HMG Strategy presents The CIO Summit of America Business Transformation Through Innovation and Leadership Julia Anderson, Director PepsiCo IT, PepsiCo.

HMG Strategy presents

The CIO Summit of America

Business Transformation Through Innovation and Leadership

Julia Anderson, Director PepsiCo IT, PepsiCo Business Solutions Group

Robert MacTaggart, CIO, Leviton Manufacturing Company

Mohamoud Jibrell, CTO, Ford Foundation

Moderator: Madeline Weiss, President, Weiss Associates, Inc. and Director, SIM Advanced

Practices Council (APC)

Innovating in Tough Times

Innovating in Tough Times

February 8, 2010

Julia Anderson, PepsiCoMohamoud Jibrell, Ford FoundationRobert MacTaggart, Leviton Madeline Weiss, Advanced Practices Council Director

McKinsey Study on Leadership and Innovation

• 70% of executives say that innovation will be one of three key drivers of growth.

• 65% are not confident of their ability to innovate.

• 94% say that key innovation enablers are people and culture – these are also the key inhibitors.

Agenda

• Creating a Platform for Innovation

• Leveraging Networks to Identify Innovative Solutions

• Managing Costs

• Executing to Capture Value

Creating a Platform for Innovation•  

Creating a Platform for Innovation•  

Creating a Platform for Innovation• Why?(MIT 10 yr study) Platform 20% more profit

lower cost

scalable

centralized

globally agile

• Enterprise Architecture Platform Model Stages Silos – many technical platforms and processes Standardize Technologies – std technical platforms Optimized Core – std processes Modularity – rapid strategic innovation

Creating a Platform for Innovation•  

Creating a Platform for Innovation

• Platform Foundation? built on “Sacred Transactions” Design to Make Make to Ship Order to Cash Account to Report

• Platform Extended Integration to External Partners Customers -> $Revenue$

sell high and more! Vendors ->$Cost Management$

buy low and pay for when used!

Creating a Platform for InnovationBusiness Case Example:

Pain Point: Lighting System configuration cycle time 6 to 8 weeks, configuration errors, lost bids and significant engineering labor cost.

Innovation solution on Oracle ERP Platform: self-service web based configurator expert that generates in a few hours:

CAD drawings Quote Priced BOM Customizable Sales proposal

Business Results:

$10MM increase in market share revenue 1 yr ahead of competition

Engineering time savings to work on new products

Configurations more accurate via expert (5000 rules) per product

Global solution on platform (currency, language) 

Creating a Platform for Innovation

Creating a Platform for Innovation

Creating a Platform for Innovation

Creating a Platform for InnovationThrough Diversity and Inclusion

Performance With Purpose We believe our financial success - Performance - must go hand-in-hand with our social and environmental responsibilities - Purpose. We bring that Purpose to every aspect of our business

Guiding Principals include:Win with diversity and inclusion. We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity brings new perspectives into the workplace and encourages innovation, as well as the ability to identify new market opportunities.

Employee Resource Groups

• PepsiCo has over 9 employee resources teams that are actively supported by an executive of the company.

• Enable people with different abilities• Equal – Gay, Lesbian, Bi, Transgender• African American• Latino• Asians• Women • Women of Color• White Males• Native Americans

Assess Impact Opportunity Measure Success

Impact Innovation, Leverage Technology, Engage Globally

Examples

• Bobs House from the EnAble Network

• http://www.youtube.com/watch?v=ffrq6cUoE5A

• Making of Bob’s house behind the scenes

• http://www.youtube.com/watch?v=Wl1UdFFeopo

Adaptive Technology Expo

Provide awareness of Productivity tools for Temporary and Lifelong situationsa. Auditoryb. Visualc. Cognitived. Physicale. Innovation and look into future ….

• Provide a hands on look at technologies and tools for all shapes and sizes of needs….

• Value can be gained on addressing accessibility for customers, employees and suppliers

Utilized SIM APC network to select Content for Expo…

• Reached out to Partner

Organizations• IBM

• Guiding Eyes• Ability Beyond

DisabilityAutism SpeaksUSA, UCP……

Two pronged approachto content development

Reached out to CIOnetwork

People using technologyU MassAmtrak

Vender referralsATIA

Leveraging Networks to Identify Innovative Solutions

• Why Do You Need to Leverage Networks Beyond Your Firm?• There are many more ideas and smart people outside your firm

than you can ever hope to hire• The global talent pool dwarfs the talent in developed markets• Emerging market talent is cheaper and more motivated• Customers and partners have knowledge and expertise waiting to

be harnessed• Large firms find it difficult to do cost-effective innovation

Leveraging Global Technology Network at BP

• Digital Technology Scanning Team• Goal is to identify truly significant opportunities for BP• Meets with business executives to ferret out opportunities • Reaches out to its global network for possible solutions

• Game Changer Initiatives• At least one per year has generated business impacts up to $100 million

“Our first job is to change mindsets and evangelize about the possibilities, helping the business envision what can be done.”

