An IT executive with a diverse background at organizations such as Rexall and Cogeco, Faramarz Farahani has spent the last several years at Federated Co-operatives in Saskatoon, where he is currently executive vice-president of innovation. Though the concept of a “chief innovation officer” has been gaining ground, those taking on such roles do not always come from a traditional CIO background. In Farahani’s case, he said there is a benefit to working for an organization that supports growth and innovation and make major strategic changes. This could include everything from using drones to supporting Apple Pay.
“Because we are local, because we are very close to the communities where we operate, we believe we can compete and win in those areas,” he says. “Being able to enable change is really what keeps me going.”
Farahani recently spoke by phone with CanadianCIO about his innovation journey. This interview has been edited and condensed.
CanadianCIO: How did you come to take on your current role within the organization and its innovation focus?
Faramarz Farahani: When I joined four and a half years ago, I joined as a traditional CIO. Within the Co-Op our titles are a little bit different, so I was called VP of IT, but the focus was pretty much around IT. Just traditional IT. We didn’t have anything different than most other IT shops. You have seen and heard about the IT productivity pyramid where most of the IT shops spend about 70 percent of their effort on running the business, keeping the lights on, and somewhere around 25 percent on changes mandated by business or competition and if they’re lucky, they spend five or 10 percent of their time on driving innovation. So we were not different. We had obviously a little bit more focus on supprotung the infrastructure and running the business, because in the last couple of years before I joined we didn’t spend a lot on IT.
We started to look at the nature of our business — we are a more than $10 billion organization, multi-faceted, in upstream refining, downstream. We are in food, home centre, agriculture, all around feed, herbicide and pesticide. We are a centralized IT shop — we support about 500 communities where the CoOp operates in Western Canada. Given all those pieces, and given the focus on traditional IT, it became very clear to us we had to start shifting and focusing more on innovation. It was primarily a business need.
CIO: What does innovation mean for an organization like yours and how do you define what the goals of working on innovation would be?
FF: We subscribe to Gartner’s definition of innovation, which is new ideas that are implemented to create business value. We focus our areas of innovation — again, keep in mind the nature of our business — around products, services, processes, business models, and organizational issues. As far as the type of innovation, we focus on incremental, evolutionary and revolutionary. Now, most of these are really not that much different than other businesses that have realized innovation should be an integral part of their business structure.
As far as the timeline is concerned, one of the reasons innovation became a little bit more important to us was about a year ago, we decided to make some structural changes at the organizational level. My role as a CIO moved to an executive vice-president of innovation because I kept what I had in terms of IT, but added growth and business development out of that. The focus was to merge these two groups and make sure we grow, expand our business and keeping innovation at the forefront. IT is an integral part of many, if not all strategic business units.
CIO: Since those internal changes took place, how do you now align innovation with the strategic priorities of your organization?
FF: We subscribe to the McKinsey model of the True Horizon. The first horizon is to build a wall around own fort where we are strong, and the second is to focus on acquiring and building emerging businesses. It’s very much close to what we currently have, but it’s about expanding it through M&A. The third horizon is to create viable options for future growth. That is where the breakthrough innovation usually happens. We also went ahead and started breaking these horizons down to put some metrics on them. For example, we decided to put about 45 percent of our focus on that first horizon. The second horizon, we put 35 percent, and for breakthrough innovation, we put 20 percent on that.
Within those areas, we try to look for initiatives. It was a lot of work, but the ideas were simple. For the first horizon, it was relatively simple. We needed to have a strong operations, management and leadership and expand the business growth in those traditional areas. For Horizon Two, we had a bit more difficulty, because we had to look at M&A options, and look for businesses primarily within the fertilizer, liquor and pharmacy areas that are close to what we’ve doing. Liquor is an area where we had a number of successful stores in Alberta and now we’re expanding that into Saskatchewan, pending some government legislation. Within pharmacy, it’s a business that we have been in, but we are really pushing hard to expand it. Within food, we took over 14 fairly large locations from Sobeys/Safeway when they went through that merger and they got some guidance from the Competition Bureau to shed off some of those locations.
CIO: How does technology support some of that work you’re doing?
FF: For Horizon One, when we took over those 14 Safeway/Sobeys stores, there was a wireless access we need for those stores, a number of mobile apps. If I talk about leading edge innovation within retail, many restaurants have mobile payment devices that they can bring to you so you don’t have to walk to the front desk to pay for your bill. Certain devices are not certified to work that way within the gas stations because of the fuel and vapor situation. We are one of the very few retailers out there to prototype those devices. We have a couple of locations using it. It’s a little bit awkward right now, because the back end is not integrated, but that is one of the innovation areas in our petroleum business that we’re working on right now.
CIO: What do you make of things like mobile payment platforms such as Apple Pay, wearables and so on?
FF: For Apple Pay, I know there is a November timeline where they might move into Canada officially. We have been evaluating it; we have been approached by a number of organizations. Obviously we are a large partner of IBM, which is a large partner of Apple’s. You have to keep in mind the privacy around that and the financial liability. We are working with big banks through our payment provider — in this case it’s Moneris — to evaluate who is going to own the liability, the security of those payments. Obviously it’s an area that a number of retailers are exploring. We are definitely one of them. I can’t announce anything officially, but we are aware of the competition, we are aware of the timelines. We cannot chase every new shiny thing, but we have to evaluate them and make a very clear decision of whether we’re going to play in it or not.
CIO: How does your focus on innovation change the way you think you’ll hire for and develop your team over time?
FF: We’re very aware of the fact that when we’re looking at the three horizons, we need very different types of people. We know that within Horizon One, we need a strong operational manager who can lead and run our existing business. We know in Horizon Two, where we are looking into acquiring and building emerging businesses, we need business builders. We need value creators. For Horizon Three, where we are looking for breakthrough innovation, we know we need visionaries and unconventional thinkers. The question is, are we going to hire them from outside, or do we have people within our group who can move, for example, from being a strong operational manager to become a value creator or potentially become a visionary? That’s an area where we’re going to putting a lot of our focus in the future.