Necessity for digital innovation due to the COVID-19 pandemic
Digital innovation encapsulates a coherent set of digital principles and practices that could radically alter the operations of an existing IT apparatus. The Covid 19 pandemic, apparently proved to have a silver lining, with organizations and government entities rapidly adopting digital innovation in all spheres.
The streamlining set by the pandemic years has yet set a benchmark for advanced operations wherein companies are always evolving in an iterative IT landscape to bring in more inclusivity.
Deloitte’s suggestion on the impact of digital technologies on business goals
Deloitte pointed out that despite digital innovation being a ubiquitous agenda, it can be a make-or-break situation, depending on the methodologies. Unplanned or haphazard implementation of innovation principles into the existing hierarchy can be disastrous. On the other side of the coin, a suitable digital innovation partner effectively ensures increased productivity and stable returns.
Consequence of failing to adapt to digital innovation
The analysis showed that with the right digital innovation strategy, Fortune 500 companies are entitled to gain up to $1.25 trillion in surplus market capitalization. However, the wrong strategy puts over $1.5 trillion of their market value at risk.
What is Digital Innovation?
Definition of digital innovation as the implementation of digital technologies
Digital innovation involves strategically applying and adopting digital technologies to improve business operations, create new products or services, enhance customer experiences, and adapt to changing market needs.
Importance of a digital strategy covering various initiatives
Digital innovation employs advanced technologies like artificial intelligence, big data analytics, and cloud computing to discover new opportunities and spur growth for businesses and organizations. It focuses on maximizing existing tools and systems to fuel this progress.
Detailing the essential elements for starting with digital innovation
A digital innovation initiative has four key elements: people, process, platform, and portfolio. These elements must be administered coherently in both front-end and back-end procedures to achieve desired results. It is also vital to set a tangible target, based on the understanding of digital principles, and work towards achieving it.
Digital Innovation vs. Digital Transformation
The distinctiveness between digital innovation and digital transformation
Although closely related, these are unique systems. While digital innovation depends on improving the existing system with advanced digital practices, digital transformation is more exhaustive. It refers to a complete overhaul of the existing system and indicates a sea-change in the way of doing business.
For example, to put it simply, the digital innovation of an operating system refers to improving the existing one with advanced dynamics. On the other hand, in a transformative protocol, the entire system is changed, and a new and improved system is installed to conduct business practices.
Again, digital innovation in smart home technology may refer to the addition of an improved version of the Internet of Things (IoT) for enhanced security. On the other hand, digital transformation would involve the incorporation of an entirely new system to enhance the usability of smart home technology.
Importance of Digital Innovation
Competitive Advantage
Digital innovation aids your enterprise with cutting-edge technology, offering a distinctive competitive advantage. With the right innovation partner, innovation can be an exciting experience.
Enhanced Customer Experience (CX)
One of the prime facets of digital innovation is to improve customer touchpoints to make the experience more encouraging and inclusive.
Increased Efficiency and Productivity
The most obvious advantage of digital innovation is a tangible improvement in efficiency and productivity. This is achieved by incorporating the latest digital methods to bridge the gap between point A and point B.
New Revenue Streams
Perhaps, the most delectable advantage of innovation is to observe new revenue streams into action. Companies report a significant increase in revenues by incorporating these principles into their processes.
Data-Driven Insights
Another prime advantage of digital innovation is that it relies inherently on real-time data-driven insights to achieve the desired goals. The insights could be a potential game-changer in understanding how digital systems can perform in the changing landscape.
Agility and Adaptability
Digital innovation imparts adequate agility within and around processes, to guide them to achieve more. Besides, since the competitive landscape is evolving rapidly, especially with AI, organizations must embrace innovation principles of adaptability.
Key Components of Digital Innovation
Digital Technologies Disruptive Business Models
One of the prime components of digital innovation is the implementation of disruptive business models as potent means to an end. The input of new ideas and technology can effectively achieve a fresh way of conducting business instead of sticking to the competitive lag derived from already existing models.
User-Centric Design
The ultimate focus of digital innovation is to reverse user alienation through the usage of intuitive design principles. The purpose is to offer a heightened sense of belonging for the end user, so much so that the individual is guided to proactive involvement with the digital product.
Data-Driven Decision-Making
Data analysis and incorporation is a core innovation principle. At all stages of the innovation journey, data is parsed to understand the gap between the objective and processes. The real-time and continuous incorporation of data helps business leaders to arrive at better cumulative decisions, even in the long run.
Agility and Experimentation
The process leaves ample space for the agile adoption of modern methods in heightened problem-solving scenarios. There’s always sufficient space for experimentation, and backed by data, the results speak for themselves.
Collaboration and Ecosystems
Digital innovation bridges the gap between different ecosystems to achieve effective collaboration. As the process becomes more and more inclusive, all stakeholders can participate more intelligently to achieve the intended success.
Types of Digital Innovation
Digital innovation for organizational growth is broadly categorized into the following three types.
