The Transformational CIO: Leadership and Innovation Strategies for IT Executives in a Rapidly Changing World

The New Yin and Yang of IT

Innovative use of technology is a prime requisite for success in today's markets. It's not the only requisite, but it's difficult to imagine an organization succeeding without it.

From the CIO's perspective, however, it seems impossible to consider innovation without considering costs. In the CIO's mind, innovation is inextricably linked with applications development. By the common calculus of IT budgeting, resources for apps development are created by extracting fixed costs from IT operations (i.e., “keeping the lights on”).

But that means the CIO always has to justify new spending by showing how much money it will save. That kind of approach made sense 18 months ago, but as the competition heats up again, it doesn't seem like a formula for growth. As an old boss used to say, you can never save your way to greatness.

I submit that a new equation needs to be written. Instead of trying to balance innovation and cost cutting, the new formula balances innovation and value creation. After all, what really matters to the business, creating value or cutting costs? You already know the answer.

For the next couple of years, at least, the role of the CIO will be to navigate a practical course away from the old paradigm, which forced every IT expense to be counterbalanced by an anticipated savings, and move toward a new paradigm in which IT investments are justified by how much value they will create.

The “old” yin-yang was innovation and cost savings; the “new” ...