IT Innovation in the Federal Government
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IT Innovation in the Federal Government October 24, 2011 ACT-IAC 2011 Executive Leadership Conference Presented by: Rob Atkinson, President, ITIF
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At the ACT-IAC 2011 Executive Leadership Conference, ITIF president Rob Atkinson presented on the importance of innovation in IT and government leadership in IT practices. This presentation highlights the innovator’s challenge of exploiting and exploring industry facets simultaneously.
Transcript of IT Innovation in the Federal Government
IT Innovation in the Federal Government
October 24, 2011
ACT-IAC 2011 Executive Leadership Conference Presented by: Rob Atkinson, President, ITIF
The Information Technology and Innovation Foundation (ITIF) is a Washington, D.C.-based think tank at the cutting edge of designing innovation policies and exploring how advances in information technology will create new opportunities to boost economic growth and improve quality of life. ITIF focuses on:
Innovation processes, policy, and metrics E-commerce, e-government, e-voting, e-health IT and economic productivity Science policy related to economic growth Innovation and trade policy
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Today’s Presentation
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Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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4
What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
What’s the Challenge?
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What’s the Challenge?
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What’s the Answer? Innovation
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Innovation Can Cut Costs
The Tech CEO Council estimates that better use of IT could save the federal government over $1 trillion by 2020
Innovation Can Boost Citizen Satisfaction
Today’s Presentation
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2
Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
What is Innovation?
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Innovation is Different from Quality–and Comes in Different Degrees
quality
innovation
incremental architectural discontinuous
systems-centric process-centric
improvement-oriented
customer-centric design-based creation-oriented
modest change
radical change
Degrees of innovation
Improving what you already do
Creating new elements of value and differentiation
degree of change
Incremental innovations involve small
improvements to an existing product or process
to enhance efficiency.
Architectural innovations involve incorporating new technology and processes to change business elements.
Discontinuous innovations occur when an advance is so powerful, it makes old products or processes obsolete
Exploiting known certainties
Exploring unknown possibilities
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Business model
Finance Networking
2. Networking enterprise’s structure/ value chain
1. Business model how the enterprise makes money
Channel
Delivery Brand
Customer experience
10. Customer experience how you create an overall experience for customers
8. Channel how you connect your offerings to your customers
9. Brand how you express your offering’s benefit to customers
Core process
Process. Enabling process
3. Enabling process assembled capabilities
4. Core process proprietary processes that add value
6. Product system extended system that surrounds an offering
Service/prod. performance
Offering Svc/prod system
Service
7. Service how you service your customers
5. Product performance basic features, performance and functionality
“Ten types of Innovation” by Larry Keeley/Doblin Inc.
There are Ten Types of Innovation
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What Are the Consequences of Not Innovating? 1. Failure to meet rising customer expectations.
2. Risk of losing the best talent.
3. Risk of losing new revenue opportunities.
4. Risk of getting “Baumol’s Disease” (low productivity, high
costs).
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Today’s Presentation
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2
Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
Federal IT Challenges Customer-facing challenges: Too many web sites still hard to use Too many web sites still organized around agencies and
bureaus
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7.279
7.484 7.382 7.391
6.995
7.679 7.78
7.704
8.146
7.449
6.46.66.8
77.27.47.67.8
88.28.4
Customization Organization Navigation Overall Statisfaction Comparison to Ideal
E-Government/Agency
E-Business/Company
Source: Forrest V. Morgeson III and Sunil Mithas. Does E-Government Measure Up to E-Business? Comparing End User Perceptions of U.S. Federal Government and E-Business Web Sites. (Public Administration Review, 2009).
Users Rate E-gov Websites Lower Than E-commerce Sites
6.6
8.2
7.9
8.7
6
7
8
9
10
E-Government/Agency
E-Business/Company
Source: Forrest V. Morgeson III and Sunil Mithas. Does E-Government Measure Up to E-Business? Comparing End User Perceptions of U.S. Federal Government and E-Business Web Sites. (Public Administration Review, 2009).
The Range of Satisfaction is Higher for E-gov Sites
Federal IT Challenges Customer-facing challenges: Too many web sites still hard to use Too many web sites still organized around agencies and bureaus Internal Challenges: Considerable duplication of applications instead of
widespread shared services Gap (growing?) between commercial best practice and
current government practice (e.g. slow to move to the cloud).
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Federal IT Challenges Customer-facing challenges: Too many web sites still hard to use Too many web sites still organized around agencies and bureaus Internal Challenges: Considerable duplication of applications instead of widespread
shared services Gap (growing?) between commercial best practice and current
government practice (e.g. slow to move to the cloud). Overall Challenge: No systemic focus on driving automation and productivity
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Today’s Presentation
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2
Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
Innovation is Challenging, Rare, and Often Frightening
Hey, let’s innovate!
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Innovation Isn’t Easy – Some Puzzles to Ponder Why didn’t IBM keep the operating system? Why didn’t Microsoft create the browser? Why didn’t AT&T create AOL? Why didn’t American Airlines create Southwest? Why didn’t Citibank create PayPal? Why didn’t Blockbuster create Netflix? Why didn’t Sam Goody’s create iTunes? It takes effort to stand in the future and see new
possibilities. Just because you’re not willing to disrupt your own
business, doesn’t mean someone else isn’t willing to do it for you.
