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How to rightsize your digital strategy

Don’t wait for a light-bulb moment. Small ideas are best, but businesses must also assess whether their IT is a speed bump, slowing down innovation

A study from Cass Business School has estimated that less than 40% of industry is digitised, The research, published in a paper called Innovating in the exponential economy, showed that businesses should not dismiss digital disruption.

The research found that companies may need to address their culture and update their IT systems to ensure they keep pace with the rate of business change.

Speaking at a recent roundtable panel discussion on digital innovation, Feng Li, a professor and chair of information management at Cass Business School, said: “People almost always underestimate the impact of change. By the time you notice, it is too late.”

While there is a sense that digitisation is about having a truly original idea, this is actually very rare. The research found that small steps in innovation are more likely to succeed.

According to Li, although people can have a lot of ideas, genuinely good ideas are very rare. Instead, he argued that successful digital innovation is about building an incremental advantage.

“Innovation is rarely about coming up with something totally new,” he said. “New business models are about finding a business model in a different domain and adopting it.”

As an example, he pointed to the failure of some western technology businesses to grow in the Chinese market. “Most western companies adapted their technology to the Chinese markets and failed; the Chinese companies developed native business models and were successful,” he said.

Gideon Kay, CIO, Europe, Middle East and Africa (EMEA) at Dentsu Aegis, said innovation can fail when businesses try to standardise across the globe. “Many things do not scale globally,” he added.

Try not to over-process

Discussing how innovation works at Dentsu Aegis, Kay said the company tries to avoid putting too much of a structure around innovation. “Innovation is part of our DNA,” he said. “It pushes us all the time. We have 45,000 people who are not shy and our clients are not shy. We try not to over-process and try not to create huge innovation funnels and paperwork for people to jump through.”

But some form of framework is needed, according to Joe Baguley, vice-president and CTO, EMEA at VMware. Drawing on his experience in the military,  Baguley said: “What works in the military is a framework for innovation. Be aware not to throw away the culture and everything you have already done, but try something in a different way.”

Gavin Jackson, managing director at Amazon Web Services (AWS), said: “While other businesses are obsessed about the business model, we anchor our culture on customer innovation.”

A company may think of its customers at a macro level, said Jackson, but Amazon has tried to look at specifics. “Our focus is on Jane in accounts,” he said, which means the company tries to build a user journey around the persona of Jane and other categories of user.

AWS and Amazon take a long-term view of innovation, said Jackson, adding: “We are very comfortable with failure and we experiment widely with technology.”

Tech-driven innovation

Any transformation journey needs to start with a goal, according to Sue Dalery, head of programme for cloud, data analytics and artificial intelligence (AI) at TechUK. “It is a very exciting time to be in technology, but it is also a very different time,” she said. “Technology has gone mainstream, and is key enabler of economic growth.”

Cloud computing is clearly regarded by industry experts as a key enabler powering digital innovation, enabling businesses to try new software-driven ideas quickly. The panelists felt it was important for companies wanting to instil an innovation culture in their organisations to allow ideas to fail quickly.

With speed and agility, a business can move very quickly, but, according to Kevin O’Connor, managing director and head of private equity at IHS Markit, this also means a lot of bad ideas get much further than they should. “We need to have a vision and a mission,” he said. “We know where we want to go.”

So although it is necessary to have a factory of ideas through a culture of innovation, businesses should ideally steer these ideas towards a defined goal or business outcome.

Read more about innovation culture

  • Two digital officers weigh in on why the term “failing fast” doesn’t work for their organisations.
  • Digital transformation has been in vogue in recent years. Success depends as much, if not more, on deep-set culture change, as RSA and The Economist Group have discovered.

But the business landscape is always changing, so the outcome must also evolve. This also applies to technology choices. In his research, Li warned that companies can be constrained by technology investments that may have previously served the organisation well.

For instance, a company that used enterprise resource planning (ERP) to automate and streamline its business processes may find it costly and complex to adapt an inflexible system to cope with modern working practices.

“My research found that the notion of a linear relationship between innovation and execution, rooted in a level of certainty and predefined outcomes, is increasingly outdated,” said Li. “In the digital economy characterised by industry disruptions, exponential growth, blurring boundaries and expanding ecosystems, the future path is often uncertain and the final destination unpredictable and constantly shifting. Regularly revisiting and updating strategic plans based on emerging intelligence is essential. Failing to do so can be costly.”

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