It's topped the IT buzzword list for several years now. Analysts are advising it, chief executive officers are demanding it and everyone in IT is scrambling to deliver it.

But you can't simply tell your team to "go forth and innovate." Nor can you tell your CEO that you're too busy innovating to provide exceptional IT services to the business.

So how do you strike the right balance? How do you innovate while keeping the rest of IT humming? To find out, we spoke to chief information officers and senior IT execs well down the path of innovation to learn how they did it. Here are the four essential steps they outlined:

• Step 1: Deliver foundational services consistently
• Step 2: Establish innovation as an organizational priority
• Step 3: Earn the right to innovate
• Step 4: Create value

Focus on meeting basic needs first, advises Robert Urwiler, CIO of Vail Resorts.

Urwiler likens the preconditions for IT innovation to Abraham Maslow's hierarchy of human needs. Usually portrayed by a pyramid-shaped diagram, Maslow's hierarchy ranks basic survival requirements, such as food and shelter, before more abstract needs, such as recognition and love. Likewise, the business requires IT to fulfill its basic needs, such as upholding service-level agreements, before innovation.

Here’s how Urwiler's hierarchy stacks up:

• On the bottom is the IT stack. Network, email and applications have to be up and functional at all times.
• Next is application stability. Business applications must be available and transactions have to be flowing.
• After that comes integrated information. You need to be able to support the business by extracting meaningful business intelligence from IT information systems.
• Once these have been established, IT can begin to offer competitive differentiation. Urwiler sees this as the entrée into innovation.

Once foundational services are delivered consistently, IT can start climbing up the pyramid.

Moving from a reactive "order-taker" mode to a proactive innovator requires a significant shift in the culture of your IT organization.

"We’re lucky here at Partners," says Mary Finlay, deputy CIO of Partners HealthCare System. "We work in an academic environment, and our colleagues are constantly pushing the envelope. They expect the IT organization to innovate as well."

But Finlay knew that an innovation culture alone wouldn't be enough. So she created a formal innovation program. Each year, employees apply to participate. The winners tackle a new business problem with the help of a team mentor. The program has produced some novel technology solutions to business problems and reinforced throughout the entire IT organization that innovation is a corporate priority.

"We knew we had pockets of innovative thinking, but I wanted to foster even more," says Finlay.

Once the IT team is thinking about innovation, the next challenge is to claim a place at the innovation table.

"We earned our right to the table by declaring that we would drive down costs by a certain percentage," says Robert Scott, vice president, innovation and architecture, global business services at Procter & Gamble. "We asked that if we achieved the cost reduction, we’d like a percentage of the savings to reinvest in innovation operations. We exceeded the cost-reduction goal, and our business partners made good on their promise to drive some of that savings back into innovation ops."

While Scott's above-board approach worked well at P&G, not every enterprise is lucky to have such receptive business partners. In the face of resistance, some CIO's resort to more discreet tactics. Both Finlay of Partners and Urwiler of Vail are fans of flying under the radar from time to time with covert innovation projects.

"Ideas are free," says Urwiler, "and proof of concept is cheap."

Finlay agrees.

"You can test a project with little expenditure and visibility, then get people in the enterprise excited," she says. "If the concept is good and solves a real business problem, you'll have no trouble getting a full-scale project funded."

Of course, you shouldn’t innovate just for the sake of it. The key to building innovation equity is identifying a business problem and using technology to solve it.

"IT creates value by marrying what the business needs with what's possible," says Scott. "You've got to understand what the business needs, then look forward and connect the two. That's how you create value."

Finlay concurs. "Solving business problems is what brings value to the organization. That's what builds trust in your innovation abilities and makes your business partners sit up and take notice."

HP Software supports and propels you forward on every step of your IT innovation journey. Whether you're building a foundation of trust by delivering and maintaining exceptional services, improving operational efficiency and performance, or looking for new ways to create business value, HP's full suite of software aligns IT goals with business goals. By helping extract more value from your IT resources and enabling better business outcomes, HP Software helps put you in a position to innovate and create long-term business value.

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