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Incremental Architectural Discontinuous
Originate from discovery-oriented activities
Often found at the margins of your core business
Game-Changing Innovations
Typically found within your core business
Originate from continuous improvement efforts
Enabled through OTS components
Implemented within a current line of business
External partnerships, if any, are straightforward
Fit within your existing business model
ROI is modest but clear-cut
Rese
arch
D
ev
Fund
ing
May require significant enabling technologies
May require coordination across lines of business
Often require major external partnerships
May run counter to your current business model
ROI is uncertain but upside potential is significant
exploit explore
The Innovator’s Challenge is to Exploit and Explore Simultaneously
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IT Investment is Necessary
National Governments Invest More in IT
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0123456789
National governments Average
IT$/Share of Revenue
Source: Gartner, 2011
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11,500
12,000
12,500
13,000
13,500
14,000
14,500
15,000
National governments Average
IT$/per Worker
National Governments Invest More in IT
Source: Gartner, 2011
0.35 0.32
0.26
0.13 0.13 0.11 0.08 0.08 0.06 0.06 0.06 0.05 0.02 0.01
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Source: Rubin Worldwide, 2011
Installed TB per Employee
But Money is Not Enough Firms that adopt digital organization tenets and simultaneously
invest more in IT have disproportionately higher performance than firms that do not.
MIT’s Erik Brynjolfsson: “Something unique happens when human capital and other workplace practices are combined with technology.”
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A distinct corporate culture and organizational practices are found in most corporations that make extensive use of IT and the Internet. They:
1. Move from paper-based to digital business processes 2. Empower front line service personnel 3. Foster open information access 4. Link incentives to performance 5. Maintain focus and communicate goals 6. Hire the best people 7. Invest in human capital
Organizational Change is Also Required
Erik Brynjolffson
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Higher Profitability Accrues to Firms That Get Both Right
Prof
itabi
lity
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McKinsey Finds the Same Result
75th percentile and above
25th percentile and below
Man
agem
ent p
ract
ice
scor
e
Intensity of IT Deployment 25th percentile and below
75th percentile and above
+
_
% increase in total productivity
+8%
0
+20%
+2%
+
There are productivity gains from simply automating processes.
Yet the biggest productivity gains are achieved when IT investments are combined with changes in business practices.
This is hard and takes lots of time and effort.
Source: LSE – McKinsey survey and analysis of 100 US, UK, French, German companies, 1994-2002
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As Does Rubin Worldwide
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So Where is the Federal Government?
Prof
itabi
lity
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USG = Japanese Enterprises?
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=
IT investment by asset in OECD countries, 2007, percent of non-residential capital formation
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0
5
10
15
20
25
30
Software Communication equipment IT equipment
Today’s Presentation
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2
Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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4
What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
Opportunities
Data-driven policy
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Opportunities
Data-driven policy IT platforms
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Opportunities
Data-driven policy IT platforms Partnerships
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Partner with Private Sector:
Partnership
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Partner with private sector:
Partnership
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Go it alone
Opportunities
Data-driven policy IT platforms Partnerships Automation
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IT Impacts on Public Sector Capabilities (positive – negative impacts)
0
20
40
60
80
100
120
ImprovedServices
Staff Reduction Data access Control
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Source: Anderson, Henriksen, Medaglia, Danzinger, Sannarnes, and Enemaerke. Fads and Facts of E-Government: A Review of the Impacts of E-government (2003-2009), International Journal of Public Administration, 2010
Today’s Presentation
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2
Why is Innovation So Difficult?
What’s the Challenge and Why Innovation is an Answer 1
Where’s the Federal Government?
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What is Innovation?
5 What are the Federal Opportunities?
6 Leading Innovation
Speak candidly about innovation challenges
Clear definition of risks and rewards
Leaders spend hands-on time Inspiration and collaboration:
“We can do it”
2000s leadership style The new leadership paradigm
Rarely talk about innovation No innovation definition or
metrics No leadership time spent on
innovation Leadership style is directive:
“Make it happen”
What’s Different About this New Management Style?
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Measures BU leaders on “courage” to drive out-year revenue growth Uses Six Sigma (quality) savings to fund innovation investments
Implemented a Run/Grow/Transform strategy
Created a strategic design capability in every BU Requires that 50% of new innovations come from outside the company
Managers Must Lead Innovation Differently
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Poll Question:
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1. Steward
2. Strategist
3. Revolutionary
What Should the Role of Federal CIOs Be?
IT Executive’s View of the Role of Their CIO
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05
101520253035404550
Steward Strategist Revolutionary
Deloitte: September, 2011 (survey of 1000 IT executives: How do you view your CIO?
Can the Government Learn to Fail Fast?
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Companies Can
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“We have to strike the right balance between being in touch and being in control. The irony is that the more in control we are, the more out of touch we become.” - A.G. Lafley, CEO Proctor and Gamble
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Permission
Passion
success zone
Senior management: •Declares an innovation intent •Sets conditions for innovation
The organization: • Establishes processes to
support innovation.
Your people: • Have the passion, they just need the
proper channels to unleash it.
Striking the Right Balance
Successful innovation requires marrying Passion, Permission, and Protocols
Processes
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Robert Atkinson [email protected]
facebook.com/innovationpolicy
www.innovationpolicy.org
www.youtube.com/user/techpolicy
www.itif.org
Twitter: @robatkinsonitif
Follow ITIF:
Thank You
