The Future Company
The role of the CIO and the IT department
Copenhagen, December 2002
Is this the status of your present IT department?Constantly having your hands in the dirt trying to maintain adequate velocity
Leverage systems toward new business!Trying to gather information in order to obtain an overview but it seems impossible
Looking at best pratice!Fierce competition in the marketplace combined with more rapid product cycles
Lanell is a part of the WM-data Stratevo network
Agenda
1.1. Lanell Innovation is a part of a pan European NetworkLanell Innovation is a part of a pan European Network
2.2. Innovation and the IT organizationInnovation and the IT organization
3.3. How to apply innovation in a working organizationHow to apply innovation in a working organization
Virtual Organization Structure
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What is a Virtual Organization?
Facilitates the workflow of a group of users across multiple domains who share [some of] their resources to solve particular classes of problems
Collates and presents information about these resources in a uniform view
Members configure project teams in order to meet customer needs quickly
Lanell Innovation is a networking company with a virtual organization
Networks are a realityTechnology now allows networks both to become easier and to expand
Networking is basic
Virtual organization stripped of its technological aspect - has always existed
what is new - is technology now allowing such activities both to become easier and to expand; barriers of distance and time are no longer constraints for business in communicating with employees, suppliers, customers, partners
What is new in networking
Barriers of distance and time are no longer constraints for business in communicating with employees, suppliers, customers, partners.
Enabling temporary operational units based on market opportunity
Facilitating that partners contribute only with their strengths (core competencies)
Forces feeding the power of networkingAbility to respond requires a new flexibility that affects our traditional ideas of organization and management
Effects driving networks
Growth in importance of the individual who values loyalty to a profession above loyalty to one organization - and who values their private and working lives equally
Disappearance of the job for live and of progress up the career ladder
Shift from manufacturing-based to information-based economy
Organizational structures and management concepts of the past are no longer viable in market place of rapid change
Technologies are now converging to support the flexibility demanded by organizations
Lanell is a part of a pan European network
Lanell Innovation is the network facilitator that initiates Virtual Organization, maintains relationship between the member companies, facilitates the formation of market and customer driven temporary Virtual Corporation,
Lanell Innovation is based on: Partner Equality Boundary Crossing Geographical Dispersion Complementary Core Competencies Pooling of Resources Changing Participants Electronic Communication
Infinite innovationSustain constant product development and accelerate product cycles in the organisation
What Lanell Innovation does differently
Share knowledge and add value to corporate knowledge
Based on equality of Partners
Innovative and Flexible with a small core organization “Stripped” to “core competencies
Use of Information and Communication Technology
Focus on the essentials
Outsourcing all non-essential
Lanell Infinity model
Agenda
1.1. Lanell Innovation is a part of a pna European NetworkLanell Innovation is a part of a pna European Network
2.2. Innovation and the IT organizationInnovation and the IT organization
3.3. How to apply innovation in a working organizationHow to apply innovation in a working organization
Proposed closing the US patent office in the late 1700’s because everything necessary had
already been invented
John Adams
Proposed closing the US patent office in the late 1700’s because everything necessary had
already been invented
John Adams
Does innovation matter ?
Innovation matters!
Average annual shareholder return 1986–99
Innovativeness
20 %
10 %
0 %
–10 %
–20 %(Sample: 600 U.S. corporations)
Arthur D. Little research has shown the explicit link between innovativeness and shareholder return
Innovation for sustained value creationLeading companies have been able to capture the Innovation Premium by making innovation their main strategic thrust
01992 1993 1994 1995 1996 1997 1998
Average of oil & gasindustry
Premium
600
400
200
01992 1993 1994 1995 1996 1997 1998
Average of personalproducts industry
Premium
300200100
400500600700800900
300
200
100
400
0
Premium
Premium
1992 1993 1994 1995 1996 1997 1998 1992 1993 1994 1995 1996 1997 1998
200
400
600
0
Average of photograficsupplier industry
Average of majordrug manufacturers
01992 1993 1994 1995 1996 1997 1998
Average of oil & gasindustry
Premium
600
400
200
01992 1993 1994 1995 1996 1997 1998
Average of personalproducts industry
Premium
300200100
400500600700800900
300
200
100
400
0
Premium
Premium
1992 1993 1994 1995 1996 1997 1998 1992 1993 1994 1995 1996 1997 1998
200
400
600
0
Average of photograficsupplier industry
Average of majordrug manufacturers
Reven
ue
(M
M D
KK
)
?
0
10
20
30
40
50
60
70
80
90
100
Today 2007 Target
Market Expansion
Base Revenue
Traditional Mergers and Acquisitions
New Products Currently in Pipeline
Growth Gap
Target
The CIO play a major role in closing the growth gap.
To do this the CIO needs:
In-depth knowledge of IT and the capacity to apply IT strategically.
Streamline IT department
Along with general business experience outside of IT and the ability to get messages to top management.
Illustrative
Where do future revenue growth come from?Companies need to recognize that innovation is the key element in closing the growth gap - this involves the CIO.
Profile of typical CIOThe CIO needs to stay focused on the big picture while constantly improvising.
Profile
90 percent are male.64 percent have IT backgrounds.Of those with non-IT backgrounds, most have experience in finance or operations.Nine percent are expatriates.
The CIO face challenges:
Make the shift from playing a more tactical role, to becoming an integral part of strategic planning and knowledge management.
Make high-stakes decisions and big-ticket expenditures in areas that the company’s top decision-makers may not understand.
Be an effective team player while shaking up the status quo.
Contact with CEO
15 percent of U.S. CIOs have no interaction with the CEO.17 percent interact with the CEO less than once a year.11 percent interact less than once a month.
