Digital Innovation and emerging technologies
Ahmed Shokry
Digital Transformation Expert | Strategy Consultant | Business Transformation Advisor | MBA | TOGAF | GenAi | Innovative Business Solutions ??Let’s Mark it ?? Digital Transformation ?? Strategy ?? MBA
Digital organizations are innovative by nature. This is partly because they actively seek to disrupt their market, their environment, or themselves, and partly because the rate of change in technology is so high that few leading organizations can stop changing once they have embarked on a path of digital strategy.
?Innovation changes the fundamental nature of an organization’s internal and external environments. A successful digital organization must be able to track, adopt, and adapt these innovations to maintain its position. To grow its competitive advantage, it must become innovative itself.
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An innovation can be small and incremental or large and transformative, and it can take many forms. Innovation includes changes to products or services, the organizational structure, supply chains (as in the case of Amazon), or the customer experience (as in the case of Disney or Apple).
?Some innovation is minimally disruptive: it changes how existing activities are performed without changing how the organization functions as a whole. Other innovations, those that bring the most long-term competitive advantage, are called ‘discontinuous innovations’. Discontinuous innovation is an innovation that completely replaces what came before.
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Whether innovation is being used to enhance existing capabilities or as a means to disrupt an entire ecosystem, it enables digital transformation. How well an organization innovates determines how well it will compete and survive in the long term, so innovation is an essential skill for individuals, teams, and organizations. Unfortunately, most organizations do not understand innovation. Even those that do often do not have a disciplined innovation process.
As defined in ITIL 4, Innovation is the adoption of a novel technology or way of working that has led to the significant improvement of an organization, product, or service.
?An important aspect of this definition is that innovation can only be said to exist if an idea has been implemented and has impacted the organization. Many new technologies and ways of working are created and offered within and outside organizations, but they are only innovative if their adoption leads to improvement.
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Evaluating possible innovations and focusing on those that are likely to produce the desired outcome is key to managing innovation. This approach relies on:
?These capabilities introduce requirements into multiple practices, particularly business analysis, portfolio management, project management, change enablement, organizational change management, workforce and talent management, and relationship management.
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The management of innovations is likely to be supported by a dedicated value stream. However, innovation, like any strategic capability, cannot be managed by a small, specialized team working in isolation. Rather, it should be embedded in the organization’s operations at every level. Identifying innovation opportunities should be encouraged across the organization.
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Processing the initiatives should be a prompt and transparent process that includes effective feedback loops. It should involve the initiatives’ originators wherever possible. The initiatives’ effects should be reviewed and reported on with high failure tolerances: not every idea or initiative will become an innovation.
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Strategic capability | Managing innovation
?Are you a management innovator? Have you discovered entirely new ways to organize, lead, coordinate, or motivate? Is your company a management pioneer? Has it invented novel approaches to management that are the envy of its competitors?
?Innovation in management principles and processes can create long-lasting advantage and produce dramatic shifts in competitive position. Over the past 100 years, management innovation, more than any other kind of innovation, has allowed companies to cross new performance thresholds.
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Yet strangely enough, few companies have a well-honed process for continuous management innovation. Most businesses have a formal methodology for product innovation, and many have R&D groups that explore the frontiers of science. Virtually every organization on the planet has in recent years worked systematically to reinvent its business processes for the sake of speed and efficiency. How odd, then, that so few companies apply a similar degree of diligence to the kind of innovation that matters most: management innovation.
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The purpose of managing innovation is always the same: to enable an organization to succeed in a constantly changing environment.
Some innovations will be used to determine the organization’s strategic position. Other innovations will be used to perform existing activities more efficiently or effectively, enabling the organization to outperform competitors who offer similar products and services.
?Furthermore, innovation can challenge an organization’s existing strategy and objectives. For example, a strategy based on innovative technology must be revised if that technology is replaced or a competitor emerges with a better solution.
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Digital leadership is not about being as innovative as possible or reacting to innovations that come an organization’s way. It is a deliberate art of selecting, and then building or applying, those possibilities that will give the organization the greatest chance of success.
