This hack draws its inspiration from the way some places (e.g. Hong Kong in China or Trieste in Italy) have been designated Free Economic Zones in order to spur commerce. For an organization, one key step on the path to becoming truly adaptable is to define some business capabilities where more freedom is needed to be able to innovate more easily because innovation and differentiation in these areas is critical to the company. These areas should be defined as ”free innovation zones” with separate funding and special rules:
Four Key Characteristics of Free Innovation Zones:
Freedom of Environment - designed to operate separately and independently from the existing corporate environment.
Freedom of Funds - direct investments and incentives, provided in stages when idea advances to maturing stages, and increased applicability (applying to solve problems in real life cases).
Freedom of Procedures - simplification of procedures, in pursuit of objectives, free entrance, small committed resources and infrastructure support.
Freedom of Architecture and Standards – not limited to using existing platforms, technologies, and architectures standardized across the rest of the organization.
Just as with Free Economic Zones in countries, this approach is not right for every part of the organization. The reason why this approach should be limited to some business areas is to focus the innovative energy where it makes most strategic sense for the company. You might still be making the wrong bets but at least you are exploring a wider front.
In many companies the IT organization and solutions have become barriers and not a source of innovation. Focus on cost reductions and process efficiency has led to corporate-wide ERP systems and standardized infrastructure. Often a lot of innovative thinking has been invested in implementing these systems but when in place, they effectively lock down the company and changes become very costly and time consuming.
Define some business capabilities as "Free Innovation Zones"
These are areas where innovation and differentiation is critical
These will normally be value or revenue creating areas
Provide seed funding for initiatives in the "Free Innovation Zones"
Establish initiative pipeline separated from the traditional IT project pipeline with separate governance and budget
Simplify or remove requirements for business case or architectural fit to existing IT solutions
Three key considerations for funding:
Differentiate - Ideas that provide significant competitive advantage to current business model
Innovate - new ways or different ways of thinking of solving existing problems
Value - brings significant value to customers, or new sources of revenue to the organization
Require "sales effort" to line of business
Further funding of the initiatives to be done directly by the lines of business, outside of ordinary IT-funding governance
Once the initiative is proven successful, develop a framework of "replicating the success" to the rest of the business
Organizations may need to "forget the past" to create new futures. The Free Innovation Zones are areas where ideas of "futures" can be experimented without legacy constraints. The ideas in this hack could ease the business-driven IT innovation process in the areas where it matters most. At the same time the solid and cost efficient legacy IT-solutions will be protected in the other areas.
One other important impact is that nimble projects could also change the perception (and sometimes reality) of IT being a “dinosaur” and a barrier to innovation.
Identify business capabilities needed for future growth
Define a Free Innovation Zone around one or more of these areas (typically where IT struggles to cover demands because of lack of agility and too much focus on backbone systems)
Ensure seed funding for a few initiatives
Invite for ideas for innovation (with little formality)
Have business leaders in the zone select the best ideas (without being confined by IT restrictions)