Instead, a junior programmer came up with the idea to build a click-to-order option that viewers could use instantly with their remotes. The programmer approached his manager and got the OK to build a prototype, which he delivered within months.

The click-to-order feature, which started rolling out in 2007, boosted self-service orders from 5% to 55% in just one month, cutting costs and inspiring click-to-order uses in other areas of the FiOS lineup too.

“He hit a gold mine,” says Shaygan Kheradpir, CIO at Verizon Communications Inc.

Kheradpir says the junior programmer’s ability to run with an innovative idea wasn’t a fluke; Verizon’s IT shop is designed to enable that kind of innovation to happen again and again.

“The underlying mission for Verizon IT is to look for opportunities where IT can make a quantum leap in performance for the business,” Kheradpir says.

The Building Blocks of Innovation

IT leaders at other companies share Kheradpir’s outlook. The keys to making innovation a sustainable process, they say, include understanding the business inside and out, setting up a team dedicated to trying new ideas, and not being afraid to fail.

Verizon Communications

For Kheradpir, innovation in IT is all about giving workers opportunities to see and develop ideas that they think can make a difference in the company’s business, whether it’s in product offerings, customer service or cost control.

But to do that, Kheradpir says, his staffers can’t be isolated from the employees working in the company’s other divisions. So he sends his teams into the field to see how their business-side colleagues do their jobs.

“You’re going to dream a lot better stuff if you’re side by side with the front line — in the call center, in the stores, in the trucks, doing installations in people’s homes,” Kheradpir says. “That’s where you see the real problems and opportunities. And that’s where you can make a difference.”

Indeed, the junior programmer who developed the click-to-order function had been riding around with a technician doing home installations, which gave him the opportunity to ponder how to make FiOS TV installations more effective.

However, Kheradpir acknowledges that an IT organization has to do more than allow inquisitive programmers insight into operations if it wants to capitalize on breakthrough ideas.

To that end, Verizon has established a way to follow up on innovative proposals, he says. Workers are encouraged to take their ideas to their supervisors, who are expected to help build on them. If it looks like an idea could work, the process keeps going. Workers form partnerships with their connections on the business side, and they develop plans with milestones that allow the team to learn and correct as they go.

“We ask, ‘Tomorrow, 8 a.m., what are we going to do different? What are you going to show me next week? So we give them a little bit of leeway and see what they can do,” Kheradpir says. “So through this process, if they keep going and we see some proof of concept and we see it’s a big idea, we start to give more resources and really blast out the thing.”

Kheradpir calls it “disciplined innovation with focus and accountability.”

Inttra Inc.

Jeffrey Pattison says that when he started as CIO at Inttra Inc., a Parsippany, N.J., company that provides e-commerce systems to the ocean freight industry, he inherited an IT group that was “innovation-averse.” The staffers felt their main job was “to pump transactions through.”

But Pattison wanted a staff that wasn’t afraid to stretch, so he established some new expectations and policies to support innovation. He let his staffers know that they didn’t have to have all the answers to start working on an idea. He let them know that they could make mistakes and recover. And he created a special R&D unit charged with mocking up new possibilities.

“That’s how you encourage innovation,” Pattison says. “It’s in how it’s staffed, how it’s organized, how it partners with the business.”

He says one of the most important steps has been the creation of a separate group of about 10 workers who are freed up from routine responsibilities. “You really need to have an R&D department, so when they have an idea, we have the bandwidth to model it out and mock it up,” he says. “Because if you don’t protect your innovators from the day-to-day stuff, you won’t be able to innovate.”

But Pattison says his promotion of innovation comes with some checks. His innovators have some leeway, but they also need to focus on delivering innovations that drive business results. “You can’t innovate in a vacuum, not in our industry. So you have to look at what is the end goal,” he says.

To help ensure that that happens, the IT innovators partner with others in the business to better understand where changes and improvements are needed. For example, they recently met with international shippers to evaluate what’s needed in a new electronic freight payment settlement program that’s in the works.

Harrah’s Entertainment Inc.

As part of her job as chief technology officer at Harrah’s Entertainment, Katrina Lane oversees a small team of workers who make up the casino operator’s innovation group. Lane says this seven-person team looks at the latest technology to figure out whether any of it can further the Las Vegas company’s business goals.

This innovation group, which Lane says has only a modest budget, is not expected to calculate investment paybacks or develop business requirements. Its charge is to figure out whether a technology is worth pursuing.

