May 27, 2011 (08:05 PM EDT)
Innovation Atrophy: How Companies Can Fight It

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These days, information technology giveth.

Web-enabled mobile devices and applications are the biggest game changers since the PC. The cloud has redefined how we think about computing power and even the need for data centers. Big data analytics are a looming business opportunity. The Windows desktop is giving way to a variety of devices--tablets, smartphones, maybe even Google rent-a-Chromes, all working alongside conventional PCs and laptops. IT is being embedded in everything from cars to slot machines to handheld checkout devices in retail stores.

It's a whirlwind of potential that business technologists can help their companies seize. So why aren't people more fired up about doing that?

When InformationWeek, in our 2011 U.S. IT Salary Survey, asked IT professionals about their most important job attributes, the ability to work on creating new, innovative IT solutions was cited by only 20% of IT staff, down 11 points from 2009's survey. A mere 21% cited working with leading-edge technology--a five-point drop from 2009. Just 39% cited the challenge and responsibility of the job as an attribute, a decline of eight points. Hardly the stuff of a profession facing the opportunities of a lifetime.

ADP CIO Mike Capone saw this mood recently at a breakfast meeting with IT pros from other companies around New York City, which led him to give an impromptu pep talk. Based on the questions and discussion that ensued, it became clear that a lot of the attendees felt "beaten down" by cost cutting and left out of company strategy, he says.

David Guzman, CIO of the marketing data and technology company Acxiom, thinks IT leaders evaluating their innovation strategies need to start by acknowledging reality--that cost cutting has dominated the business environment and taken its toll on the troops. "All investment in IT has had to be very ROI-focused," Guzman says. "It's part of what we've had to do to keep pace with the business."

Dell CIO Robin Johnson looks at the InformationWeek salary survey data showing diminished interest in working on the newest technologies and isn't at all worried. In fact, "I think we have far too much of a focus on new technology," he says.

At every IT team meeting, Johnson reminds his people that they're in the business of making Dell's business run better, not implementing technology for technology's sake. Johnson has a dedicated innovation team. But starting with what a technology can do, instead of a business goal like cutting order-to-cash time, has led to a lot of folly for IT operations. One way to interpret the data from our salary survey, he says, is that "IT has grown up a lot."

That's good, as long as it doesn't mean that those youthful innovation muscles have gone flabby in the process. The danger is innovation atrophy, a condition where risk taking and daring become so neglected amid belt tightening, quick ROI, outsourcing, and plain old fear that IT pros forget how to take a chance on a big, potentially brilliant idea.

Even the most successful companies must constantly guard against innovation atrophy. Bill McNabb, CEO of mutual fund giant Vanguard, saw his company seize the Web to reshape its operations--from being a company dependent on the phone and mail for customer relations to one in which Web interactions are the norm. Sometime after that flurry of Web innovation, though, the company hit what McNabb calls "a bit of a lull in innovation." In an effort to get more high-impact projects into the mix, Vanguard's leadership took steps to create ad hoc project teams geared to the rapid development of prototypes. In 2010, Vanguard was at the top of the InformationWeek 500, our annual ranking of IT innovators.

Fostering innovation should be high on every CIO's priority list, as companies shift into growth mode as the economy recovers. (See 4 Steps To Spark Innovation.) Their approaches, however, must be consistent with their companies' culture, such as their tolerance for risk and failure, or how far into the future they're planning. Following are some of the key questions CIOs must consider as they look to build innovation muscle or tone up after extended inactivity.

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