It is said that digital innovation comes in waves and each wave comes stronger than the one before.
You should stop for a moment and ask yourself:
Do you want to surf on these waves,
Or
Do you want to get drowned under these waves?
In today’s world, digital innovation is the key to success.
It can help you reach new heights in your market and offer customers different ways of experiencing your brand.
But what does it mean? How do you know if your business needs to innovate digitally, and how do you go about doing it?
In this post, we’ll explore the current state of digital innovation: what it means on a business level, how it continues to change the industries and markets, and how best to implement a digital transformation strategy in your company.
What does digital innovation actually mean?
Digital innovation is the use of digital technology and applications to improve business processes and workforce performance, improve customer experience, and introduce new products or business models.
The process is ongoing, but as I said in the introduction of the article, it can be thought of as happening in waves, with each wave driven by new technological advancements.
Previous waves were driven by the introduction of Web 2.0, smart mobile devices, and increased high-speed internet connectivity.
Web 3.0 is already having an effect on our lives and technology as we know it, as shown by the Internet of Things (IoT), wearables, and smart home applications.
Because of the pandemic, the vast majority of customer journeys now start online. To stay competitive in today’s digital era, every business must now consider itself a technology business.
Businesses can increase revenue, reduce costs, and even create new revenue streams by leveraging opportunities to develop digital products by using predictive data and analytics to better understand both customer behavior and internal performance.
Digital innovation is currently playing a vital role in transforming the business landscape at an incredible rate.
There are three types of business opportunities:
- Use digital technologies to enhance conventional business models
- Use digital technologies to improve current business models and processes
- Use digital technologies to build completely engagement models or business models
Why should you prioritize digital innovation?
Businesses that fail to understand the importance of emerging technologies will be easily overtaken by more savvy rivals. Smart business leaders should always consider how technological advancements will help them stay relevant and add value to their organizations.
Here are some of the benefits you will get if you prioritize digital innovation in your business:
- A competitive advantage
- Technology solutions that improve ROI and boost revenue
- Improved efficiencies and streamlined processes
Any business striving to achieve long-term success should embrace digital innovation. Here’s why:
Data
Make sure data and analytics are at the core of your digital innovation strategy. Today, due to the ever-increasing interconnectivity in our world, businesses have more access to customer data than they’ve had before.
Business leaders who embrace digital innovation will be able to transform this data into valuable customer insights, helping them to make better business decisions.
Customer expectations
Today, customers have high expectations for a seamless customer experience.
This includes everything from an application’s usability to how you interact with your own employees.
Prioritizing digital innovation will ensure that you are constantly delivering a superior experience to your customers in all aspects of your business.
Employee productivity
Businesses can use digital innovation to improve employee efficiency by automating processes.
Core business functions such as HR, for example, may use technology to automate the key areas such as payroll and employee onboarding, giving employees more time to focus on other activities.
Many companies’ digital transformation initiatives have accelerated as a result of remote working. To maintain business continuity during global lockdowns that occurred in 2020-21, teams were forced to operate from home. After COVID-19 was declared a pandemic, 88% of companies around the world made it mandatory or strongly encouraged their employees to work from home.
Early evidence indicates that companies that were able to quickly shift to a digital work model saw benefits such as access to a global workforce and increased productivity (77% of remote employees say they are more productive working from home).
Security
Cyber-attacks have risen exponentially as businesses move to the cloud (90% of businesses already use cloud computing for some of their services), implying that businesses must use technology to improve their security.
Cybercriminals are getting better, and businesses that fail to keep up with technological advancement will pay a heavy price.
What are the risks of digital innovation?
Prioritizing digital innovation, however, is not without risk.
Lidl’s failed attempt to implement a company-wide ERP system is a popular example. The company lost over €500 million due to a decision not to modify their internal processes and customize the program, before realizing that a customized version was too expensive to scale.
Lidl then went back to their old system, showing the big losses that can occur when a digital strategy goes wrong.
Reasons? Lidl’s inability to adapt to the standard specifications of modern software, according to SAP experts, is to blame, while others say the software itself is to blame.
All in all, this is a clear example of what can go wrong when a digital strategy isn’t executed with caution and strategic planning.
Ignoring digital innovation is risky too
According to Gartner, by 2025, every industry will have adopted digital transformation in some manner.
However, only about half of CEOs and senior executives claim they have a digital business strategy.
As per McKinsey’s new report, incumbents are afraid of damaging their core business if they innovate. In a rapidly evolving technological world, this is a very risky strategy.
Kodak is a real-life example of a company that was left behind because it refused to adapt.
They were well aware of the digital revolution and devised a very good strategy. The company created the first digital camera and recruited top technology experts to lead the company.
However, the company’s refusal to abandon its core business model eventually led to its demise.
