As the last hundred years have shown, successful innovations rise from not only great technologies, but also excellent business models.

Ford’s production line, for a standardized product, was as much a story of process technology as of great business-model insight. EBay’s auction site couples great technology with the ability to leverage network economics.

Each enterprise will require a different combination of technology and business-model change to effect innovation, and each type of innovation will require tailored management practices. What can a CIO do about that? The answer: lots—if he or she understands the process of innovation and the role that information technologies play.

For any organization, investing in innovation and innovative processes creates an opportunity to grow by bringing improved products and services to the market. In addition, a company can innovate to alter the competitive landscape. Consider how Apple Computer shifted the competitive environment with its iPod and iTunes innovations. In the same way, Southwest Airlines developed a unique business model that avoided hubs.

Innovation is a management process that, to be effective, requires tailor-made tools and management systems. And when a company’s innovation engine runs properly, innovation becomes a steady source of value, rather than a series of isolated, random events.



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