How do you find and foster innovation, whether in your organization or outside it? I’d like to hear from you, as I’m writing about this topic a lot.
A version of this post first appeared on VentureBeat.
The role of the chief information officer is changing dramatically. Gartner famously predicted a few years ago that by 2017 the chief marketing officer’s budget for new technology would outstrip that of the CIO. That might have been an exaggeration but many CIOs are taking it seriously. Faced with the prospect of becoming mere custodians of whatever cool projects their fellow executives in marketing cook up, CIOs are learning to embrace innovation on their own terms.
It’s not always easy. To learn more about innovation, about 150 CIOs and other tech executives gathered in a small Microsoft-sponsored event on open innovation in Las Vegas this week.
I moderated a panel there with senior tech execs from several very large organizations: NASA, Coca-Cola, Toyota, and AT&T.
It was quite a crowd. At dinner on Tuesday I found myself sitting between Enrique Uriel Arias, who is the CIO for Real Madrid, and Jason Crusan, a NASA director overseeing IT for human space missions — everything from the flight control software for rockets to the Wi-Fi on board the International Space Station. Both guys were pretty humble about working for such stratospherically world-famous organizations. Though both admitted that they were able to get a lot of things for free that other companies would have to pay for, simply because vendors want the association with their brands.
A common theme at the event: CIOs need to look outside their own organizations in order to innovate effectively. In some cases, that requires undoing decades of comfortable precedent. In a nutshell, it means letting go of control.
Take NASA for example. Crusan has pushed his organization to embrace — and foster — open-source projects as a way of increasing the organization’s leverage. NASA’s 2015 budget is $17.5 billion, or about 0.5 percent of the overall federal budget, and Crusan points out that 95 percent of that budget is spent on outside contractors, private companies who have long formed the backbone of the space industry in the U.S. So with just 5 percent of its budget left for personnel, and salaries strictly limited by government pay scales, Crusan doesn’t have the kind of liberal hiring budget that a Silicon Valley startup would.
Instead, NASA seeds innovation through open-source projects. OpenStack, for instance, was kicked off as a joint project between NASA and Rackspace. It has gone on to become a major cloud-computing platform used by many companies through the IT industry — including NASA.
More recently, Crusan has been supporting open-source development of a delay-tolerant networking protocol that could supplement the basic Internet TCP/IP layer. That could help NASA make Internet connections to the International Space Station more efficient. It could also help Internet pioneer Vint Cerf realize his dream of an interplanetary Internet.
Cerf and Crusan debated the best way to create a DTN protocol, incidentally, and Crusan says that Cerf initially opposed the open-source route. Crusan won, and in a few years, as this protocol reaches fruition, I hope the two will publish their email debates on the topic.
NASA is even open-sourcing its flight control software, so people can use the same thing to control their quadcopter drones as NASA uses for rocket launches. That has lots of benefits for NASA, Crusan says: The open-source work is likely to improve the software. Many eyes on the code mean that it’s more likely one of them will discover (and fix) hidden flaws that could have serious safety (or security) implications. And by making the software open-source, NASA is creating a pool of student talent that already knows how to work with this code — talent that it can hire later, or which will go on to create new companies that will supply needed products and services to the space agency. (Perhaps for free!)
AT&T has made its hunt for outside innovation explicit, by setting up five “AT&T Foundry” locations around the world. These are essentially incubators where promising companies can work and have access to other startups as well as AT&T expertise. Igal Elbaz, the vice president of ecosystem and innovation for the telco, and another panelist, spoke about how AT&T looks to foster the development of ecosystems, not just companies. And it doesn’t view its innovation centers as startup farms, growing companies for possible acquisition. It’s much more interested in making sure that the telco, and its networks, are at the center of a vibrant array of interdependent and mutually beneficial relationships between different companies.
And AT&T is willing to make changes in the way it does things in order to make that happen. For example, Elbaz described trying to set up a three-month free trial of a small two-person startup’s service a few years ago. AT&T had agreed to try the product, the entrepreneurs were willing to deliver it, and everything was good to go — until one of the entrepreneurs called up Elbaz to say she’d just received a 128-page contract from AT&T’s legal department. Needless to say, burying well-meaning startups in paperwork is no way to make your company startup-friendly. Elbaz says that today the company is able to execute such partnerships with one- and two-page contracts.
Another panel featured Techstars co-founder David Cohen along with a couple representatives of two joint Techstars projects, one with Disney and one with Barclay’s. The trio spoke about how important it was for the accelerator’s corporate partners not to be too “transactional” about their interest in the startup world. The ultimate benefit for corporations may indeed be improvements to the bottom line, but you can’t go into every startup relationship with an eye toward the bottom line. “Just give first,” Cohen advises his corporate partners, without expecting an immediate return. Open up the space for an incubator. Invite startups to play with your API. Give away free accounts. And don’t make every gift contingent on some expected future return on investment.
For CIOs, who are accustomed to managing projects to deadline and keeping costs under control while guaranteeing network uptime and application efficiency, this all may seem a bit “woo-woo.”
But, as Microsoft’s own CIO Jim DuBois said at the beginning of the day, the success metrics for IT organizations are different than they used to be. Now, IT needs to deliver end-to-end experiences. It needs to demonstrate a positive impact on the organization’s key performance indicators (KPIs).
You can’t do all that by yourself. So for CIOs, it’s time to start looking outside for innovation.