Have you hear about the industry 4.0? Or about Internet of things (IoT) cloud computing, customer experience or social selling? I reckon you do, as it is almost impossible space of this buzzwords nowadays. But among all these words the winner is Digital transformation. This seems to be the big breakthrough, that will help to disrupt and evolve the way we run the business, and also to improve our relationship with customers. However, there are two big problems. It is not weird talk with some executive (in some industries) and notice they have not a clear idea yet what is this about, they still wonder the benefits this digital thing could bring or how they should move forward. Obviously in al these cases they have not invest enought money, time and resources so it is very difficult to see any impact (as they get the same results they are already getting). The second big problem, that is derived from the first one is for all those ones that ask: we are about to close our digital transformation project, so now what?
Is it a project or a way to run business?
In both cases (mentioned above), there is only one root cause. They have not understand the problem and the basics. I would like to take one step back to review the definition of project (I know there are several, but the more common one). A project could be the opposite definition, and this example could help to explain what the digital transformation is. A project is a group of activities (grouped in phases) with a clear and defined scope, to be executed in a define timeline, to get an agreed goal within a approved budget upfront.
The digital transformation is,indeed, a way to run the business and not a project. It is based on continues improvement activities and there is not an agreed total budget (although it is per year). But there is a clear vision: get a better business relationship with the customer in the long term, based in a higher engagement, when our product/services are bundle in solutions to meet customer requirements solving their problems. We should take into account that customer needs/problems could change in the time, therefor the direction the company should take should be adjusted and will evolved.
So, it is clear we are talking about a way to run the business, and not about a project (with a clear start and ending point). Said this, we can jump into the Innovation concept. This is other of the buzzwords, very used now in any presentation or keynote, but we should use carefully. So, let’s start with the following question: Is the same innovation and (Research and development) R&D?
Is the same innovation and (Research and development) R&D?
It is very spread out belief that companies within some industries are more advanced or invest more money in innovation. But this is not completely true. All the companies can and should innovate. The R&D is another game.
The R&D put together activities from engineers and scientific researchers. They are pretty expensive initiative, with very often results a very long term. Usually there is a small percentage of successful initiatives. However, this is a key activity to progress not only in the corporate side, but also as society. Due them, there are new products in the market, new technologies come across, products are improved, there are new methodologies (based on scientific data proof).
The innovation, although very related with this above, it is different. It become something broader and that should be in the DNA of any organization.
Innovation means bring up new changes, using existing elements with a simple goal: improve existing products or add new improvements in order to make them more competitive in the market
I know that the word element could be anything, but this is the true. Innovation is very broad, it could be about resources, technologies, methodologies, processes or materials. In other words, any area could be improve. We can bring innovation over any area. Because of this, the innovation should be in the core of the corporate culture of any company. Any team could improve a process to be more agile, flexible or dynamic. Although it is true, when usually, innovation used to get along nowadays with technology to find new business cases, or setting new business models.
Bringing back one of the topics discussed some lines above, and trying to reply the question of the title, I really thing the innovation plays a key role. The digital transformation is about innovation. It is about to improve how we do things, not only our product portfolio or how we connect with our customers. The innovation is in all the small details, as make it easier the invoicing processes for the consumers, post more added value content in our communications or lean process reducing steps or make them easier. It is not needed to applied high tech in all the innovation project we run. One of the big lesson learns, for all of us, from the entrepreneurs is that all the changes are possible. Some business models looked like set in stone, when out of the blue were disrupted by Uber AirBnB, Spotify, Netflix, Salesforce.com, Whatapp, Telsa, Amazon,…
Innovation, is it the next step in the digital transformation?
We already talked about the digital transformation is not a project, as it should be a way of running business. The innovation should be in the core and engine for the growth. We should challenge our surrounding to find improvements, using existing (or new) elements. Why not disrupt business model, find new usages or new customer segments for existing products or lean existing process (even though we did not create them). The customer should be always in our thoughts, in the center of our strategy and all our projects should respect this principle. The innovation is built taking baby steps, challenge the existing way of working to make it better. Let’s think how to put in practice these within a business case.
Of course this is not an easy and smooth journey. It is very important believe in this, get the concept and ensure our colleagues (and managers) do it as well. As soon as the need is identified, we can thing in the added value, it is matter to adopted it to our business. The innovation is the real engine of any industry. We can stay as we are, but we will be knock out by others (taking this approach). Obviously this is a not a risk-free decision. If we want to be successful we should save a pocket of money to ensure this continues improvement and A/B testing. Using same tactics, we can not wait different results.