Innovate Like a Startup: The CIO's

Front-Office Toolkit

Richard Hunter
VP and Gartner Fellow
September 2013

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The Game Changed
in the Front Office
The Game Changed
in the Front Office

New Rules New Practices

• Drive differentiation • Mine the front office for ideas
• Don't follow — lead • Focus on capabilities
• Hunt in packs • Harness microinnovation
• Don't fight shadow IT • Implement a new solution life
cycle
• It's OK to be IT again
• Build on flexible
infrastructure
Most IT organizations that succeed in the front office create a
new team with new roles, responsibilities and operating model
The Game Changed
in the Front Office

Is a Startup
Need
What
We

Inside Our IT
We need new engagement methods, ways to discover
innovations and new measures for success that are totally
distinct from traditional IT
Meet Your Guides …
Janet
A new CIO and CDO of a boutique
retailer, she is digitalizing her business
model for the first time

Phil
An established government CIO for an
agency with offices worldwide, he is
trying to balance local agility with
efficiency at scale
 Confronted
They Are
With Three
Challenges

The Innovation A Way to Learn A Means to

Catch-22 and Experiment Measure Success
Overcoming the
Innovation Catch-22
 Overcoming the
Innovation Catch-22 Definition

Exploring for opportunities is vexing

• You need to understand business problems at a "doer"
level
• The people you need access to in order to develop
this understanding have no incentive to talk to you:
- They make money today without you, and they will
make money tomorrow without you

You can't get close if you haven't done something; you can't do
something unless you're close
 Overcoming the
Innovation Catch-22 Your Starting Capital

Invest in understanding
• Learn how particular business leaders make money
• Use a "power map" to understand relationships and
politics
• Identify the "moments of truth," and get your people
next to the right people

"Don't ask, 'How can I help?' If you do — you're not adding

any value to the conversation …"
 Overcoming the
Innovation Catch-22 Do IT Differently

Most back-office IT is about automating

processes
• The front office is not process-based — it is powered by
moments of truth:
- A moment when the customer experience is defined — an
inflection point that determines whether the enterprise mission
succeeds or fails
- A moment of truth is usually person to person, or a point where
individual creativity and decision making determine the
outcome

"Technology's role in the front office is to enable better

outcomes for moments of truth …"
 Overcoming the
Innovation Catch-22 Know Where to Look
Map business processes to the Gartner Business Model
Framework to get an overall view of where moments of truth
can be found

Understanding Supplier Relationship

Buying Patterns Management

Sourcing Unique Items

Bundling Packages

The personal Shopping Experience

Personal Offers

Custom Requests

"I knew I could not explore with everyone, but the business model
helped me think about where to explore and with whom to try to
form relationships …"
 Overcoming the
Innovation Catch-22 Know Where to Look
Use the Gartner Business Value Model to compare
measurements to find and qualify moments of truth

"Correlating the KPIs let us drill down a level and develop to find
the moments of truth …"
Overcoming the
Innovation Catch-22 Find the Right People

"I developed my understanding of the moments of truth

as an initial innovation exercise — a business hack-a-
thon, as it were, which helped me identify people who
would be successful in my startup …
I looked for problem identifiers, not just
problem solvers"

"I have a long history with the agency, and I ran a more
targeted effort focused on recruiting people from
populations who would have more 'frontline' support
expertise, and who would be naturally interested in
this work …"
 Overcoming the
Innovation Catch-22 Summary

Stake out your territory, and know what

you're looking for
• Look for moments of truth, not processes — aim to
find ways to use technology to create or enhance
these inflection points
• Understanding these will help you identify gifts to
bring to get front-office people to engage,
overcoming IT's front-office Catch-22
• This initial exercise takes effort, but it's a good way
to identify the right people
A Way to Learn
and Experiment
 A Way to Learn
and Experiment
The Issue

Innovation requires experimentation, which

requires tolerance of failure — and most
businesses are not tolerant of failure
• Saying you'll "fail fast" still sounds expensive
• Claiming to "measure what you learn" sounds fluffy
• IT departments tend to be very risk-averse

"The startup experimentation process is extremely prone to risk.

There's plenty of opportunity for mistakes to be made. But with the IT
mindset, we were not getting anywhere in discovering things that were
going to be of value, or uncovering what we could actually do."
A Way to Learn
And Experiment
The Breakthrough Idea
"My breakthrough came after watching a Sherlock
Holmes movie. We needed our startup team to act like
detectives!"

