IT Innovation in the Federal Government

504 views

Published on

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.

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
504
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
11
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

IT Innovation in the Federal Government

  1. 1. October 24, 2011IT Innovation in the FederalGovernmentACT-IAC 2011 Executive LeadershipConferencePresented by:Rob Atkinson, President, ITIF
  2. 2. 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 2
  3. 3. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 3
  4. 4. What’s the Challenge? 4
  5. 5. What’s the Challenge? 5
  6. 6. What’s the Answer? InnovationInnovation Can Cut Costs  The Tech CEO Council estimates that better use of IT could save the federal government over $1 trillion by 2020Innovation Can Boost Citizen Satisfaction 6
  7. 7. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 7
  8. 8. What is Innovation? 8
  9. 9. Innovation is Different from Quality–and Comes in Different Degrees modest radical change degree of change change Improving what you already do Creating new elements quality of value and systems-centric differentiation process-centric improvement-oriented innovation customer-centric design-based Exploiting known Exploring unknown creation-oriented certainties possibilities incremental architectural discontinuous Degrees of innovation Incremental innovations Architectural innovations Discontinuous innovations involve small involve incorporating new occur when an advance is improvements to an technology and processes so powerful, it makes oldexisting product or process to change business products or processes to enhance efficiency. elements. obsolete 9
  10. 10. There are Ten Types of Innovation 1. Business model 5. Product performance how the enterprise makes money basic features, performance and functionality 2. Networking 6. Product system enterprise’s structure/ extended system that surrounds an offering value chain 7. Service how you service your customers Finance Process. Offering Delivery Business Networking Enabling Core Service/prod. Svc/prod Service Channel Brand Customer model process process performance system experience 8. Channel how you connect your offerings 3. Enabling process to your customers assembled capabilities 9. Brand how you express your offering’s 4. Core process benefit to customers proprietary processes that add value 10. Customer experience how you create an overall“Ten types of Innovation” by Larry Keeley/Doblin Inc. experience for customers 10
  11. 11. 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). 11
  12. 12. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 12
  13. 13. Federal IT Challenges Customer-facing challenges:  Too many web sites still hard to use  Too many web sites still organized around agencies and bureaus 13
  14. 14. Users Rate E-gov Websites Lower Than E-commerce Sites 8.4 E-Government/Agency 8.2 8.146 E-Business/Company 8 7.8 7.78 7.6 7.679 7.704 7.4 7.484 7.449 7.382 7.391 7.2 7.279 7 6.995 6.8 6.6 6.4 Customization Organization Navigation Overall Statisfaction Comparison to IdealSource: Forrest V. Morgeson III and Sunil Mithas. Does E-Government Measure Up to E-Business? Comparing End User Perceptions of U.S. FederalGovernment and E-Business Web Sites. (Public Administration Review, 2009).
  15. 15. The Range of Satisfaction is Higher for E-gov Sites 10 E-Government/Agency E-Business/Company 9 8.7 8.2 8 7.9 7 6.6 6Source: Forrest V. Morgeson III and Sunil Mithas. Does E-Government Measure Up to E-Business? Comparing End User Perceptions of U.S. FederalGovernment and E-Business Web Sites. (Public Administration Review, 2009).
  16. 16. 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). 16
  17. 17. 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 17
  18. 18. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 18
  19. 19. Innovation is Challenging, Rare, and Often Frightening Hey, let’s innovate! 19
  20. 20. Innovation Isn’t Easy – Some Puzzles to PonderWhy 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 createSouthwest?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. 20
  21. 21. The Innovator’s Challenge is to Exploit and Explore Simultaneously Game-Changing Innovations exploit explore Incremental Architectural DiscontinuousResearch Typically found within your core business Originate from discovery-oriented activities Originate from continuous improvement efforts Often found at the margins of your core business Enabled through OTS components May require significant enabling technologies May require coordination across lines of businessDev Implemented within a current line of business External partnerships, if any, are straightforward Often require major external partnershipsFunding Fit within your existing business model May run counter to your current business model ROI is modest but clear-cut ROI is uncertain but upside potential is significant 21
