Don’t Just Think Innovation, Think Digital.
For large organizations innovation is a simple entry point. Set aside a small budget, a bunch of creatives, strategists and technologists; have them work on interesting problems to develop novel solutions or products for a given market opportunity and voila! your making moves.
Far too often, I’ve witnessed companies ignore or overlook the value of innovation units. As an innovation leader, I can tell you this: the struggle is real! I truly believe innovation is an entry point to broader transformation that a company undergoes into becoming a digital powerhouse within its own industry, or within an adjacent arena leveraging competitive assets to disrupt whoever is next door.
But before diving any deeper, hopefully we can agree to this: if you’re still only talking about digital transformation, you’re behind. Innovation is only one pillar of a broader “digital” movement — a cultural movement. I’ve learned that if companies want to transform there is only one way — very carefully. Though don’t mistake careful with slow. There’s strategies for moving quickly. J
When I think about digital transformation there are five components that make true change possible:
1.) Customers: It’s imperative to understand the changing dynamic of customers. Customers are no longer powerless, they are now networked, they like to receive customized and relevant information, they form alliances with other customers for products and services, and they help companies innovate and pivot in new directions.
Customers are powerful, listen to them, work with them, allow them to participate. (This should apply to your own employees too!)
2.) Re-thinking competition: The lines of competition are now blurred. Innovating and maintaining a competitive advantage involves more these days then maintaining exclusive rights within your value chain, or increasing barriers to entry. Developing platforms in this environment is game changer and startups are winning here.
Co-opetition between firms is growing, though those who own the platform win!
3.) Leverage Data: Let’s face it — we live in world where data is growing exponentially. Those who can harness the power of big data to provide insights that help make the best business decisions for their customers, will create experiences unprecedented by competitors.
If you’re not investing heavily in data commercialization, products, or assets through AI, Robotics, or digital marketing, your digital strategy fails.
4.) Innovation: Rapid experimentation and lots of it.
That — is — all.
5.) Value creation: Speed is key. Agility is key. The term “sustainable competitive advantage” is a dinosaur. Strategies that take years to execute are failures out the gate. Companies need to think about developing a portfolio of “transient advantages” adapting quickly to changes in the market place. This requires a hard look and audit of your current value proposition, identifying its threats and weaknesses and planning a strategy that constantly enables you to shift to where your customers find value in your services.
Can you move at their speed?
Innovation is one pillar of a greater vision for all companies that wish to transform into the digital era. Use it to your advantage to impact change and drive the other areas of digital that really matter.