• Detective work "leads" to close cases — not all leads pan out;
in fact, most don't
• Operational excellence resides in:
- Identifying dead-end leads and closing them quickly, and tracking
the evidence gathered
- Developing new leads by processing evidence
• This sounds like a semantic change — it isn't!
- Cases are opened based on a testable hypothesis; so leads, too,
must be testable
- Cases progress based primarily on "physical evidence"
- Detectives are rightly distrustful of "eyewitness testimony" (aka
business requirements)
 A Way to Learn
and Experiment
Tools You Can Use
"After meeting Phil at Gartner Symposium, I and my
team went 'all in' building tools for our detective agency
…"

The Master
Case File
Tracks
progress and
resources, as
well as what
the team
learns as it
develops and
closes leads
 A Way to Learn
And Experiment
Tools You Can Use

A Screening
Mechanism
for Cases
Makes sure
we are
investing time
in places that
will yield
benefits
beyond just
ROI
A Way to Learn
and Experiment
Tools You Can Use

A lead management tool to measure

learning, and how quickly we develop new
leads and close existing ones

"The key behind all these is that they're data-driven and

they are focused on capturing what you learn as much
as what one accomplishes …"
 A Way to Learn
and Experiment The Key Detective Disciplines

Startup detectives use empathic and

outside-in design techniques
• Is driven by A/B market testing of ideas and new
functionality
• Is centered around the customer experience
• Shifts work effort from the user or customer to the
enterprise
• Relies on testable data to drive requirements

"These same techniques are widely used by top startups

and Silicon Valley success stories (Google, Intuit) …"
A Way to Learn
and Experiment
Summary

• In traditional IT approaches, users ("witnesses")

provide requirements ("testimony"), and IT accepts
those at face value
• "Detectives" in an IT startup don't take witness
testimony at face value, because witnesses are
notoriously unreliable
• Detectives in an IT startup look for physical and
circumstantial evidence, and they cultivate more
evidence using outside-in or empathic design
techniques
"What's really amazing is that I was able to take some of these
same techniques and tools, and use them to drive greater
productivity in my back-office development as well"
A Means to
Measure Success
 A Means to
Measure Success

Rethink value measures so you don't get stuck between

an unstoppable force and an immovable object
 A Means to
Measure Success Enhance Value by "Farming"

We want to extract more value from our

innovations and our relationships
• Continue to build relationships with front-office leaders
and managers
• Continue to explore to find more moments of truth
• Tune the efficiency of solutions as well as their
effectiveness

"Farming lets us extract more value in a formal way

without overinvesting — we don't want to jump to
industrialization too fast "
A Means to
Measure Success Measure Business Outcomes

"Our approaches within this startup are creating

positive business outcomes. Our metrics show we sell
more and are enjoying increases in customer loyalty,
lifetime customer value and associate satisfaction. As
all of these outcome-based measures that would be
important to most enterprises started to happen, my
partners and constituents became happier, and more
and more money was thrown at us."
A Means to
Measure Success Demonstrate Improving Efficiency
and Effectiveness for the "Squad"

"It got back to the same kind of 'aha!' moment we had in design
— we need to measure ourselves like we are detectives. Given
that, what are the most effective measures (absent the number
of cases solved, which show, given the business outcomes, we
are obviously doing well) to tell me whether I need 20 detectives
or I can get by with 15?"
 A Means to
Measure Success Summary

• Success creates higher expectations all around —

be prepared to answer questions from the CFO.
• An explicit "farming" step can help you extract more
value from innovations and avoid the cost of
industrializing too soon.
• The "detective" approach works here, too. Measure
your performance and improvements like detectives
do: time to close cases and leads, number of
"successful prosecutions," and so on.
Recommended Gartner Research
 The Game Changes in the Front Office
Leigh McMullen, Patrick Meehan (G00232333)
 Building the IT Brand: Impacting the Front Office and
Beyond
Patrick Meehan, Leigh McMullen (G00226621)
 Don't Waste a Crisis: Becoming an Engaged IT
Organization
Patrick Meehan and others (G00212281)
 Stop Trying to Manage Demand, Generate It
Leigh McMullen, Colleen Young (G00235969)
 Four Futures and Their Implications for IT
Colleen Young, Leigh McMullen (G00232796)

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