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Executives need to be able to choose the opportunities that represent the best way for their organization to achieve its objectives. The ability to identify and manage innovation is thus at the core of an organization’s ability to define and manage its strategy.
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Managing innovation | Mindset & Culture
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Innovation begins with solving a problem for customers or within the organization.
It requires an entrepreneurial mindset. Large global organizations often have formal research and development (R&D) or innovation teams, but the best ideas do not necessarily come from them. In fact, the vast majority of industry-changing innovations are developed by entrepreneurs.
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This is because entrepreneurs focus on innovation that is important, not just interesting. They solve customer needs and build businesses around addressing those needs, rather than working on technology that is exciting. Innovation is the result, not the goal.
?‘Work on what’s important, not just what’s interesting – there’s an infinite supply of both.’ Frank Guarnieri
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It is critical to understand that innovation is only viable if it solves a customer problem; if it does not meet this criterion, it is a waste of time. Further, innovation should not be limited to an organization’s R&D or innovation team. Some of the best ideas for innovation come from frontline workers who regularly interface with customers. They see the struggles, frustrations, and unsolved needs that customers face. Therefore, there must be mechanisms in place to capture and act on their ideas.
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Innovation or adoption
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The scope of innovation management is a matter of some debate, but organizations should take a pragmatic approach. For clarity, ITIL draws the following distinction: innovation is novel. It may be a new technology or way of working, or it may be a new way of using an existing technology or working method. Innovation does not include adopting a tried and trusted technology or working method, even if it is new to the organization. However, for many organizations, the introduction of something new, innovative or not, requires a shift in capabilities and culture.
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Innovation must be managed from the time an idea is conceived to the time that it has been built into a fully functional solution. Some organizations focus on initiating innovative ideas and building innovative solutions internally. Others scour the external environment for ideas and early-stage technologies that will save them time and effort in changing their business and operating models or product lines to become more competitive.
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Most organizations prefer to wait for others to innovate, so that they can adopt the mature technology or method after it has been tested. Some use those solutions to spark smaller-scale innovations to apply to their unique environment.
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The way an organization uses innovation will be reflected by its position in the market. This can be described in terms of Geoffrey Moore’s technology adoption lifecycle
Organizations that focus on innovating will tend to be more disruptive, but they will face a higher risk of rejection of their products or services. Many innovative technologies and products have found their way to the market but never been widely adopted. They eventually disappeared or remained niche. Examples include MiniDisc; full-keyboard mobile devices; smart spectacles, such as Google Glass; and Segway. Moore calls this risky part of the adoption curve ‘the chasm’.
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Those that only use tried and trusted technologies will compete as adopters, only disrupting their own organization in an effort to keep up with leading competitors. The early majority will often adopt technology but find innovative ways of using it.
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It is important to note that all these positions (except for laggards) are viable, but the organization’s chosen position will determine which approach is desirable. Laggards face the risk of being acquired and dismantled, or going out of business.
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Achieving a balanced approach to innovation
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Although innovation offers substantial rewards, it is also inherently disruptive and risky. Innovation can help an organization to outmaneuver its competitors, but uncontrolled innovation can waste precious time and resources and, ultimately, plunge it into chaos.
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Managing innovation involves managing uncertainty. Almost everything about it is uncertain, including what it will cost, whether the idea will work in practice, whether the implementation will have the desired effects, whether the organization will accept the changes, etc.
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Just as each organization evolves a risk posture that determines how it manages the uncertainty of risks, each organization will evolve a posture regarding innovation. This posture is determined by how the organization responds to several variables and is based on its culture, objectives, regulatory requirements, and funding.
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Several variables will be relevant at any given time. Some of these will be more significant when considering the organization’s overall approach to innovation, while others will be more significant when evaluating individual innovations. These variables include:
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Innovation matters, not only at the level of the individual enterprise but also increasingly as the wellspring for national economic growth.
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