Needed skills
65 percent of U.S. CIOs believe that their successors will have a different skill set than they have.80 percent think a grounding in business skills or an MBA is important to their success.Most of those who say that their current job is NOT a route to the top cite insufficient business or functional experience.
Analyzing the IT organization
Added
value
Impact
Cost efficienc
y
Computer operations
Systems DevelopmentAnd maintenance
Systems and Information Architecture
BusinessRequirementsIdentification
The traditional IT department has undergone huge evolution – Information technology is on the track to become basic business
The traditional set of tasks for IT department has included:
Managing operations of data centers, remote systems, and networks
Managing corporate data
Performing systems analysis and design, and constructing new systems
Systems planning
Identifying opportunities for new systems
IT knowledge
Businessknowledge
Balance of expertise required
Changes in traditional functions
Added
value
Impact
Cost efficienc
y
Computer operations
Systems DevelopmentAnd maintenance
Systems and Information Architecture
BusinessRequirementsIdentification
Different forces are pushing the traditional functions
IT knowledge
Businessknowledge
Balance of expertise required
Growing external services
Growing capability of users
The following trends are moving their performance out of the IT department:
Distributed systems
More knowledgeable users
Better application packages
Outsourcing
OrganizationalEffectiveness5.Restructuring the
industry6.Restructuring the
organization7.Growth and
Increase in market Share
Operational control2.Asset management3.Process
management
Management focus
Remain in Business5. People Systems
Knowledge controlMake Money4. Megadecisions5. Marketing,
distribution, customer service
Save Money2. Financial,
manufacturing, services
3. Administrative
Functional use
Tuning management focus towards real application
benefit
Reducing costs
1
2
Leveraging Investments
3Enhancing products and services
4
Enhancing executive decision making
5Reaching the consumer
Above the lineAbove the line
Below the lineBelow the line
Where do traditional IT functions stop and key business processes start?
Changes in the roles of the IT department
Added
value
Impact
Cost efficienc
yIT knowledge
Businessknowledge
Computer operations
Systems DevelopmentAnd maintenance
Systems and Information Architecture
BusinessRequirementsIdentification
Balance of expertise required
CIO’s must start reshaping the way the enterprise and IT department works and competes
IT departments have two missions: maintain today’s systems and work on tomorrow’s systems.
The “Today” operation should concentrate on providing services, while the “Tomorrow” operations need to focus on helping the businesses operate better.
The IT department must keep performing while transforming
New Roles in IT
Broker
Business
and
Info
rmatio
n Arc
hitectu
re
Keeping up speed
The CIO play a major role laying out the playing field.
To do this the CIO needs to:
Have IT performance analysis, indicating problems and need in current operations
Encourage project teams to study the marketplace
They are becoming more “proactive” by helping to create a vision of the firm’s future and its use of IT and selling those ideas to others
Develop a competent business driven IT staff and IT-savvy users
Implement systems that helps leverage information and cross department strategies
Establish close relations between IT executives and general management
CIO’s are required to bridge the innovative gap between IT optimizing initiatives and business development
Agenda
1.1. Lanell Innovation is a part of a pna European NetworkLanell Innovation is a part of a pna European Network
2.2. Innovation and the IT organizationInnovation and the IT organization
3.3. How to apply innovation in a working organizationHow to apply innovation in a working organization
“Normal people can and will innovate of their own initiatives if enabling conditions are
present.”
A. Van de Ven
“Normal people can and will innovate of their own initiatives if enabling conditions are
present.”
A. Van de Ven
Can your organization become highly innovative?
Initiate a plan for innovation
Creating an organization culture that enables innovation
Vision – Declare the importance of innovation; make it part of the company’s self-image
Foresight – Find out where technologies and markets are going. Identify articulated and unarticulated needs of the customers
Stretch goals – to make quantum improvement
Empowerment – Hire good people, trust them, delegate, provide slack, and get the #$%& out of the way
Communications – Open, extensive exchanges according to ground rules in forums for sharing ideas, and where networking is each person’s responsibility
Rewards and recognition – Innovation is an intensely human activity. Keep good people happy.
It is imperative that CIO’s and general management articulate the companies’s innovation policy
Knowledge that one has is critical to personal success
Knowledge that one has and shares is critical to personal success
Reuse destroys creativity Reuse can fuel innovation
Value is derived only from personal creativity
Better ideas can be generated from interaction and collaboration
The right mindset is essential
Routinely seeks knowledge to increase effectiveness
Occasionally seeks knowledge to fill gaps
Leverages institutional networks Leverages personal network
Routinely captures and shares knowledge with global network
Occasionally captures and shares knowledge with personal network
Beh
avio
rB
eliefs
Practitioner Knowledge worker
It is vital to nourish the beliefs and behaviors of the knowledge worker
The Lanell workflow for applying innovation Before embarking on the innovation mission ensure that you have the right setup in place
Setup the company for innovation
Mentorboard – Establish a mentor board with senior employees from all parts of the organization
Develop Business Case tools – Set a standard for BC’s that enables Value driving decision making
Define hierarchies – Don’t realize too late that ideas are the main business asset
Define rewards – Fuel the idea process
“Never time to do it right,
always time to do it over!”
“Never time to do it right,
always time to do it over!”
Be cautious of harmfull agility
Lanell Innovator helps accentuate innovation Supporting the process of knowledge and innovation driven organizations
Niels Stenfeldt PoulsenManaging Director
Lanell InnovationMosede Højvej 24
DK 2670 GreveDenmark
Website: www.lanell.com
Niels Stenfeldt PoulsenManaging Director
Lanell InnovationMosede Højvej 24
DK 2670 GreveDenmark
Website: www.lanell.com