Ready, set, compete: The benefits of IT innovation

The lab works on just three to four projects at a time, and a steering committee made up of business and IT leaders meets quarterly to develop a list of promising ideas to work on in the next two to three months.

"If you have the product people sitting next to the developers sitting next to the testing folks, and you're all just working through it in a very rapid and iterative cycle, you will get something very good in 60 to 90 days," says Shivanandan. "It may not be perfect, but you will have such a good idea of what it is."

Sometimes, ideas that might have been scrapped by one business unit may turn out to be valuable to another part of the company. Capital One's team discovered, for instance, that a credit card project that was about to be killed was well suited for the small business banking group. Now in incubation, the project is a big bet for 2014, she says.

Not every project makes it to the finish line, and that's OK with Shivanandan. "A failure is sometimes the biggest success because you didn't spend $10 million finding out that it didn't work," says Shivanandan.

That's also one of the biggest challenges of leading an innovation team, she adds. "If you get one out of a thousand ideas implemented, that's a good rate. Just make sure that people on the team understand that not everything is going to be implemented, and that's OK. We've learned from that, but the individuals sometimes don't feel that way."

A Second Life

Sometimes projects fail fast and then sit on a shelf until technology catches up to the idea. For instance, in late 2008, Hertz tried to launch car rental kiosks similar to those used by airlines. "It failed pretty fast," Eckroth recalls. "Our process is so much more cumbersome than just checking in for your boarding pass and picking a seat. There are so many added things we want to sell, so it really didn't take off."

Hertz scrapped the kiosks by early 2009. Fast-forward to 2010, when an IT employee learned about a company that developed video integration technology. Team members surmised that if they used the new technology and worked with their key suppliers to put it together, they could create a more interactive, personalized kiosk that would solve the problems they encountered with the basic kiosk technology.

The new kiosks have two interactive video screens. When a customer picks up a receiver, a centralized customer service rep pops up and can complete the entire rental transaction remotely. The rep can even suggest optional services, print the rental agreement and give customers access to their car keys in a safe -- 24 hours a day.

In 2011, Hertz's new ExpressRent kiosks hit major airports and have since catapulted the company into new markets. "This has been a real game-changer," Eckroth says. "We have reduced line waits in most of our major airports and shaved peak staffing requirements. We can serve markets we weren't able to serve before -- we now have these [kiosks and rental cars] at hotels, body shops and parking garages in New York City."

A Method to Their Madness

Though ideas may run wild during brainstorming sessions, the process of refining a great idea into a workable plan usually includes a defined methodology.

Each quarter, the innovation management team at Steelcase, a workplace furnishings and services provider in Grand Rapids, Mich., convenes an innovation meeting with representatives of all areas of the business. The Innovation Management Office leader, who reports to the CIO, poses a single question to the group, such as "How do we create more efficiency in our manufacturing process?" He then uses a methodology developed by Palo Alto design firm IDEO to guide team members toward new ideas.