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Over the last few months the topic of innovation continues to come up in conversation with peers, at advisory board meetings and clients. Each time it does, I’m reminded of the Gartner’s keynote at Symposium last October. In that keynote, Peter Sondergaard introduced the following concepts:

1. Every company is a technology company
2. Every budget is becoming an IT budget
3. Every business leader is becoming a digital leader

When I heard these for the first time, my initial thought was, would the message behind each concept resonate with the audience? They easily could be interpreted as too blue sky given some have a horizon of six years, and certainly provocative since the last concept has a suggestion of demise of IT. Let’s look at the messages in each concept.

Every company is a technology company:

The technology we have at our disposal today coupled with what the Internet can deliver provides the ability to change business models, provide new opportunities and generating revenue through digital products and services. Examples of this are Airbnb, changing how we can book accommodation, providing the ability to anyone with a room, house or even a boat to list it on the Internet in over 192 countries worldwide. 3D Printing is changing manufacturing; produce products anywhere in any volume; how will this impact supply chain?

Every budget is becoming an IT budget:

In 2011, Gartner predicted that by 2015, 35% of enterprise IT expenditure would be managed outside of the IT department. Twelve years ago tech spending outside of IT was 20% of total technology spending, Gartner predicts this will grow to 90% by end of decade. Both of these trends are now taking shape and we find that technology spend is increasing at the business unit level and certainly cloud technologies have made it easy to obtain technology services outside of one’s own IT organization.

Every business leader is becoming a digital leader:

The real impact for IT is on digital leadership. As I mentioned, I’ve had several conversations regarding innovation and this is where this concept has the biggest implications for IT.  In order for IT to remain relevant, it must respond to the demands of the business; which means not just delivering on the projects when they’re required, but by innovating, providing technology leadership and providing the business unit with technology use cases. This is essential since the business unit must continue to innovate to stay ahead of competition. If IT fails to deliver on innovation, the organization will find a way.  New positions will emerge, such as the Chief Data Officer, and their role will be to bring innovation into the organization as an agent of change, and they won’t be part of IT.  This danger here is that IT can be relegated to an operational role and not to one of the technology leaders in the business.

So how do you create innovation? This is an interesting challenge, is it a taxonomy, a methodology and process that you create, or is it about creating a culture that fosters new ideas?

My position is you must start with culture. It isn’t as simple as setting up a lab and it must be embedded in the culture of the IT organization. There are certainly aspects that you need to define, such as what your tolerance for the time to value gap and how you decide when not to invest in a given technology, but most important is fostering culture, having the right people, and setting guidelines for them so they know how far they can go.