What is Digital Innovation and Why Is It Needed in Today’s Businesses
Updated: Aug 15, 2018
We define Digital Innovation as the implementation of new technologies into existing business processes and systems to solve problems, increase efficiency and productivity, which reduces operational costs, and leads to an increase in bottom line or net profits. Because of this, we see Digital Innovation as a never-ending, ongoing process. This is due to the fact new technologies are constantly being developed and disrupting industries. What may be considered innovative today will not be tomorrow.
Furthermore, companies will always need to find new ways to solve existing and potential problems, and continue to be more efficient and productive. Additionally, companies will always need to communicate in a way that is up to pace with the consumers they want to sell to. By doing so, it will allow companies to remain relevant to their customers, and stay competitive in the market.
Today every business should consider themselves to be a technology company that uses new technologies to provide a product or service to an end user or consumer. Ignoring this truth means very soon companies become irrelevant and obsolete, and end up going out of business.
Why is Digital Innovation Needed in Today’s Businesses?
According to a 2017 research report done by PricewaterhouseCoopers (PwC), where they interviewed 1,379 CEO’s in 79 countries across the world, Uncertain economic growth in their companies was the number one concern for CEO’s covering 82% of the responses. Of the top ten concerns, Speed of technological change and Changing consumer behaviours were the two fastest rising concerns from 2015 to present, rising from 58% to 70% and 60% to 65% respectively.
Based on these findings we can identify several reasons why Digital Innovation is needed in today’s businesses.
1. Your Consumers’ Buying Behaviours Have Changed Due to Digital Innovation
The number one reason is that your consumers’ buying behaviours have changed. Previously, pre-digital world, if a consumer needed to find out more information on a particular product or service they had to rely on what the company’s marketing message had to say in a television, radio, or newsprint ad. At the very best they would seek feedback from immediate friends and family, hoping they had used the product or service before.
However, in today’s Social Media driven world a consumer’s buying process doesn’t start from a marketing message, it starts from a quick Google search, from a review on Amazon, or comments from the brand’s Facebook page. In other words it starts digitally. What this means is you can no longer reach your audience through conventional means or technology, but must adjust to find new ways of connecting and communicating with said audience. Otherwise you will be broadcasting your message to a non-existing audience.
Audiences have shifted to more digital means of communication which were made possible through Digital Innovation. If companies cannot remain current with how their audience communicates, and delivers their message in a way that is relevant, then their messaging will die out and give way to competitors who have the eyes and ears of said audience.
2. Technology Continuously Changes the Way the World Operates Through Digital Innovation
Through the ages technology has disrupted many industries and how the world now operates. Before thousands of workers would be needed in a factory to manufacture a car, to put all the parts together to make a whole. Today, machines do most of the work and there is no longer a need for a large work force.
Before if you needed to conduct a bank transaction you would have to go into a physical bank location. Now you can do it online or from a mobile app. Even the account opening or loan application processes are no longer paper and people based, but are digital-based and automated using tools such as iSurvey. Data collection is digitized, and everything happens online.
During the Industrial Revolution companies who were still doing manual labour were quickly replaced by those who had machinery and other forms of Digital Innovations that were developed. Ironically, those companies who were successful in business in the Industrial Revolution who were unable or unwilling to shift when the internet and the Information Age came about, quickly went out of business. Now we’re in the era of Automation, and moving into the era of Artificial Intelligence and Virtual Reality, and the companies who are unable or unwilling to make the necessary shift won’t be around in the future.
The point is companies who are unable or unwilling to move with the current age and market shift brought on by Digital Innovations throughout the decades found themselves no longer relevant to the market, and were replaced by their competitors who were.
3. Digital Innovation Allows Companies to Disrupt as Opposed to Being Disrupted
As mentioned in the PwC report Uncertain economic growth for companies was the number one concern for CEO’s. The reason for this can be pointed back to one thing: CEO’s see their companies being disrupted by Digital Innovation and more innovative companies, and are uncertain of how to navigate this threat and market shift.
In 1997 the digital streaming giant Netflix was born. In 2000 Its founder Reed Hastings approached Blockbuster to form a partnership. The agreement would be Netflix would distribute movies for Blockbuster online, and Blockbuster would distribute Netflix products in retail videos stores. According to a 2014 Forbes article, Hastings was laughed out of the meeting because the executives thought it was a mediocre idea at best, because they believed no one would able to find the movies online. What they failed to see was the shift in consumer behavior and in 2010 Blockbuster went bankrupt. As of May 2017, Netflix is valued at close to US$62 Billion Dollars.
Companies need to be not just more innovative, but implement Digital Innovation as a part of their growth strategy if they want to continue to remain in business, as Blockbuster clearly shows what can happen to companies who don’t.
All this leads to one simple truth: companies who aren’t willing to move and stay relevant through being the catalyst for Digital Innovation in their companies soon find that they’re out of business.
4. Digital Innovation is the Most Effective Growth Strategy
Over the years there are many companies who have allowed their current success to sabotage their future, and potentially greater success. This is because the company is locked into a mindset of ‘This is how we’ve always done things and it made us a success’. However, they fail to realize that what got them to their current level of success won’t take them to their next level of success.
This is where Digital Innovation plays its most important role in the growth and continued success of a company. That innovation isn’t just about technology. It’s about having a better understanding of the company’s customers, brand, product, and even staff, and using technology as the means to the end.
Companies that have a Digital Innovation mindset have an agile mindset. This means they know not to get stuck into the familiar ways of working. They know how to pivot and adjust to the market, as changes in consumer behaviour and habits occur. They understand that they need to continuously improve their business processes and systems. They are certain that markets are often uncertain, and can shift without notice, especially in today’s world of constant technological changes and advancements. They see technology as simply a tool to be used to further and achieve the company’s goals, not something to be crippled or threatened by.
Once a company is flexible enough to see market shifts, and know how to get ahead of those market shifts, to constantly remain digitally innovative, they will always be successful. They will always know how to position their companies to respond to the market based not only on where the market is, but where it is going.
It is clear why companies need to start thinking and paying closer attention to Digital Innovation, and how it affects their company, positively or negatively. The traditional ways of doing business have been disrupted due to the shifts caused by Digital Innovation. Industries that were once stable are finding it difficult to keep up with today’s technologically advanced world.
Digital Innovation is absolutely imperative in order to remain relevant in uncertain times, stay ahead of your competitors, and current with your customers, in order to ensure that your company is around for at least the next five years as technology continues to disrupt the world.
Digital Innovation & Transformation series:
Part 2: How Digital Innovation Transforms Businesses