new business ideas in support of their larger objectives. A few vendor executives, as in the case of Bill Gates above, reach guru status (typically with the help of others who do most of the research and writing). Others jump on business bandwagons that already exist. For example, in the early years of knowledge management, the document management and imaging industry jumped onto that bandwagon as a way to market its tools.
It’s easy to be skeptical about the role of vendors in managing ideas, but they actually can make quite positive contributions. Where would reengineering be without ERP systems? How rapidly would knowledge management have grown without Lotus Notes, portals, and the Web in general? Technologies often make it possible for business ideas to be implemented within organizations, and of course vendors are usually the most knowledgeable parties on their own technologies. The broad-minded vendor that isn’t entirely motivated by marketing can add considerably to the dialogue about many business and management ideas.
But most vendors are sadly lacking in their ability to create and nuture business innovations. Microsoft, for example, spends billions on basic and product-oriented research, but only a few million dollars on business innovations (it has recently begun to focus, for example, on fleshing out the idea of the “information worker” and information work productivity). Intel is a paragon of technological innovation, but again has only recently begun to address the use of its technologies by focusing on mobile work and the “eWorkforce.” If these and other smaller firms began to more aggressively research and communicate how to apply their technologies in business innovations, I’m confident that the entire landscape of business and technical innovation would be much healthier and faster-growing.
Thomas H. Davenport is the President’s Distinguished Professor of Information Technology and Management at Babson College, and an Accenture Fellow. His most recent book (co-authored with Larry Prusak), from which the ideas in this article are derived, is What’s the Big Idea: Creating and Capitalizing on the Best Management Thinking (Harvard Business School Press).
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