Saturday, January 9, 2016

Digital Master Tuning #122: Three Practices of Digital Innovation

Either at the individual or organizational level, creativity and innovation become #1 "what matters now" factor to achieve the digital vision.

Generally speaking, innovation is to transform novel ideas to achieve their business values. It is not a serendipity, but a discipline and a set of practices to achieve business goals. Innovation helps to tackle the complexities of business dynamic in the digital ecosystem, but often within itself, it needs to change and improve as well. Therefore, digital paradigm shift also includes the perspective of building a scalable innovation environment or innovation ecosystem. It is crucial to fine tune innovation processes, capabilities, and develop a set of practices to manage innovation portfolio more effectively.

Systematic Innovation: Innovation can be viewed as consisting of many different stages: idea generation, development, and implementation. Creativity stage is generally accepted to be less structured than development stage, and the later is likely to be far more process driven than the former. A systematic innovation approach is to depict innovation as a system rather than a traditional process, its performance depends on the alignment of various business components such as people, resources, information & technologies, actions, control, etc. Thus, systematic innovation practice means to manage innovation, not as a one-time initiative, but a structured way with fine-tuned processes and a set of practical tools used to create or improve product/service/process that delivers value-added solutions to customers or delight employees. Even for the “soft flavored innovations,” such as communication, management, or culture innovation, it is important to have some degree of a “hard-wired” innovation system to translate into business processes or change mechanisms with the proper metrics to monitor it. Though such structure or processes shouldn’t be overly rigid to stifle innovation. The systematic innovation is based on the in-depth understanding business issues,  it’s important to do the systematic analysis of the true business problems, opportunities, or dilemmas, and then the practice of systematic innovation can focus on mapping and aligning the important business elements to solve them in a structured way.

Intrapreneurship or Corporate Entrepreneurship: Compared to nimble startups, many well-established organizations are struggling with innovation, due to the legacy technologies or processes, silo thinking, change inertia, or rigid hierarchy. So what are the strategies or practices to advocate innovation in those companies? Intrapreneurship is considered as a relatively recent concept to practice innovation in large organizations to close the innovation gaps, especially for business model innovation, it runs up against a “not now, later” obstacle. For example, if a well-established organization identifies a new value proposition that requires the change on the business model or creates the new one, then it’s strategically safer to develop the new venture and run it with faster speed. Now many organizations that are in the digital journey also run in bimodal speed, to strike the balance between stability and innovation, efficiency and agility. Overall speaking, corporate entrepreneurship is embodying risk-taking and more radical changes, but it helps the company  to develop either the new business or the unique capability to create revenue and improve the top line growth, and promote & sustain organizational performance and renewal the business energy to be a digital disruptor, rather than “being disrupted.”

Hybrid Innovation: We live in the business world with both physical corporate buildings and internet remote working environment, the hybrid of many things from energy to technologies, etc. It is hard to think of any innovation at not a hybrid nature, a combination of something old with something new, or a number of new things. And digital innovation is mainly an incremental-radical innovation continuum. Often the potential benefits from innovation and risks are proportional: the incremental innovation starts with small objectives, aims to achieve business improvement (products/service/process), and brings short term value additions; while radical innovation often starts with a problem or a challenge, having no solution in the current situation, it may have more “creatively disruptive” characteristics, it brings something new, something that couldn’t have been possible without innovation, and it shows amazingly differentiated business value for the long term, but it could mean to take the certain level of risks. Therefore, innovation portfolio management does require to keep the hybrid theme and leverage the variety of business factors, not just have the interdisciplinary understanding to connect the dots and see what’s possible, but also have the technical expertise to create the multifaceted values, even disruptions if necessary.

Either at the individual or organizational level, creativity and innovation become #1 "what matters now" factor to achieve the digital vision. It is the core activity of digital evolution. And the speed of innovation also needs to be accelerated, so the flow of innovation will have reached a new level, a level that can address the “VUCA” challenges of digital dynamic.


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