The importance of innovation in digital transition

| November 13, 2019

Organisational digital transformations generally fail, a McKinsey survey in 2018 found that 16 per cent of respondents had improved performance, a further 7 per cent said that performance improved; however, this was not sustained. A transition is better than a transformation. Transitions are a ‘state within’ an organisation rather than a transformation being an ‘activity to’ an organisation.

Further, innovation is unlikely to occur in isolation. Thomas Edison produced the first commercially viable bulb; historians have established 23 others had invented light bulbs. Innovation is an iteration. It requires a range of capabilities; those how know the problem or have an idea, those capable of creating the solution, and those who know how the solution can be implemented within the organisation. Creativity is a collaborative process. Innovation is achieved incrementally and through a diverse range of teams working together.

Those involved within the innovation of their organisation need to avoid treating all initiatives in the same manner, different ideas progress at rates. Implement now; this makes sense and aligns to our organisation’s agenda. Concrete suggestions; likely to be implemented within a year. The idea needs to be further refined and socialised, possibly matured. Some of these ideas may run beyond a year; however, should not run for several years. A dream; is exciting; however, it is unqualified and likely to take several years and iterations.

When considering dreaming; a business is to determine if there is a product niche with a small market willing to pay a high price for the first iteration. Many digital innovations will be first iterations. There is a mid-market that will be excited by the next generation of product. Your product is probably not going to be the cheapest; however, it must be differentiated. Is this mid-market a niche? Is there a possibility of this differentiation becoming mainstream? The business could then scale. Be mindful that scaling attracts attention and niches don’t. Often there is a desire for scale, but the niche may be more lucrative if you could make it profitable and sustainable.

Technology will play a role; different types of technology require different treatments. Information Technology is enabling the work within an organisation consisting of infrastructure, network, applications, data and security. Digital possibilities are best offered with Operational and Customer Technologies. Operational technology is common in manufacturing. The scale of operational technology may enable customer technology, for example, smart transport: informing a commuter of the best possible commute home or where to not walk in a shopping centre. Customer Technology, this is generally enabled by a mobile device and application. However, it is expected to evolve into an experience. The probability of near field communication recognising your device and prompting something that you are interested in is now occurring. Technology capabilities need to be considered within business modes.

Three modes should be implemented consciously by an organisation with their transitions.

  • The existing/traditional business is to be maintained and not neglected. Refining and not stagnating this business is important; neglect may erode it.
  • An interim business is to be explored to see if outcomes can be achieved with selected products or customers that may enable a digital future. An interim business mode intends to qualify possibilities by results rather than milestones. Establishing a transaction capability that is automated is a milestone; the use of this capability is a result. The frequency of use increases the probability of it being an appropriate mode for digital.
  • Digital Business: This is implementing an interim business. Usually, the existing/ traditional business will continue to evolve and be complemented by the digital enterprise.

There is a lot of hype about disruption; organisations should seek to disrupt their industry. What if all your competitors were focused on being the disruptor and not the disrupted? What is their or your likelihood of success? How many start-ups fail? Lots! Often, venture capital will not be made available to those who have not failed or failed multiple times. Large organisations don’t like failing. If start-ups and transformations fail, transitions within an organisation is an alternative. Successful transitions are incremental with iterations. Transitions seek results that are stretch but not ridiculous. Metaphorically, they start with a brisk walk and build to longer more frequent sprints.