- Process Innovation:
Companies can lower costs, improve quality, and reduce cycle times by revising internal processes. Adopting cloud connectivity helps link disparate processes and locations across the company. For example, robotic process automation can automate manual tasks in procurement, supply chain management, and other administrative functions. Digitizing logistics and supply chain processes and integrating machine learning and artificial intelligence helps companies recognize data patterns and generate actionable insights for modernizing their networks.
- Business Model Innovation
Business model innovation aims to fundamentally change how companies deliver value to customers. For example, Netflix successfully transitioned from mailing DVDs to online streaming, while Blockbuster failed to make this change, leading to its demise.
- Domain Innovation
Organizations often adopt new technologies to redefine their products and services, either by extending current offerings to new customers or by developing entirely new technology-enabled products. For instance, renting equipment rather than only selling it allows organizations to reach new customer segments that may only need the technology temporarily.
Examples of Digital Innovation
Smart Home Technology
Digital innovation in smart home technology has mainstay applications and a huge growth potential. Increasingly, more and more homes are adapting to living smarter aided by a coherent network of IoT. Digital innovation is also effective in administering key challenges such as increased privacy concerns in smart homes.
E-commerce Disruption
Voice assistants and conversational AI have become popular trends in e-commerce, enabling voice commerce that allows customers to shop hands-free. By integrating voice commands into their platforms, businesses now offer a convenient, personalized shopping experience as voice-enabled devices grow increasingly common.
Digital Payment Systems
Contactless payments allow customers to make purchases without physical cash or cards. Using mobile devices or payment cards with near-field communication technology, contactless payments provide a fast and convenient alternative to traditional payment methods.
Fintech Solutions
A cloud-based lending approach can make a difference by creating an application programming interface (API) that integrates seamlessly with asset systems. This API can provide a sustainable digital model to drive a well-designed lending solution that is seamless and user-friendly.
Ride-Sharing Services
The ride-sharing revolution sparked by Uber and Lyft highlights how technology can fundamentally transform an industry. By leveraging mobile apps and GPS tracking, these companies have created seamless connections between drivers and passengers. This innovation provides convenience through real-time ride tracking and builds trust through increased transparency and accountability on both sides.
Artificial Intelligence (AI) Applications
Digital innovation and AI applications go hand-in-hand in almost all segments of transformation. From gaming to e-commerce and agriculture, and marketing to social media, innovation principles harbored by AI are dominating the scenarios.
Health Tech and Telemedicine
The healthcare sector has undergone enormous transformation with the constant evolution of digital technology. From IoT-powered wearables to remote consultations, digital transformation has fundamentally changed how medical professionals diagnose, treat, and monitor patients, as well as carry out administrative tasks.
Collaborative Platforms
Technology has transformed collaboration by eliminating traditional communication barriers. Teams can now work together seamlessly despite time zones or location, overcoming the constraints of physical distance. Real-time video conferences, instant messaging, and cloud-based document sharing empower effortless collaboration with partners across the globe.
Best Practices for Digital Innovation Strategy
Align with Core Business Objectives
Developing a suitable digital innovation strategy would require the implementation of processes that are at par with core business objectives. Facilitating target-oriented digital innovation is highly effective in conducting business affairs in a way that is coherent with tested market principles.
Foster a Culture of Innovation
The implementation of innovative technology is imperative if businesses are to stay relevant in the long run. By successfully incorporating a culture of innovation, digital protocols promote business growth and newer revenue streams.
Embrace Agile Methodologies
The agile methodology in digital innovation involves the breakdown of the innovation procedure into shorter objectives, with test-and-run procedures implemented at every cumulative phase. Digital innovation, being a comprehensive procedure, must be implemented in agile to achieve the best results without the risk of getting out of track.
Emphasize User Experience (UX)
Digital innovation procedures must be instilled with the ultimate objective of deriving an embracing user experience. The objective of innovative technology should be not to alienate users but rather to cover up the knowledge gap with a faster and more interactive learning curve.
Design Customer-Centric Approach
An obvious inference of inclusive UX is to utilize digital innovation in designing a better and more proactive customer-centric approach. The improved principles should be able to correlate with emotional expectations from customers to provide a more encouraging experience.
Leverage Data and Analytics
A cornerstone of digital innovation practices should be to leverage data and analytics to interpret the needs and dimensions of digital innovation. The more emphasis is placed on harvesting data with a definitive objective, businesses can protect themselves from the pitfalls of randomness.
Foster Partnerships and Collaboration
Digital innovation should be implemented with a collaborative objective. The importance should be on involving the various interconnected processes in achieving the ultimate objective of offering a better UX. Apart from internal collaboration, innovation strategies are also crucial in fostering partnerships between different organizations.
Encourage Experimentation
Since digital innovation is diverse and constantly evolving, it is important to understand what works best in a particular scenario. The more importance is placed on experimentation, the better the results.
Invest in Talent and Skills
An important aspect of digital innovation should be the emphasis on involving new talent and skill sets in the trajectory. This can be done either by hiring new talents or by upskilling existing employees to meet the new challenges.
Continuous Evaluation and Improvement
Incorporating a culture of continuous evaluation is important to see whether the innovation principles are following the right trajectory. Using data sets and involving feedback from the personnel involved goes a long way in improving business operations.
