The Five Digital Flavors of Innovation

By: Pearl Zhu

Innovation must become your business routine and corporate culture to renew creative energy. Digital innovation has a broader spectrum and the hybrid nature. It comes in the variety of flavors and there are many opportunities in an enterprise to taste it. The companies who get the most from innovation effort have the right ambition, open leadership, and culture quintessential.

The purpose of innovation categorization and differentiation is not about separating and siloing these management disciplines, but about how to best link them together – across focusing on core activities to develop innovation competency and manage a healthy innovation portfolio in a structural way.

Systematic innovation

Innovation is not serendipity; organizations should ideally have a structural and sustainable approach to manage innovation. A systematic approach is to depict innovation as a system, whose performance depends on the alignment of its various components (people, process, technology, actions, controls, resources, etc). Fundamentally, innovation is the process to solve business problems in alternative ways. Innovation process could be very loose on purpose, but what is very rigorous and systematic is the analysis of problems and the ability to innovate by the depth of understanding of the issue to be dealt with, and identifying and evaluating opportunities where important problems need to be solved. And then, the practice of systematic innovation can focus on translating from the innovation system to business processes. Digital innovation often has a lot to do with external circumstance; traditional management approach usually focuses on internal factors only. It is important to leverage a systematic approach with robust processes and tools that deal with both and enable the business for generating winning concepts on the consistent basis to manage innovation systematically.

Customer-centric innovation

The digital era upon us is about people-centricity. The customers, including prospects, should be observed and studied. For a customer-driven innovation, customers are the major focus of the digital innovation process and accomplishment. Listen to customers and involve them in the innovation process to gain insight. This involves gaining a deep understanding of the motivational construct of the customer through empathy and observation with the innovator by taking a more inductive approach as to what the customer wants to accomplish “next,” and then, they become more anticipatory and figure out how to solve innovation puzzles presented by differences between what is verbalized, what is acted out, and what is technically feasible. Innovation must prove its value in the market. Customers must be willing to  pay for this, be it a product, process or service innovation. Thus, customers become an important link in the innovation process management. When managing customer-centric innovation life cycle, customer involvement at all stages often elicits highly valuable information.

Open innovation

Open innovation = innovation whereby a company uses ideas, sources or help of people outside the company. These people are normally business partners, customers or crowd-sourcing consultants. Open innovation leverages all available information sources in developing a robust innovation pipeline to improve innovation management effectiveness. Innovations simply benefit from being developed and subsequently commercialized in a more open ecosystem. There is more flow of creative ideas, the more is happening, the pie gets bigger. The smaller players can gain economies of scale through collaboration. Open Innovation not only lies in an industry that is rapidly growing and market participants are small and fragmented, but also in the mature sectors or traditional companies that only innovation can rejuvenate their business by breaking down the bureaucratic culture and improving their business changeability and innovation capacity.

Design-driven innovation

Design becomes a strategic business driver equal to business and technology. Good design is much more than decoration. Tools for design are user personas, scenarios, and storyboards. The design is largely considered a byproduct of solid engineering discipline. The design-driven innovation requires planning and fine-tuning that must take place to deliver innovative products or services. It is also about composition as designers seek a different kind of inspiration. Design-driven innovation is neither spontaneous nor serendipitous. Design-driven innovation has different stages of maturity. From design-by-default, where design just happens and design is dictated by status quo policies, procedures, tools, and old mindsets, to design–by-practice, where design becomes the key ingredient of innovation strategy, and design-driven innovation has been supported by cohesive business capabilities, fine-tuned business processes and high-skilled talent teams with open-minded people in creative business environment. When the organizational maturity about design increases, design moves from a superficial afterthought (branding a design) to competitive advantage (branding through design). Very few companies can arrive at the top of the design maturity pyramid, but it is the journey worth the effort.

Management innovation

Management innovation means to accelerate innovation at the multitude of management levels. Management innovation is a new angle to orchestrate a broader spectrum of digital innovations. Management innovation includes multiple elements such as communication innovation, culture innovation, and process innovation, etc. Management innovation can be very powerful; it really comes with personal risks as you get close to the “core of power and control.” Management innovation can change the way managers do what they do to improve the organizational capability to innovate. It’s important to create the space for dialogues and debates about why management innovation is important for their organizations, developing a common understanding of it, creating the necessity and motivation for it. To achieve that, the right atmosphere should be created and maintained, such as how to encourage innovation, reward innovators, optimize innovation processes, build innovation capacity, and develop a culture of learning.

Digital is the age of innovation. Digital innovation has all sorts of flavors; there are sweet spots, also some bitter taste. Innovation needs to be introduced all over the spectrum of the product or service life cycle which includes refreshing the portfolio, finding totally new fields or ensuring ongoing profitability and extension of the current portfolio. Innovation has to become the business routine and corporate culture to renew creative energy and it requires a systematic approach to manage a balanced portfolio for building innovation strength in the digital organization constantly.

By Pearl Zhu