Transforming IT into an Innovation Engine


Published September 2014

The following content may no longer reflect Microsoft's current position or infrastructure. This content should be viewed as reference documentation only, to inform IT business decisions within your own company or organization.

Learn how building an incubation center in your IT organization can help transform it into an innovation engine. Find out how you can establish the same for your organization as Microsoft IT reveals its innovation blueprint.


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The case for transformation

We have entered the mobile-first, cloud-first era. Users and business customers alike are demanding modern experiences that they can access anywhere, with the same level of polish as leading consumer apps. IT needs to be competitive to stay relevant, yet has a perception problem that is often rooted in real-world challenges. It is seen as slow, overly process-oriented, inflexible, risk averse, plagued with technical debt, and lacking creativity—among other less-than-flattering depictions. This has bred a cottage industry of business professionals paired with external firms in avoidance of internal IT.

There are advantages of modernizing IT capabilities in house. These include ensuring better solution sustainability and reusability, utilizing the increased subject matter expertise and relationships that exist within a company, and reducing vendor spend and overall complexity. From a demographic perspective, as the digital-native millennial generation takes charge, the drive for speed, creative elegance, and use of new technology trends will only grow. The new generation expects no less!

Building an incubation center within IT

Modernizing IT capabilities can start by building an incubation center, which is a group within the organization focused on new application ideas, implementing the latest technologies, and utilizing new methodologies for delivery. The group is designed to partner with internal business groups and other IT teams to develop modern solutions with creativity and agility. They must be willing to defy standard IT convention and processes in order to exceed customer expectations.

The goal is not simply delivery of finite solutions, it is also demonstrating new skillsets and ways of working that can be adopted across an IT organization. Once the benefits and outcomes of this group start to materialize, it can serve as an example to others of better, faster, and even cheaper delivery. The ultimate goal is transforming IT into an innovation engine—a fast-paced, flexible, and creative delivery powerhouse that delights customers in ways similar to leading consumer start-ups.

The Modern IT Innovation Group within Microsoft Information Technology (Microsoft IT) exists to help address the need for transformation. The group was conceived and is led by Pankaj Arora, with teams in Redmond, Washington and Hyderabad, India. Pankaj established the group with the vision of creating innovative, consumer-worthy, enterprise-grade experiences—making users love their devices while delivering experiences with unprecedented agility. The following steps reveal his blueprint for CIOs and their leadership teams to develop these capabilities in house, as is the case within Microsoft.

Figure 1. Blueprint for transforming IT into an innovation engine
Figure 1. Blueprint for transforming IT into an innovation engine
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  1. Start from scratch. To truly be as agile and innovative as the consumer start-ups users have come to love, we must let go of past and even current standards. For your innovative incubation center, start with an entirely blank slate and take no practice or process as a given. The goal is to eliminate past and present bias, to ensure not just a simpler “what” but also “how” of the group’s operations. Don’t improve on today; start anew.

  2. Insert special talents. The voice of experience can be a mixed blessing in a changing and accelerated world. Experience in methodologies and architectures of yesterday can pose risk to what is built today. Organizations should onboard people who are open to new ways of working, with biases toward creativity, digital passion, and speedy results. For example, Microsoft IT heavily utilizes college hires within the Modern IT Innovation Group. Harness leaders who have start-up and small-business temperaments. Study such examples, learning not just what they do, but what they don’t do. Insert those who focus on customer-centric results and combine cross-group perspectives into unified goals.

  3. Build flexible operating models. Successful innovation requires reduced constraints. Favoring principles over processes, judgment over absolute standards, iteration over initial perfection, and direct collaboration over documentation are all ways to reduce internal group constraints while fostering agility and creativity. Allowing designers to play a leadership role and using a combined engineering model (dev and test in one) takes it further. For constraints inherent within a company’s environment, mandate only critical processes (for example, security). Create pathways or “on-ramps” to them for this group and introduce accelerated “highway” versions of processes to ensure they are enablers, not barriers. Flexibility is needed not just within the group, but for dependencies around it.

  4. Define stakeholders and projects. Your stakeholder for this centralized group is not just the business partner, but also the IT team that traditionally supports that business. There must be harmony across these relationships, even if the incubation group does the hard work of initial delivery. The group must be seen as an asset, not a threat; and success should be shared by all parties, including the traditional IT team. This is a prerequisite to healthy stakeholders and projects. Consider end users as everybody’s ultimate customer, and collectively fixate on them. Also, don’t limit your focus to corporate functions. Some of the best opportunities may be related to product functions of your company—such as helping better develop, augment, or support shipping products. You may also choose to pursue grassroots ideas, experiments, or other unique styles of projects. Focus on incubation and agree to hand off v1 or v2 solutions to traditional IT for longer-term operations.

  5. Foster healthy cultural incentives. Incentives and culture drive much behavior. An ethos of experimentation, embracing and managing calculated “smart risk” versus avoiding all risk, and cross-group collaboration are key. Ensure that teams who partner with this new group understand the different paradigm, are motivated to partner versus feeling threatened, and see the value. Creative atmospheres are often fun atmospheres: money spent on pizza and creative knick-knacks can have real returns if they help form the right culture. Also, success is not just solution adoption and happy customers. It is also learning valuable lessons from failure, and encouraging experimentation. Don’t apply all the standard IT measures; instead, choose ideals that drive desired behaviors.

  6. Evangelize the what, why, and how. In the Microsoft model, there are three objectives. First, deliver innovative services to users with agility. Second, support business and product groups (R&D;) with the creative value-add outcomes. And finally, evangelize the what, why, and how of those outcomes to the rest of IT, the company, and the world. In addition to evangelism, the Modern IT Innovation Group rotates developers in and out on a yearly basis to try to spread the practices and learnings. Ultimately, success for such a group might not just be finite outcomes but instead helping foster an overall cultural transformation. An idealistic definition of success might be the group rendering itself irrelevant, because the culture of creativity, innovation, and agility has been ingrained across IT.

This will not be an easy journey for most organizations. It will take time, and just as one performs iterative cycles when developing applications, the model itself should be developed and implemented in a iterative fashion. Executive sponsorship is important, and in the case of Microsoft, it comes directly from the CIO. Best practices and principles of change management are also key. However, by using this blueprint, we believe most organizations can be well on their way to providing a world-class, modern IT experience for their customers—transforming IT into an innovation engine.


Additional Resources

The following evangelism video from the Modern IT Innovation Group ( captures the group’s spirit. It serves as a representation of ideas mentioned in this article, including the cultural atmosphere, creativity, and agility, that an incubation group may want to possess.

Figure 2. The Modern IT Innovation Group Evangelism Video
Figure 2. The Modern IT Innovation Group Evangelism Video

The following article and video discuss app-related strategies used by the Modern IT Innovation Group. They pertain to the innovate incubation model outlined in this article.

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