In this post, we’ll explore the current state of digital innovation: what it means from a business perspective, how innovation continues to transform industries and markets, and how best to implement a digital transformation strategy in your business.
What exactly is digital innovation?
Digital innovation is the use of digital technology and applications to improve business processes and workforce performance, enhance the customer experience, and introduce new products or business models.
The process is ongoing, but in the introduction to this article, you can think of it as happening in waves. Then, You can also each wave is fueled by new technological advances.
The previous wave is Web 2.0, smart mobile devices, and increased high-speed Internet connectivity.
Web 3.0 has impacted our lives and technology as we know it, as evidenced by the Internet of Things (IoT), wearable devices, and smart home applications.
What is digital innovation?
Due to the pandemic, most customer journeys now start online. To remain competitive in today’s digital age, all companies must now think of themselves as technology companies.
Companies can increase revenue, reduce costs, and even create new revenue streams by taking advantage of opportunities to develop digital products using data and predictive analytics to better understand customer behavior and internal performance.
Today’s digital innovation is playing a major role in changing the business landscape at an incredible rate.
There are three types of business opportunities:
Use digital technology to improve conventional business models
Use digital technology to improve current business models and processes
Last, use digital technology to create a complete engagement or business model
Why should you prioritize digital innovation?
Companies that don’t understand the importance of emerging technologies will be easily overtaken by smarter competitors. Smart business leaders must always consider how technological advances will help them stay relevant and add value to their organizations.
These are some of the benefits you will get if you prioritize digital innovation in your business:
Technology solutions that increase ROI and revenue
Improved efficiency and streamlined processes
Any business that wants to achieve long-term success must embrace digital innovation. This is why:
Why digital innovation is important
Data
Make sure data and analytics are at the heart of your digital innovation strategy. Today, due to the ever-increasing interconnectivity in our world, businesses have more access to customer data than ever before.
Business leaders who embrace digital innovation will be able to turn this data into valuable customer insights, helping them make better business decisions.
Customer expectations
Today’s customers have high expectations for a seamless customer experience.
This includes everything from the app’s ease of use to the way you interact with your own employees.
Prioritizing digital innovation will ensure that you continue to deliver a superior customer experience across all aspects of your business.
Employee productivity
Companies can use digital innovation to increase employee efficiency by automating processes.
Core business functions like human resources, for example, can use technology to automate key areas like payroll and employee orientation, giving them more time to focus on other activities.
The digital transformation initiatives of many companies have accelerated in the wake of remote work. In order to maintain business continuity during the global lockdown that occurred in 2020-21, the team was forced to operate from home. After COVID-19 was declared a pandemic, 88% of companies globally required or strongly encouraged their employees to work from home.
Preliminary evidence shows that companies that can quickly shift to a digital work model see 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 increased exponentially as businesses move to the cloud (90% of businesses are already using cloud computing for some of their services), implying that businesses should use technology to enhance their security.
Cybercriminals are getting better, and businesses that fail to keep up with technological advances will pay a heavy price.
What are the risks of digital innovation?
Prioritizing digital innovation, however, is not without risks.
Lidl’s failed attempt to implement an enterprise-wide ERP system is a popular example. The company lost more than €500 million due to the decision not to change their internal processes and adapt the program, before realizing that the customized version was too expensive to scale.
Lidl then reverted to their old system, pointing out the huge downsides that can occur when a digital strategy goes wrong.
Reason? Lidl’s inability to adapt to the standard specifications of modern software is, according to SAP experts, to blame, while others say the software itself is to blame.
Overall, this is a clear example of what can go wrong when a digital strategy is not executed with care and strategic planning.
Ignoring digital innovation is also risky
According to Gartner, by 2025, every industry will adopt digital transformation in some way.
However, only about half of CEOs and senior executives claim to have a digital business strategy.
As per a new McKinsey report, incumbents fear damaging their core business if they innovate. In the rapidly evolving world of technology, this is a very risky strategy.
Kodak is a vivid example of a company falling behind because it refuses to adapt.
They are well aware of the digital revolution and devise excellent strategies. The company created the first digital camera and recruited top technologists to lead the company.
However, the company’s refusal to abandon its core business model eventually led to its demise.
Movies were too valuable for Kodak, and they went from a $30 billion business in 1996 to very minimal for fear of underestimating their flagship product.
In 2012, the company filed for Chapter 11 bankruptcy but resurfaced in 2013 to focus on commercial customers.
Examples of successful digital innovation
Despite the fact that mastering digital innovation is no easy feat, several industry leaders have jumped in and integrated digital technology into their products with great success and spectacular results.
Machine-to-machine (M2M) communication is leading to a new era of “predictive maintenance”.
Sensors embedded in the machine can transmit data that can be used to determine when maintenance is needed. This increases safety and reliability by ensuring that only parts that require immediate attention are inspected, and time is not wasted on well-functioning machines.
A perfect example is the oil and gas industry. Many pipeline operators are now relaying information about pipeline integrity using sensors rather than human inspection, saving time and money while increasing safety.
Marketers engage customers through new touchpoints. Customers now engage with businesses across multiple channels before taking action. Marketers can turn these touchpoints into highly successful acquisition channels with a well-thought-out digital strategy.
