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Innovation expert speaks on the business-IT balancing act

Tom Koulopoulos is founder and CEO of the Delphi Group, a Boston-based consultancy focused on biztech leadership and strategy, and director of Perot Systems' Innovation Lab. He will arrive in Madison, Wisconsin this February to speak at the Fusion 2007 CEO-CIO Symposium. We asked him to share some of his insights into the ways business and information technology professionals can work together and be more effective.

WTN: What's the ideal situation for IT working with business processes, and just how far are most of us from that?

Koulopoulos: Pretty far from the ideal, is the short answer. My ideal scenario is much more involvement on the part of business, and actually much less involvement on the part of IT. It's just the opposite in most organizations that I've encountered.

To really do anything substantial and significant in how you rethink, much less re-engineer a business process, you really have to have intimate involvement on the part of the businesspeople. There are a lot of challenges you face when you try to get that involvement.

One, everyone is busy. Two, they probably don't understand the business processes that well. They understand their piece of it, but they usually don't have the purview and peripheral vision to understand the whole thing. Three, there's usually a lot of legacy, in terms of the business process, that doesn't need to be there, and they often are not in the position to see whether the legacy adds or does not add value.
You have to have businesspeople involved, willing to commit and take time to work through those issues.

WTN: What happens when they don't have the time?

Koulopoulos: What often ends up happening is IT steps in and says, "We've got the time, it's our job, our responsibility, let us help you with all that." Which is very noble, but the reality is they don't understand the process.

What you end up with is IT making a valiant effort to figure it out, putting in place a lot of things that are not, unfortunately, taking into consideration the legacy issues and the real intimate insight of the process.

Part of the problem is that the tools that many companies use to rethink and re-engineer their business processes aren't necessarily tools that are understood by a businessperson. They're IT tools, whether it's Visio or something more complex. There just aren't enough tools that the businessperson can use without a lot of education.

WTN: And many companies cannot afford to wait until they have a good structure for and knowledge of their existing business processes before they innovate. How do you move forward through what is often a mess?

Koulopoulos: There are two ways that people often think of innovation and business process re-engineering. One is the magnificent way. Let's tear it all apart and rebuild it on a clean sheet of paper. There are very few opportunities in the world where one can do that. Yet I think people often chase that as sort of a holy grail.

If you look at companies like Toyota, and what makes them excellent in business process, they don't look for the big bang. They look for the million different innovations every year that come from the most granular parts of the organization. The secret is, do you have a plan by which to capture those million innovations and orchestrate them?

WTN: What about IT innovation at Toyota?

Koulopoulos: The foundation really is leadership and culture. But from an IT standpoint, companies like Toyota have very sophisticated innovation management systems. They actually track innovations at an absurd level of detail. Toyota will claim that in any given year, they have upwards of one million distinct innovations that they can document.

So step number one is, are you documenting these great ideas that your people are coming up with? Without technology, you can't do that. You can't do that in the file cabinet, because you'll never be able to coordinate it.

WTN: How much do you see IT skills spreading among non-IT professionals in the next 5-10 years, and how will that affect the functions typically centralized in IT departments?

Koulopoulos: I wish there was more, because I think there's a very good case to be made. The reality I see is still distinct professions.

The IT professionals still are focusing on technology stuff and the business professionals are shying away from that, although necessarily becoming more technology savvy. I see more businesspeople becoming IT savvy than IT people becoming business savvy, and there is a lot that both communities can do to bridge that gap.

I don't see that as a failing of the IT community. In fact, this is going to sound like real anathema, I see it as a failing of the business community. I think businesspeople tend to be very protective of what they know and very arrogant about what they know, and tend to discount the degree to which anyone else can understand their process. So they tend to isolate IT and relegate IT to do the nuts and bolts stuff. But the reality is that you can't do that nuts and bolts stuff unless you know the process.

If you look at the classic model for flight training, pilots intimately understand the mechanical behaviors of the machine they're piloting, and they're very in tune with the way the machine works. If you talk to the engineers who build the machine, however, they can't necessarily fly it.

What you have in those disciplines is a tremendous mutual respect and collaboration between the folks who fly the machine and those who maintain it and build it and operate it. You don't see as much of that in business. There needs to be more.

I think what changes that is a much more intensive emphasis on the right kind of education for folks that choose an IT profession or track. Those folks don't tend to get a lot of exposure to things that someone studying operations or management might get.

WTN: Focusing on the CEO/COO level, how common do you think at least a top-level understanding of IT is?

Koulopoulos: Much more so. I've been hugely impressed with the degree to which CXO-level folks have taken on much more than I would expect in terms of educating themselves and understanding the trends in technology - as they apply to their business, naturally.

The relationship between the CEO and CIO, I think, has moved in a very positive direction. The introduction of CTOs as well as CIOs and the division of labor has been a very positive direction for a lot of companies. I'm encouraged at what's going on with that level of the organization. There's always going to be dysfunctional companies where for whatever reason the CEO doesn't want to get involved in technology, but that's not an area I end up losing a lot of sleep over.

WTN: What do you see as the most successful strategies for a CIO to become more integral to the business and have more input?

Koulopoulos: I'm not sure how I would generalize that. Where I do see it work, it tends to work because there's a very close relationship between the CEO and the CIO, and it evolves over some period of time because of personal chemistry. The other reason it evolves is because the CIO has spent a lot of time in that industry and understands that industry well. I don't know there is necessarily a way for a CIO to do that other than time on the job.

Tom Koulopoulos will be a keynote speaker at the Fusion 2007 CEO-CIO Symposium on the topic "Innovation that Matters: Finding and transforming your most vital business processes."

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