Navigating the Complexities: how Litmus Test can drive Innovation

Disclaimer: While I have not held the targeted (Chief Technology Officer (CTO) / Chief Information Officer (CIO) /Chief Digital Officer (CDO) / Chief Automation Officer (CAO) /Chief Cloud Officer (CCO) /Chief Infrastructure Officer (CIO) ) position before, my previous experience across various roles in corporations has provided me with valuable insights and skills.

In today's rapidly evolving business landscape, companies are constantly striving to remain competitive and relevant. Central to their success is the ability to innovate, to think outside the box, and to make informed decisions. As a Chief Technology Officer (CTO), it is crucial to have a robust framework for evaluating ideas and initiatives. One such framework can be the concept of innovation through litmus test (practically by defining a set of criteria used to evaluate the viability and success of a decision, strategy, or concept). It will serve as a preliminary assessment tool, helping businesses assess potential risks, opportunities, and outcomes before fully committing resources.

Innovation is the driving force behind progress and growth. As a CTO, fostering a culture of innovation is essential to stay ahead in the market. Innovation goes beyond Agile's incremental improvements and involves exploring novel ideas, technologies, and business models. It requires a mindset that encourages experimentation, embraces failure as a learning opportunity, and seeks to disrupt the status quo.

Most CEOs fails in their objective to strengthen market position and this will inevitably have an impact on employee behavior, especially on CTO, because you fail as a team. Employee management is based on sole purpose of achieving the company's goals therefore it must inevitably have an impact on management's work. If the goal is to aggressively acquire market share, a specific core team attitude is required. This means that managerial behavior must be tailored to the goals of the business, and for a technical company, means that the CTO should adapt the framework to match the entrepreneurial vision.

In group companies, decision-making can become complex due to multiple stakeholders, hierarchies, and differing priorities. As a CTO, IF I am accountable to the CEO or board, THEN I (want to)/should be able to make the final RIGHT decision. Especially in group companies, where I have the impression that there are many directors who can hardly make any decisions, therefore their growth rate is marginal. This is just my personal reflection of the challenges faced by CTOs in such conditions. To navigate these challenges, CTOs must establish their clear decision-making frameworks and structures that promote accountability and enable and empower the timely action needed for innovation. Only by granting them this authority, the organization benefits from their specialized and industry specific knowledge and experience, enabling faster and more efficient decision-making related to technology and innovation resulting in a more pragmatic approach of the strategic initiatives that can be made swiftly and effectively. As a CTO, it is crucial to foster a collaborative environment among directors. Regular communication, information sharing, and alignment of objectives help in reducing conflicts and ensures a cohesive approach to decision-making. Only by involving all relevant stakeholders and seeking their input during the litmus test evaluation, the CTO can gather valuable insights and build consensus, facilitating smoother implementation of innovative ideas. The litmus test plays a vital role in the decision-making process within group companies by serving as a unifying factor which provides a common framework for evaluating capabilities, ideas and initiatives.

From my perspective as a CTO, to evaluate innovation initiatives through the litmus test, the Balanced Scorecard approach provides a comprehensive framework encompassing four critical criteria: result, market, people, and processes. Anything else will steal your focus and eventually become just another indicator (you have to be mental to have (as observed) lots of KEY performance indicators) which will be translate into death by powerpoint in the end. Of course you can address those drill-down KPIs (and adjust their definitions) if something is under-performing (due to vision, strategy or implementation). Below I will explain why I chose each criterion in detail.

The result criterion focuses on the outcomes and impact of the innovation or decision. It assesses whether the intended objectives have been achieved and measures the success of the initiative. Metrics such as revenue growth, market share, customer satisfaction, and profitability are key indicators under this criterion. The litmus test just aids in determining if the projected results align with the organization's strategic goals and vision.

The market criterion emphasizes understanding the target market, customer needs, and competitive landscape. It involves conducting market research, analyzing trends, and identifying opportunities for growth and differentiation. Both innovation and the litmus test contribute to gaining insights into market demands, customer preferences, and potential risks associated with new initiatives. Practically, as a CTO, you are assured in the competitive landscape that innovative initiatives are market-driven and have a higher probability of success.

The people criterion highlights the importance of human capital and organizational capabilities. It assesses whether the right talent, skills, and resources are available to execute the innovation or decision effectively. People-centric factors such as employee engagement, skill development, leadership, and collaboration play a vital role in driving innovation and ensuring the success of the litmus test.

The processes criterion focuses on the efficiency and effectiveness of the organization's operational processes. It examines whether the existing systems, workflows, and infrastructure support innovation and decision-making. The litmus test helps identify gaps or bottlenecks in the processes, and enables the CTO to address them proactively by streamline workflows and leverage technology to enhance efficiency and effectiveness.

From a CTO's perspective, the litmus test and innovation are closely intertwined and essential for driving organizational success and staying competitive in today's business landscape. By applying the Balanced Scorecard framework to the litmus test, the CTO can evaluate innovation initiatives across the criteria of result, market, people, and processes which is very beneficial, in group companies, together with clear decision-making frameworks and accountability structures.

Only an empowered and well informed CTO is able to navigate the complexities of multiple stakeholders and ensure effective implementation of innovative ideas through the use of a robust decision-making process that makes informed strategic choices in order to drive/lead the organization forward.