Lane says she expects the group to fail at least 50% of the time. “If it doesn’t, then we figure they’re not stretching enough,” she says. She notes that failure could mean that a technology didn’t work or that it worked but didn’t deliver the expected business results.

Lane says it’s important to have people dedicated to this task.

“You do need to have people doing that as their day job or you’ll focus a little bit too much on incrementality,” Lane says, adding that the group works on delivering near-term business results as well as thinking about long-term objectives. “We do focus with the group on both shorter and longer term, so we can have immediate business impact as well as pie-in-the-sky technologies.”

Consider, she says, her innovation group’s search for technologies to help handle food and beverage orders on the casino floors. Harrah’s is already rolling out self-service programs at slot machines, where gamblers can order through a small touch screen that’s right at their fingertips. But the innovation group is looking beyond that, working with service managers to study how servers now wait on customers in other areas of the casinos, such as at the gaming tables.

“They did a lot of work around figuring out the details of how it ought to work and the processes so we can think of technologies to support those processes,” Lane says.

She asserts that it’s crucial to manage the innovation process; it’s not something that will happen on its own. “There have to be strong metrics, timelines and processes, such as how you get to rollout. It’s not all research and dreamy,” she says. “Innovation is a systematic process. It’s like research and development. You have to manage your pipeline.”

Accenture PLC

In order to continually deliver innovations, an organization must have its technical house in order, says Frank Modruson, CIO at Accenture. “You can’t focus on innovation if you’re not doing the basics well,” he says. “If systems aren’t working, aren’t functional, aren’t secure — all the standard stuff — talking about that gee-whiz thing over there won’t cut the mustard.”

Modruson says Accenture has gotten rid of its legacy technology. The consulting and IT services firm replaced its telecommunications network between 2007 and 2009, and its oldest applications go back only about 10 years.

Modruson says handling the everyday duties of IT is important because it makes rolling out innovations easier. “The last thing you want is to have a success and then say, ‘Wait a minute. We can’t do this everywhere,’ ” he says.

For example, the company started using Cisco Systems Inc.’s TelePresence, a high-end videoconferencing system, in 2008. It now has TelePresence at 60 sites. Modruson notes that without the updated network, he might not have had the capacity to introduce this technology.

“When something like this comes along, you have to be ready for it,” he adds.

But you also have to know what’s coming. For that, Modruson relies in part on Accenture’s Technology Labs, an R&D unit that experiments with new technologies.

He also relies on key team members who “push the whole organization to try something different.” Modruson has “the Beta Team” — a few techies bored with current technologies who are charged with trying out new ones.

He measures their success not in conventional terms, such as return on investment, but rather by the number of new technologies they try annually. He says he randomly picked 20 technologies as a goal.

Modruson says he doesn’t want his innovation team getting too focused on project planning and implementation details — that’s for further down the road, after the innovative ideas have been vetted.

“We’re trying to keep it small and nimble,” he explains, “because innovative ideas come from people just throwing stuff against the wall.”

Consultants say the following elements are key to building an environment that can sustain innovation:

* Give employees the right to fail. Create an environment that doesn’t punish workers for having tried something that ultimately didn’t work. “It’s hard to innovate when you’re afraid to be wrong or make a mistake. Part of innovation is stretching or thinking outside the box, and more often than not, you’re wrong,” says Philip Garland, leader of the CIO advisory practice at PricewaterhouseCoopers.
* Spread responsibility for innovation throughout the organization, top to bottom. “Anyone can have a good idea,” Garland says. Besides, if just a few people champion innovation, it could go away when those people move on to other companies.
* Develop partnerships with other departments. To sell technology-driven innovations, IT needs to understand and articulate how it will help the company reach its goals, says Ian Hayes, president of Clarity Consulting. “Ultimately, there are a lot of great things we can do, but if it doesn’t fundamentally drive something that affects the bottom line, then it’s just a nice-to-have [item],” he says.
* Create a central repository for ideas and experiments. Garland likes the idea of innovation labs or centers, housed within the IT department, where people can try out new gadgets or gather to hear from various sources, such as vendors or outside speakers, about bleeding-edge technologies.
* Establish processes and ownership. Organizations should have a process for taking a promising idea and testing it out, Garland says. Similarly, someone needs to take on the role of facilitator to prioritize and guide ideas through the development process. That person could be the CIO, an innovation officer or another key leader.