Friday, March 2, 2018

The Multidimensional Digital Innovation

Digital innovation not only has the broad scope but also has deep context.

There is no doubt innovation is becoming more important whereas technology becomes more advanced. Innovation is an exploration, production, adoption, assimilation, and exploitation of value-added novelty in business, economic and social spheres. Innovation is the core activity of human evolution of changing the environment to reach performance for profit, for saving of resources, for the satisfaction of customers, for expediting collective human progress. Here are the multidimensional aspects of digital innovation:

The horizontal aspect of digital innovation: Digital innovation has a broader spectrum with hybrid nature including incremental innovation, evolutionary innovation, and radical innovation; hard innovations ( products/service innovation, business model or process innovation), and soft innovations (leadership/communication/cultural innovation). Innovation can happen anywhere in the organization and its ecosystem. Be it related to IT, procurement, operations, logistics, sales & marketing, services, HR, Finance, etc. The realities of corporate life don't allow companies to spend all their resources on radical, and thus intrinsically riskier innovation. A company should invest part of its money in each one of these types to diversify the risks. It's generally believed that companies should have a balanced portfolio of innovation projects composed of "incremental" innovations, "adjacent" and "radical/breakthrough." Obviously, the precise ratio is dependent on the age/size of the company. This requires an effective 'innovation ecosystem' that is capable of supporting both widespread incremental innovation in products/services and ways of working as well as the rarer 'step-change' innovation in products/services, methodology, business model, and market positioning.

The vertical understanding of digital innovation: Due to the fact that innovating in today’s digital world has become increasingly complex in nature, it’s important to gain an in-depth understanding of business issues. The ability to innovate is ultimately dictated by the depth of understanding of the problem/issue to be resolved, or important jobs need to be done (satisfying important customer needs), and then, the practice for systematic innovation can focus on translating from the innovation system to the business process. Innovation process could be very loose on purpose; what is very rigorous and systematic is the deep analysis of the original business problem, product issue, opportunity, marketing dilemma etc. More often than not, organizations can no longer rely on a single individual or team to drive innovation, it is the collective effort and requires much deeper whole systems, emergent, generative, iterative and integrative approach. The more ambitious, radical, market-changing innovations are specifically enabled by complete, systems-level specifications of all the relevant valued product or service interactions currently and potentially tied to the targeted product or service.

Digital innovation not only has the broad scope but also has deep context. Especially breakthroughs/transformational innovations are not something everyone can accomplish. You have to systematically develop the capability to execute it successfully, and that is something you do not accomplish overnight. Explore both the breadth and depth of digital innovation and build the roadmap for developing the capability to successfully manage an improvement-innovation continuum.


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