7 ways to digitally out-innovate your competitors
What gives companies the X factor and keeps them growing? In a word, innovation.
So how do you become innovative? Hire the right people? Hit on a truly great idea? Be Elon Musk? Having all three can’t hurt, but what organization is that lucky? Besides,not even an all-star team or cult figure can make an organization truly innovative.
Digital, on the other hand, offers connected opportunities that give companies amplified innovative reach and effectiveness.
According to new research, developing the following digital capabilities can help organizations innovate and grow today — irrespective of their digital strategy or industry.
#1 — Sense and interpret disruption.
Our survival as humans and organizations depends on our ability to sense and respond to change.
But being sensitive to a fluid market is not easy. Research labs are almost the sole preserve of large multinationals. In addition, corporate venturing and incubation of innovative start-ups come with their own problems of trust and cost for companies that attempt them.
These models, agree large companies and entrepreneurs in a new study, will gradually give way to digitally-enabled open and joint innovation. Digital winners develop disruption-seeking “radar” abilities by creating ecosystems of relationships within their industry, the venture community, start-ups, technology providers and business schools.
After sensing change, the real job is to interpret what it means to the business. If you don’t fully understand change, you could run the risk of under- or over-innovating, or falling into the me-too trap of copying others’ innovations.
#2 — Experiment, in order to develop and launch new ideas faster.
Digital technologies including 3D modelling and simulation enable a new way of experimenting at an almost unlimited scale. In addition, social engagement tools open up and magnify the potential of corporate collaboration and ideation.
Again, be careful of over-innovating. Do you have the internal capacity to take ideas to market? Is the executive fully invested in doing so? Is the market even ready for your innovation?
A good example of using digital scale wisely is of a large mobile operator testing thousands of handset and pricing plan combinations simultaneously with online users. The high speed and scale of this exercise doesn’t stretch capacity and allows the operator to quickly find the combo deal with the best sale and profit potential.
#3 — Fully understand and leverage data.
In addition to developing a “disruption-sensing” ecosystem and data acquisition capability, digital leaders must mine and analyze the data so provided.
The objective here is to put the data to work, not only by turning it into useful information, but to develop products and services that bring value to customers.Walmart.com’s search engine, Polaris, helps shoppers discover and buy items in an easy, fast and intuitive manner. The technology contributed to an approximate 10 to 15% increase in shoppers completing purchases.
#4 — Build and maintain a high “digital quotient” team.
The time is ripe for a digital quotient (DQ) score. European research indicates that many workers doubt their leaders are ready to adapt to new digital technologies. One Italian bank builds digital skills by matching senior leaders with “digital mentors” — younger high flyers from the workforce. This is a wonderful development also alluded to by a reader commenting on a previous blog of mine.
Other organizations pursue a strategy of “acqu-hiring” — buying the right skills through acquisitions of start-ups, or by establishing formal relationships with start-ups.
#5 — Design a really great customer experience.
Digital technologies have reset expectations here; today, a banking customer using a mobile banking app does not compare it with apps from other banks, but against their best mobile user experiences for usability or functionality, whatever the industry.
It’s better to ask the question, as mBank has, “What does a modern mobile service look like?” Once it understood that, the bank started reshaping banking processes and products to fit mobile, rather than adapting the solution to existing internal processes or thinking.
#6 — Organize for speed.
To be a digital leader, large enterprises need strong CEO support, a dedicated central team to drive digital growth, and a respected chief digital officer with a different remit from a CMO or CIO.
New structures are also emerging to help organizations respond more quickly to digital change. Banks have partnered with accelerators that help bring new ideas, while many retailers have set up venture funds to access disrupters. Other companies have acquired digital teams to enhance their internal capabilities, often funding entrepreneurs who know little about their industry to create a start-up that could seriously hurt the business.This counterintuitive process can reveal some implicit industry assumptions that are holding back the business.
#7 — Partner and invest for non-core activities.
Outside digital capacity and pursuing win-win collaborative partnerships, it is sometimes necessary to invest in non-core ventures to source valuable new technologies or services that can be presented to customers to boost digital growth.
Whether looking for new application programming interfaces (APIs), corporate development or business development partners, aligning with an ecosystem of partners is critical to digital progress.
For example, estimates put the proportion of revenue that Expedia realizes from APIs at 90%. The more they invest in others, the more organizations like Expedia extend the teams that are as vested in their success as they themselves are.
With these 7 tactics to get ahead digitally, what happens next?
It is now necessary to strike out on fundamentally different ways of behaving and operating. Ask yourself:
- In what areas can you partner if missing capabilities can’t be built internally fast enough?
- Have you identified your organization’s most digitally savvy employees to help drive transformation?
- Do you understand how your customers rate their experiences against their expectations — and how your company fares?
- Do you have the right digital team, unconstrained by traditional behaviors?
- Have you explored at least one potential venture that could seriously hurt your business tomorrow?
What digital capabilities are you targeting for maximum agility?