Can't Build Innovation Model without IT 'Glue'

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I wrote last week about how to inspire innovation within a company by empowering employees to operate outside the usual business processes.


All fine and good, but some folks think that much future innovation will come from outside, rather than inside, companies. So it will also be important to tap into ideas from customers, suppliers and other "outsiders."


This point is addressed in a SandHill.com interview with C. K. Prahalad, a professor at the University of Michigan's Ross School of Business and author or co-author of "Competing for the Future," "The Future of Competition: Co-Creating Unique Value with Customers" and "The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profit." His new book is "The New Age of Innovation."


Though there are few entirely new insights here, Prahalad does a nice job of linking several key concepts, including near-ubiquitous connectivity; the falling price and resulting globalization of technology; the increasing importance of social networks; and technology convergence.


Consumers increasingly want and expect personalized experiences with their products and services. The experiences around products, rather than products themselves, are becoming key to remaining competitive for companies, says Prahalad:

Even when Google may have a hundred million consumers, it may still have to treat each consumer's experience as unique. You and I can decide what content we want to look at and how we want to experience Google at any point in time. So one consumer experience, which is co-created with Google, is what creates value. This is a huge shift from the Model-T's unappreciated consumer, where Henry Ford said they could have any kind of color they wanted as long as it was black. And all the resources for the Model T were within the company.

This will present a huge challenge for most companies, of course, as they shift from the "predetermined sequential process" of the supply chain to ad-hoc collaboration between a diverse and constantly shifting group of resources.


While some folks insist that IT's emphasis on controls and security presents barriers to this model, IT actually takes on a renewed importance in this scenario, says Prahalad. Without a flexible IT architecture, companies may be able to collaborate with other entities, but they won't be able to convert the good ideas they collect into workable business models. He says:

The basement of the house is the technical architecture of the firm -- the information and communication technology backbone. The social architecture of the firm is the values, skills, attitudes of all managers and people in the company form the roof. But the thing that holds everything together, the glue, is the IT architecture, which is the flexible and resilient business processes and focused analytics.