  22. 22. IT Investment is Necessary 22
  23. 23. National Governments Invest More in IT IT$/Share of Revenue 9 8 7 6 5 4 3 2 1 0 National governments AverageSource: Gartner, 2011 23
  24. 24. National Governments Invest More in IT IT$/per Worker 15,000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 National governments AverageSource: Gartner, 2011 24
  25. 25. Installed TB per Employee 0.40.35 0.30.25 0.2 0.35 0.320.15 0.26 0.1 0.13 0.130.05 0.11 0.08 0.08 0.06 0.06 0.06 0.05 0.02 0.01 0 Source: Rubin Worldwide, 2011
  26. 26. 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.” 26
  27. 27. Organizational Change is Also RequiredA distinct corporate culture and organizational practicesare found in most corporations that make extensive use ofIT and the Internet. They:1. Move from paper-based to digital business processes2. Empower front line service personnel3. Foster open information access4. Link incentives to performance5. Maintain focus and communicate goals6. Hire the best people7. Invest in human capital Erik Brynjolffson 27
  28. 28. Higher Profitability Accrues to Firms That Get Both Right Profitability 28
  29. 29. McKinsey Finds the Same Result % increase in total productivity75th +percentile  There are productivityand above +8% +20% gains from simply Management practice score automating processes.  Yet the biggest productivity gains are achieved when IT investments are 0 +2% combined with changes25th in business practices.percentileand below  This is hard and takes _ Intensity of IT Deployment + lots of time and effort. 25th percentile 75th percentile and below and aboveSource: LSE – McKinsey survey and analysis of 100 US, UK, French, German companies, 1994-2002 29
  30. 30. As Does Rubin Worldwide 30
  31. 31. So Where is the Federal Government? Profitability 31
  32. 32. USG = Japanese Enterprises? = 32
  33. 33. IT investment by asset in OECD countries, 2007,percent of non-residential capital formation 30 25 20 15 10 5 0 Software Communication equipment IT equipment 33
  34. 34. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 34
  35. 35. OpportunitiesData-driven policy 35
  36. 36. OpportunitiesData-driven policyIT platforms 36
  37. 37. OpportunitiesData-driven policyIT platformsPartnerships 37
  38. 38. Partner with Private Sector:Partnership 38
  39. 39. Partner with private sector:PartnershipGo it alone 39
  40. 40. OpportunitiesData-driven policyIT platformsPartnershipsAutomation 40
  41. 41. IT Impacts on Public Sector Capabilities(positive – negative impacts) 120 100 80 60 40 20 0 Improved Staff Reduction Data access Control ServicesSource: Anderson, Henriksen, Medaglia, Danzinger, Sannarnes, and Enemaerke. Fads and Facts of E-Government: A Review of the Impactsof E-government (2003-2009), International Journal of Public Administration, 2010 41
  42. 42. Today’s Presentation 1 What’s the Challenge and Why Innovation is an Answer 2 What is Innovation? 3 Where’s the Federal Government? 4 Why is Innovation So Difficult? 5 What are the Federal Opportunities? 6 Leading Innovation 42
  43. 43. What’s Different About this New Management Style? 2000s leadership style The new leadership paradigm Rarely talk about innovation  Speak candidly about No innovation definition or innovation challenges metrics  Clear definition of risks and No leadership time spent on rewards innovation  Leaders spend hands-on time Leadership style is directive:  Inspiration and collaboration: “Make it happen” “We can do it” 43
  44. 44. Managers Must Lead Innovation DifferentlyCreated a strategic design Implemented acapability in every BU Measures BU leaders on Run/Grow/Transform “courage” to drive out-year strategyRequires that 50% of new revenue growthinnovations come fromoutside the company Uses Six Sigma (quality) savings to fund innovation investments 44
  45. 45. Poll Question:What Should the Role of Federal CIOs Be? 1. Steward 2. Strategist 3. Revolutionary 45
  46. 46. IT Executive’s View of the Role of Their CIO 50 45 40 35 30 25 20 15 10 5 0 Steward Strategist RevolutionaryDeloitte: September, 2011 (survey of 1000 IT executives: How do you view yourCIO? 46
  47. 47. Can the Government Learn to Fail Fast? 47
  48. 48. Companies Can 48
  49. 49. “We have to strike the right balance betweenbeing in touch and being in control. Theirony is that the more in control we are, themore out of touch we become.”- A.G. Lafley, CEO Proctor and Gamble 49
  50. 50. Striking the Right Balance Successful innovation requires marrying Passion, Permission, and ProtocolsSenior management: •Declares an innovation intent The organization: •Sets conditions for innovation Permission • Establishes processes to support innovation. Processes success zoneYour people: • Have the passion, they just need the Passion proper channels to unleash it. 50
  51. 51. Thank YouRobert Atkinson ratkinson@itif.org Follow ITIF: facebook.com/innovationpolicy www.innovationpolicy.org www.youtube.com/user/techpolicy www.itif.org Twitter: @robatkinsonitif

×