Film was too valuable for Kodak, and they went from a $30 billion business in 1996 to a minimal existence out of fear of undercutting their main product.
In 2012, the company filed for Chapter 11 bankruptcy but reappeared in 2013 to focus on commercial customers.
Examples of successful digital innovation
Despite the fact that mastering digital innovation is no easy feat, some industry leaders have taken the plunge and integrated digital technology into their products with great success and spectacular returns.
Machine-to-machine (M2M) communication is leading to a new era of “predictive maintenance.”
Sensors embedded in machinery can transmit data that can be used to pinpoint when maintenance is needed. This increases safety and reliability by ensuring that only the parts that need immediate attention are inspected, and that time is not spent on machinery that is working properly.
The perfect example is the oil and gas industry. Many pipeline operators are now relaying information on pipeline integrity using sensors rather than human inspections, saving time and money while also improving safety.
Marketers engage customers through new touchpoints. Customers now engage with businesses across a variety of channels before taking action. Marketers can transform these touchpoints into highly successful acquisition channels with a well-thought-out digital strategy.
Starbucks is a great example of this approach. In 2009, the business introduced a mobile ordering and payment app. Customers can use this smartphone app to place orders for food and drinks in advance and pay for them. Starbucks announced that mobile orders accounted for a record 22% of transactions in 2020, showing that the initiative was a huge success.
For the coffee giant, however, the real value is in the data generated by the app. It enables the company to reach consumers with personalized marketing messages and timely offers based on their purchasing habits.
Domino’s, a food delivery company with a long history, has gone through a successful digital transformation, according to Fortune contributor Kyle Wong, who calls it a “case study of how digital transformation leads to business value.”
In 2020, thanks to the company’s smart digital rehaul, customers were able to order pizza using emojis and voice recognition technology from Slack, Facebook Messenger, Twitter. During the COVID-19 crisis, this strategy paid off handsomely, with approximately 75% of consumer purchases taking place through digital channels in 2020.
How to put digital innovation at the heart of your business?
It’s not always easy to put a digital innovation strategy in place, but there are some simple steps you can take to get started.
Many larger companies set up in-house accelerators, or innovation centers, where employees can try out new ideas and processes without disturbing the rest of the business. On a smaller scale, this can be accomplished by simply encouraging a portion of the staff to experiment.
Staff
Start by inspiring two or three people who are passionate about moving the company forward to think creatively about how technology can help you solve your problems.
Process
Create an agile experimentation process that allows you to monitor your progress and receive feedback. Make sure this takes place outside regular business activities to avoid disrupting current operations.
Technology
Adopt the right technologies that allow you to merge all aspects of your company’s requirements. This will be different for each company, but it could include things like team management, collaboration, cloud access, and product lifecycle monitoring.
Review
Create a system for tracking quick wins and failures. This will help you to determine which experiments are worth continuing and which are not.
What are the next tech trends driving transformational change?
According to PwC research from 2015, the top digital technologies strategically important to CEOs were mobile technologies, data capabilities, and cybersecurity.
Those forecasts weren’t far off the mark, with mobile accounting for 61% of all eCommerce traffic in 2020 and the cost of cybercrime damage expected to reach $6 trillion annually by 2021.
5G, Quantum Computing, and Customer Data Platforms (CDP) have now joined AI and cybersecurity as the top digital transformation trends for 2021 and beyond, according to Forbes.
The comprehensive report “Tech Trends 2021″ by Deloitte offers an end-to-end analysis of the macro technology advancement that are going to reshape the industries as we know them. The top technologies which are expected to challenge incumbents are digital reality, cognitive technology, and blockchain, while digital experience, analytics, and cloud remain strongholds of digital progression.
Conclusion
If you are a non-tech company, it’s time to start thinking about digitalization.
It doesn’t matter if your industry is traditionally considered “heavy” or not; the use of digital innovation in business has only grown over the past few years.
With digital processes now affecting every business sector on the planet, the question is no longer whether your industry will be impacted by digital innovation, but when.
What do you think now about incorporating some digital innovation into your business?
Frequently Asked Questions
What is digital innovation?
Digital innovation is the use of digital technology and applications to improve business processes and workforce performance, improve customer experience, and introduce new products or business models.
Is digital innovation important?
Digital innovation has become essential in the modern world, with businesses using it to streamline processes and increase efficiencies. It allows companies to stay ahead of their competition by constantly implementing new technologies that improve customer experience. Without digital innovation, growth can be slow and a company may find itself overtaken by competitors who have embraced these advancements for years now!
What are the 4 main areas of digital transformation?
Technology, data, process people, and organizational change capability are the four key areas of digital transformation. An organization must have talent in all four areas in order to successfully digitally innovate.