Daru

Chubb’s Innovation Jams

1. Generate profitable growth ideas for Chubb

2. Generate IT efficiency and reinvestment opportunities

Leveraging Networks for Connect and Develop

Source: Mohan Sawhney, Kellogg School of Management

The Amazing Reach of InnoCentive Total Solvers > 90,000Total Seekers - 34Scientific Disciplines - 40Challenges Posted > 200Challenges Solved > 58

Source: Mohan Sawhney, Kellogg School of Management

Managing IT Costin Good and Bad Times

Mohamoud Jibrell

Tools of the Trade

Effective Governance StructureThe Key to Business Alignment

• Steering Committee of Key Business Leaders Your own board of directors

(manage your board meetings effectively )

Representing key business units Focused on aligning IT priorities

with strategic business objectives Every IT strategic initiative must

be sponsored by a member of the steering committee

It is All About Communications!• Manage the Steering Committee

Make Sure they are Evangelists for your strategic priorities

You craft the message and they disseminate throughout the company

• Update the President and Other Executives (not on SC) Quarterly Review Key Strategic Initiatives Bring Along Steering Committee Sponsors

of Key Initiatives

• Use Internal Communication Resources (Intranet, Blog, etc.)

• Keep your Organization in the Loop

Know your NumbersMake Sure the CFO is Your Best Friend

• Make sure you are intimately familiar with every line item on your budgets

• Know what you need to keep the lights on and what is flexible – I aim for 60/40

• Benchmark the cost of your services and applications

• Benchmark the cost of your vendor relationships

• Use realistic & easy to manage metrics

• Create innovation reserve

• Update the CFO at least quarterly

Manage Cost and Innovate• Review and re-negotiate all vendor contracts annually (the goal is

to create “win-win” relationship) Benchmark vendors contracts and allow the vendors to make appropriate

adjustments Always include annual price reduction clause in vendor contracts (this does

not guarantee price reduction, it only creates the opportunity to re-negotiate)

• Track the cost of your services and systems management Periodically benchmark the cost of your services and the cost of managing

key applications and infrastructure systems

• Convince the CFO that savings should go to your innovation (aka skunk works) fund 80% of your innovation funds should go to high impact strategic projects 20% should go to fun projects or solving annoying little problems

• Always keep the Steering Committee in the loop

Executing to Capture Value• How IBM succeeded in creating an innovative company able to execute on emerging business

opportunities on its third try*• Senior executive put in charge of highest potential emerging business initiatives• Dual reporting relationship – senior executive and business unit• Active sponsorship by SVP; protected funding; regular, frequent reviews• Initiatives nurtured and graduated – or killed

• Results• $15.4B of incremental annual revenue

• Conclusion• Culture is the most important control system in an organization• People watch how their leaders behave

*Bruce Harreld

Sources

“APC Forum: Leveraging Emerging Digital Technology at BP,” MISQE, Vol. 6, No 2 (2007)

Driving Breakthrough Business Innovation with IT: A CIO Perspective, Lynda Applegate and Deborah Soule

Corporate Social Networking, Ann Majchrzak and Luba Cherbakov

SIM Advanced Practices Council

Setting new Competitive Standards Through Research and Thought Leadership

• CIO Driven Research• Relevant Thought Leadership• Member Sharing• Networking

Madeline Weiss, Program Director ([email protected])

Rick Watson, Research Director ([email protected])

Recent APC Research Projects• Driving Breakthrough Business Innovation with IT: A CIO Perspective• IT Governance and Control: Making Sense of Standards, Guidelines

and Frameworks• Pulling the Competitive Levers: Leading Innovation in the 21st

Century Firm• Corporate Social Networking• Energy Informatics• Metrics for Managing Information Technology Decisions in Firms• The Wiki in Your Company: Lessons for Collaborative Knowledge

Management• Enterprise Mash-ups: What Do They Mean for CIOs?• Information Lifecycle Management Concepts, Practices, and Values• Unleashing the Power of Enterprise Value Nets• How to Drive Value from IT – Senior Executives’ Perspectives• Deploying Far-Flung Teams: A Guidebook for Managers• Transformation of the Enterprise through eBusiness• Benefits and Risks of Open Source

Early 2010 Research Agenda

• Leading disciplined innovation in good times and bad• Emerging technologies• Linking cloud strategy attributes to business value• Adopting and integrating SaaS into a legacy environment• Customer service applications for smart phones• Surviving the data deluge: Information management, risk

assessment and valuation• Update on venture capital funding for software• Updates on green IS• Updates on IT legal issues• Using social media for profit