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The Intersection of Innovation & Governance Is Business Value

light bulbLike many things in life, more is not always more.  A great view of how even innovation must be mastered for business value was presented by Teradata CTO Stephen Brobst at the Teradata NorthEast User Group meeting this week.

The basic idea is that too much innovation is fun to work on, but scattered and of limited value to the business. On the other hand, too much governance on innovation and testing will result in severely limited results, demotivated teams and ceding market share to competitors.

Consider Stephen’s simple chart below, which he adapted from “The Digital Advantage,” a CapGemini/MIT Sloan study of what fast-moving digital innovation has meant for large, traditional companies.  That 2012 report found that firms which position themselves to capture the business benefits of digital innovation have a real market advantage.  “Get this balance of innovation and governance right and you will see a 4%-6% lift in profitability,” Stephen promised.

Innovation Chart

On the scale of innovation to governance, there are those with too much governance and no innovation – the cash cows (blue quadrant in this chart).  This is like the landline phone to AT&T:  Customers who have them pay the bills without protest, but the market will not grow.

On the other hand, too much innovation in the Fashionista quadrant (orange quadrant) is also not good for business.  Stephen likens it to how eight-year old kids play soccer – where every kid just races after the ball in a huddled game of chase on the field; utilizing little teamwork and scoring few goals..  “It’s fun – we chase big data, we chase Cloud, we chase Hadoop, we chase natural learning; we chase whatever new thing that comes along,” he said. “However, we don’t achieve much and we don’t align to strategic business goals.”  While you might hit some great new innovations in this quadrant, you are not likely to know why or be able to plan for that success.

No surprise that the real prize is up in the #TopRight corner, where the Digerati live (green quadrant).  These are the innovations that have the proper amount of business oversight so that they stay focused on real business drivers and strategic business value.  “You’ve got to have a business person at the table and helping to shape the project in order to keep innovation on track,” Stephen said.

It’s always great to hear IT people say that it’s important for marketing and IT to collaborate – especially as marketing departments invest so much today in technology and data management.  There are many gaps and misunderstandings between business and IT, which makes everyone’s jobs harder.   While too much security can be a bad thing, even if the intent is good; too much governance is not a good thing either.    “Data can’t be owned by everyone,” was a common mantra at the event this week.

We know at TopRight that in nearly every client situation, we find the need for an improved understanding of roles, process and governance. Marketers collaborate not just with IT colleagues, but with those in sales, service, legal, privacy.. and even with customers themselves.  Similarly, there are many projects proposed that will utilize new data types, but those must be linked to a current objective, in order to add business value.  For example, many companies can capture and analyze service comments on Twitter, but without linking those comments to actual customers, the analysis is not actionable.  In some cases, that effort might be better spent in analyzing call center data.

In our digital age, with socially connected consumers, we all have a new call to innovate with purpose.  It’s the responsible way to move the business forward and to the  #TopRight, and it’s also the only way to keep up with customers’ digital exploration of our brands.

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