IT always had to juggle between keeping the existing infrastructure running and adding new capacity. The stakes of such trade-offs have increased lately. CIOs are now under pressure to speed up and expand digital transformation in their enterprises. The 2021 State of CIO survey reveals 76% of them find such trade-offs challenging.

Here are four approaches by which successful IT teams make the trade-off between innovation and operations.

1. Deal with Uncertainty

The biggest challenge in the operations versus innovation trade-off is dealing with uncertainty. Operating a business is a structured process. Maintaining the IT infrastructure is routine work with quantifiable targets and predictability. In contrast, innovation is organic and unstructured territory.

Today’s fluid business environment values change. Only agile businesses, capable of changing fast to adapt to the changing external environment, thrive. Innovation speeds up time-to-market, delivers better faster, and improves the quality of service. For instance, when COVID-19 struck, enterprises stared at the challenge of going digital overnight or shut shop. Most of them relied on innovation to find creative solutions for everything from sales to onboarding new employees and more.

Lenovo worked to deploy new chatbots for end-user services during the pandemic. The team learned new skills in data modeling, NLP, and conversational frameworks to make it happen.

Even before the pandemic, proactive CIOs innovated to improve the resiliency of their IT infrastructure. They launched several initiatives, focused on migrating to the cloud, data-driven analytics solutions, and more.

Such innovation leads to new operating models, which, over time, become predictable. But before long, the fluid business environment and fickle customer preferences mandate fresh rounds of innovation.

Successful CIOs live with such uncertainty. They:

• Retire legacy systems as a matter of routine to mitigate unplanned disruption.
• Reconcile the needs of agile project management with day-to-day operational needs.
• Create separate teams for operations and innovation wherever possible. Segregate innovation teams to ensure people engaged with core operations platforms do not lose focus.

2. Maintain Stability

Innovation causes changes to processes and disrupts operations. It may even retard operational excellence in the short term. Many IT teams deploy and harness innovation to drive operational improvements. The challenge before CIOs is to maintain stability in operations while rolling out such innovative business models.

Consider Prudential insurance, which introduced Immediate Response claims handling. The innovation enabled clients to engage with a claim representative round-the-clock. Adjusters worked out of mobile claims vans, outside the office. They examined the vehicle and process claims in just nine hours, down from nine to ten days earlier. But such innovation rarely works in isolation. It requires complementary operational support. Prudential Insurance introduced a new 800 helpline number and ramped up its website. These measures helped the company maintain operational stability despite the innovative business model.

Successful CIOs promote innovation but ensure such innovation does not cause big-time disruption to operations. They:

• • Approach innovation as symbiotic with operations, with one feeding the other.
  • Support team members to adjust and sustain operational excellence during the transition. This requires a multi-pronged approach to training and competency building.
  • Make sure the changes align with long-term strategy and values. They never attempt change just because everyone else is doing it.
  • Invest in automated testing and deployment processes to increase development velocity.

3. Integrate Innovation to Operational Culture

The best tech firms go beyond the “and/or” approach to operations versus innovation. They integrate innovation as part of the core company culture.

Many enterprises mistake operational innovation with operational improvement. Innovation improves operations. But meaningful innovation comes with path-breaking stuff, to do new things, or to do old things differently. Operational improvement reduces errors, costs, and delays without changing the way of work.

Consider Wal-Mart’s innovation with cross-docking. When suppliers brought goods into a distribution centre, the company transferred them into a store-bound truck immediately. The move eliminated warehouse storage, and the associated costs, completely. This had a different impact than rearranging the warehouse racks for efficiency improvements. But the COVID-19 pandemic disrupted this model, as lockdowns disrupted supply chains. Enduring success depends on developing a culture that supports such innovation.

Successful CIOs drive home a culture of change, where the team is not afraid of forsaking the good to attain the great. They:

• Build trust among the workforce to gain acceptance of disruptive changes brought about by innovation. When there is trust, there is lesser resistance to change. The rank-and-file employees cope to keep operations disruption-free to the extent possible.
• Ensure commitment to enterprise values while innovating. This ensures the change is palatable to the rank-and-file.
• Support learning. Innovation thrives only when team members are competent and knowledgeable to experiment.

4. Cater to Customer Expectations

The adage, “if it ain’t broke, don’t fix it” no longer works. The status quo is the road to obsolesce in today’s digital era.

The biggest push to digital transformation comes from customers. In today’s competitive business environment, no business can afford to ignore the customer. And today’s customers are fickle.

Best-in-breed businesses encourage innovation to become more competitive. But they give priority to areas that impact the customer experience. For instance, software majors focus on how to deliver the best product and toolkit for customers.

Consider Lenovo’s tryst with machine learning models. The innovation strengthened the supply chain, improved process efficiency, and helped the company meet delivery dates even during high customer demand.

Successful CIOs keep the customer first in everything they do. They approach the operations versus innovation conundrum to delight customers. They:

• Direct the innovation to lower costs, and pass on the benefits to customers as lower prices for the products.
• Support collaborative technologies and processes that ingrain innovation with operations, to speed up time-to-market.
• Focus on innovative measures that sustain customer engagement for the long haul.

[Read: More IT innovation success stories during the COVID-19 pandemic.]

Operational excellence is critical for the short-term sustainability of the business. Innovation leads to long-term sustainability. Successful IT teams strike the right trade-off between these two critical activities. For them, innovation and operational excellence become complimentary.

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