Digital innovation has been driving change in the economy for years, and it will continue to do so for years, if not decades.
In this post, we’ll look at several reasons why you should invest in digital innovation before waves of innovative new technology leave your business behind competitors.
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3 Reasons Why You Should Invest in Digital Innovation
Technologies such as the internet and mobile networks have already transformed the way we work and live. These two examples demonstrate how drastically the world can change as a result of technology-driven innovation.
Yet the changes we have witnessed so far are just the beginning of the digital revolution, according to some experts.
Today’s emerging technology, such as artificial intelligence (AI), augmented reality (AR), virtual reality (VR), and blockchain – among others – will have an even greater impact on the business landscape.
Here are a few specific reasons why every company should invest in digital innovation, new technologies, and digital-first business models:
1. “Disrupt or be disrupted”
Digital leaders aren’t just generating major profits, they are completely upsetting traditional markets.
The internet, for example, gave birth to entirely new generations of technology-driven organizations, such as Amazon, Netflix, Google, and Apple, among many others. When these companies came to power, they overturned existing leaders, such as Borders and Blockbuster.
The difference, as most business professionals should know, is that the disruptors adopted and leveraged technology to its fullest extent. Laggards, however, were reluctant to adopt new technology and they failed to see how technology would transform the economy and their own industry.
These illustrative examples show why it is so important to proactively innovate with technology: disruptors win, while laggards lose market share.
Since we have years of digital innovation and disruption to look forward to, this lesson will hold true for the foreseeable future.
More importantly, these changes are occurring at an even faster and faster rate, so it is crucial that businesses adapt aggressively, rather than waiting until it is too late.
2. Innovative technologies accelerate growth and profits
The examples cited above may be the most extreme cases of disruption and they likely don’t apply to every organization or industry.
A financial services business, for instance, will be unlikely to overturn its industry by adopting new tools and technology.
However, there is a more concrete, tangible reason to innovate – profits.
The innovative use of new technologies, whether that technology is digital or physical, can generate new forms of value for customers.
For instance, an organization that adopts a new marketing platform may be able to offer customers a better omnichannel shopping experience.
Likewise, an organization that uses an AI-powered recommendation engine on its site will almost certainly see an uptick in upsells, cross-sells, and profits.
3. Business resilience and innovation go hand-in-hand
Business resilience became a top priority in 2020.
As COVID-19 ravaged the world, many organizations were faced with unprecedented challenges.
While every industry faced its own unique obstacles, one common theme among many industries was that digitally mature companies were more resilient.
Those organizations that had already migrated to the cloud, for instance, were better prepared for the work-from-home (WFH) paradigm. On the other hand, companies that had yet to adopt cloud technologies and tools were stuck building out basic digital capabilities.
The lesson for the future is simple: innovate now to stay prepared for unexpected disruptions tomorrow.
How to Embed Digital Innovation Into the Business
The topics explored above should demonstrate clearly why innovation is so crucial – it isn’t just advantageous, it is essential to prepare for an economy where disruption is the norm.
But how exactly should an organization build innovation into their organization?
Here are a few strategies to consider:
Create processes, functions, and teams dedicated to innovation
First and foremost, it is necessary to actually commit to digital innovation.
Among other things, this means:
- Creating digital adoption programs
- Designing and pursuing digital transformation plans
- Embedding digital innovation into the organization’s culture
- Obtaining buy-in from leadership
- Recruiting a committed change management team
In short, digital innovation must become a strategic priority for the business.
If that commitment is not translated into actual programs, after all, “digital innovation” risks becoming a buzzword that has no tangible impact on the business.
Set goals, define measurable objectives, and track performance
What can’t be measured can’t be improved upon, so it is crucial to structure innovation efforts as one would any other business process.
- Developing an overarching strategic vision
- Translating that vision into a set of articulated goals
- Creating quantifiable objectives, metrics, and KPIs
- Collecting data continually
- Learning from and using data to drive transformation
An organization that develops a product innovation team, for instance, should set very clear goals for that team, then track their innovations’ impacts on key business metrics, such as sales, the customer experience, customers’ lifetime value (LTV), and so forth.