In an age when innovation can bring revolutionary change to organizations and their leaders, many corporations are looking for alternatives to perpetually adopting external disruptions.
But investing in innovation can be a gamble, and how an organization measures the value of innovation programs can impact its willingness to invest a second time. CIOs and IT teams are often tasked with finding metrics that assess the worth of an innovation program, even when that worth isn’t necessarily best represented with a dollar sign.
I spoke with Stephen Fridakis, Chief Information Security Officer at HBO, about this contradiction. He’ll be leading a group discussion session on Measuring ROI for Innovation Programs at the upcoming New York CIO Strategy Meeting on April 27th.
Start Small, Start Smart
Fridakis is a firm advocate for investing in innovation, but he advises thorough consideration before committing to a program. “Each innovation effort should include an understanding of potential gains and start in a small scale,” Fridakis says. He recommends getting everyone on board before taking the leap. “Programs should start with careful insight into opportunities via inquiries with stakeholders, clients and other interested parties.” Before pulling the trigger on a new idea, Fridakis suggests due diligence. “Once an idea has been identified, it needs to be connected to a well-understood business problem and then discussed and evaluated from that perspective.”
Risk Failure, Foster Innovation
Unearthing the potential of new ideas is a company-wide commitment. “The risk of failure typically holds innovative ideas back from being exercised. Disruption requires challenging the status quo and introducing new methods or questions into what ‘has been working’ for years.” In addressing the necessity of cultivating fresh tactics, Fridakis says, “Any business that does not innovate is doomed. Managers need to foster an environment that encourages anyone to question and speak up when they have better ways of doing things.”
Reward Your “Intrepreneur”
In Fridakis’s experience, the most stimulating environment for innovation is one that involves rewarding good innovators. He mentions companies that utilize patent-incentive programs as an example of a functional reward system. “Organizations that foster innovation allow individuals to work outside their prescribed tasks and actually test, document and try out their new ideas while rewarding them for it.”
“Any business that does not innovate is doomed. Managers need to foster an environment that encourages anyone to question and speak up when they have better ways of doing things.”
Embrace Flexibility
Even when an idea seems like a safe bet, there’s no guarantee that implementation will pay off. Fridakis approaches this challenge with an attitude of discovery and a willingness to learn from experience. “ROI is typically considered the amount saved or realized minus the cost to invest. However, in my experience, measuring the return on technology investment is not strictly a financial formula, but is a formula that is based on many factors, including hard-to-quantify things such as organizational culture, training, and readiness for adoption.”
Navigating through the daily disruptions caused by social media, IoT, and mobile business is the new reality. Innovation is necessary in order to remain relevant as an organization, but measuring that innovation’s success will continue to require care and consideration.
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What methods do you use to measure ROI on investment programs? Let us know in the comments, and join the conversation at NCS Madison’s upcoming CIO Strategy Meeting on April 27th in New York, NY. Email Jason Walter at jwalter@ncsmadison.com for details.