How IT leaders can drive digital innovation

1.      Understand business needs.

With the CEO's growing reliance on technology to create new products and services and stay ahead of the competition, IT-business alignment has never been more important.

James McGlennon

"There's been a realization across all businesses in almost every industry that technology is a powertrain," said James McGlennon, CIO of Liberty Mutual Insurance Group, a global insurer headquartered in Boston. "[But] you have to focus on the business process."

Businesses' reliance on technology has meant that many IT leaders have moved out from the back office and into the spotlight.

Marina Bellini

The number of items on a CEO's agenda that come directly from the CIO or CDO has dramatically increased, said Marina Bellini, former chief information and digital officer at British American Tobacco, a multinational tobacco and nicotine company, headquartered in London.

Where once the conversation between the CEO and top IT leadership centered on cost savings, IT leaders are now driving conversations around innovation, revenue growth and new business models, Bellini said.

Today's IT leaders must be able to spot business problems and understand how they can solve them, and must understand how to communicate that in language business teams can understand.

"This close relationship between the CEO and the CIO, CDO, CIDO or whatever the role is called at that particular organization requires that IT leaders communicate in new ways -- in particular, in ways that can be translated for external stakeholders," Bellini said.

2.      View the IT digital leadership role holistically.

Today's IT leaders will likely have several roles they need to execute -- and must be able to do them simultaneously.

George Corbin

"The biggest change is that [the IT digital leader] is now the company's transformer in chief," said George Corbin, board director at Edgewell Personal Care and the COO of Onriva, an AI-powered travel marketplace. "You have to be the ship's helmsman and at the same time the ship's engineer."

There are three architectures CIOs and CDOs need to change to lead digital transformation and innovation, according to Corbin:

• technology and data architecture, which includes the domains traditionally associated with IT, such as infrastructure and data;
• business model architecture, such as product, distribution and go-to-market strategy; and
• human architecture, such as a company's culture and how people are organized.

"Ultimately, the [CIO and CDO] job is a transformational job, but the problem is that 70% of transformations fail," Corbin said. "And that failure is typically not due to the technology."

Other factors -- especially those human ones -- influence technology success.

3.      Make change management your superpower.

The success of any technology project depends on people, with all their messy emotions, resistance and self-interests. The human side of the equation is even more important in digital transformations and innovations. That's why IT leaders' priority list must include improving their own soft skills, leading with empathy and enlisting people's interests in new ways of working.

A common cause of IT project failure is lack of buy-in, Bellini said. Getting people to emotionally invest -- and recognizing this requires a time investment -- can help avoid technology project failure and the finger-pointing that tends to come with it when people feel change is thrust on them.

"You need to [steer] the emotions to the right side," Bellini said.

People have different perspectives on what an "improvement" is.

"Even if it's the greatest project … you have to step back and look at who is going to lose something," George said. "That's the soft side of the equation that you absolutely have to tackle because that can undermine even the most brilliant of technology initiatives."

4.      Create a culture of agility.

Innovation doesn't happen in a vacuum. Leaders must create a culture that supports and fosters it. That may mean radically changing the status quo and managing teams in a different way.

Traditionally, organizational leaders outside of IT have understood that not every initiative will be a success -- for example, not every new product will meet minimum threshold, Bellini said. For IT to deliver innovation, the organization must grant that same understanding to the technology group. In turn, digital leaders need to push that mindset.

"We have to be much more open to experimentation than traditional IT organizations," Marina said.

In this new age where CEOs are asking CIOs and CDOs to create new products, innovate operating models and provide digital leadership, IT leaders must advocate for a culture that views failure as a necessary byproduct of agility.

"Fear kills innovation," Corbin said.  

Replacing fear with fearlessness means changing the culture, he said. Supporting innovation requires rethinking everything from the company's reward system to who it recruits and retains, and that may require some hard decisions.

Driving digital leadership requires seeing risk as part of innovation.

Liberty Mutual focuses on how it can empower employees to take risks, and part of the way it does that is ensuring that leaders don't penalize employees when those risks don't yield success, McGlennon said.

To create a culture that rewards experimentation and accepts the risks that brings, leaders must set values and then get out of the way, he said.

Done is better than perfect. Perfect never launches.

A focus on failing quickly can help in this learning process.

At Onriva, the culture emphasizes an understanding of each person's role in a project, such as on a RACI matrix, a laser focus on goals and getting to answers quickly during two-week sprints, Corbin said. That's in stark contrast to traditional organizations bogged down in process and pointing toward the idea of "perfect."

"Done is better than perfect," he said. "Perfect never launches."

5.      Focus on scalability and repeatability.

One important way IT leaders can drive digital innovation is by asking which technology initiatives can power core business growth.

Liberty Mutual operates in multiple markets, in different countries and through different channels, but one goal that unites these efforts is a focus on repeatability, McGlennon said.

"We [focus on] figuring out how we optimize, build something once and ideally use it all over the place," McGlennon said. "That's becoming more important than ever … [and] leads you directly to things like API enablement, making it simple to both plug into other ecosystems and have people plug into yours."

As one example, the company has been offering insurance to gig workers, which calls on many of the same processes and technology it's already built.

"CIOs need to be focused on what operating model you have, which partners are you trying to connect with, how are they trying to connect with you and then making sure that you reuse as much as possible [to create an] evergreen business," McGlennon said.

6.      Understand data's technical needs and business use cases

Data is critical to the success of digital cultures, and it's not an easy job to conquer the technical and business aspects of data. To that point, the company should designate a specific role for data accountability or hire a chief data officer.

Many organizations have troves of data going back many years, and preparing that data is no simple task, McGlennon said.

"We spend as much or more time preparing data to be used in things like data science and machine learning models than we do the actual modeling work itself," McGlennon said. "So it's really important to have someone focused on the entire value chain of data."

Data can help unlock new business frontiers, so that overarching view of the entire value chain of data is critical. But creating a data-driven culture across the organization is important too.

The most pressing data issue is how to build intelligence as a company quickly. As an example, marketing teams should look for critical junctures where the company is losing customers, Corbin said. People should be looking at those friction points and addressing them, or the company will be in danger of being disrupted by a competitor that finds a way to address the issues.

The point underscores why IT leaders must focus on how they can drive digital innovation and explore new opportunities, from AI to metaverse initiatives. If they aren't focused on finding new ways to delight customers, someone else will.