A lot has been written and talked about innovation. The case study of how 3M was at the pinnacle of innovation in product development has been a part of the corporate lore and was much studied when I was in B-school. Innovations until the 1970s and 1980s were manufacturing-centric, or assembly-line oriented. And then the internet took over — redefining the meaning of innovation for good.
Here are a few pointers on what to look out for, when embarking on an innovation journey in the digital era.
Innovation is all pervading
Innovations can be in the domain of products, processes, distribution, communications or anything else. Think of Apple, not so much as a product innovator, but as a case study in supply chain innovation, and you get the drift. Also, for innovations, there need not be specific problems to solve, there are just broad areas to sniff and delve into for improvements and transformation.
Innovation is transformational
Innovation is transformational and not incremental. One could spend a lifetime innovating products, only to realise that the entire industry has been disrupted. Ask Kodak or Nokia and they’ll nod in despair. Internet companies top the listing of most valued companies globally, when just a decade ago the list was dominated by oil majors and manufacturing giants.
The digital era has given rise to new business models:
1. The multi-platform model
The platform serves as a convergence point between service providers, on one side, and customers on the other. Matching customer to service provider, offering convenience, facilitating payments and transactions is enabled by technology. A few popular examples are — asset sharing: Uber, AirBnB and Oyo rooms; service: Zomato, Urban Clap, Blabla Car and TripAdvisor; product: Amazon Marketplace and eBay; and communication: WhatsApp and WeChat. Here, the demand and supply side feed off each other, such that growth on one side leads to growth on the other.
2. Platform/software as a service
Software today runs as a service and not as a product which one can buy off the shelf. Microsoft, Autodesk and Adobe no longer offer a one-time purchase product. They offer the service as a periodic ‘licence’ replete with all upgrades. Riding on good connectivity and cloud infrastructure, capital spends are almost done away with. This helps the client and the service provider as it assures the latter of constant revenue streams.
3. Subscription model
Netflix, Spotify, Magzter, and the multitude of such services have displaced the ubiquitous CDs/DVDs, magazines. Why just entertainment, you could even ‘subscribe’ to gaming portals or even lunch meals, or bicycles. Who knows, even cab services may offer weekday subscriptions for home-office-home or weekend packs.
Additionally, there are ad-funded, limited period free trials and Freemium business models, where you fill the funnel with the lure of free and then convert to paid by endearing the product to the customer through high level of personalisation or sharp contextual upselling.
All these business models ride on the internet and are big ideas — innovations which don’t necessarily require a lot of capital but transform the way of doing business, and in the process, adds a lot of value.
Innovation is a cultural change
A truly innovation-centric organisation requires a DNA shift. It must continuously look for newer ideas, sift through and discuss these ideas — however small or insignificant they may seem, evaluate the business impact, assess risks and be willing to rewire itself. The ideas themselves can come from the business environment or even from a potential customer.
Innovation demands leadership that is optimistic, welcoming to change, open to criticism and, most importantly, doesn’t fear failure. They don’t hold on to their ideas but are willing to accept that brilliant minds are all over, irrespective of the hierarchy — waiting to be unshackled.
Innovation is to take goals forward
Innovation is not an end in itself, there has to be a clear business objective on the journey to innovation. There are businesses which think of themselves as innovative once they launch a smartphone app, when they are no more than digital brochures. Similarly, adoption of newer technology is not innovation by itself, it’s at best, an enabler. Innovative businesses take stock of things that worked and the value they added to the organisation as also of things that have not worked.
Innovation is about people
Innovative businesses are created by innovative people. The leadership has to facilitate the process by suitably reskilling the key people. The process of reskilling, learning, unlearning and refreshing holds significance in the digital era. Providing exposure to a wider business environment, forming a world-view, shared learnings as also inculcating an atmosphere where people are free to make suggestions without being judged is a key part of the innovation journey.
Given the diverse environment, all the skill-sets are not always available within the organisation. There is a need to forge partnerships to succeed. Partnerships of diverse perspectives but shared values act as a force multiplier and churn out new dimensions. For instance, Vodafone’s global partnerships with insurers, fleet operators, and automobile manufacturers for IoT (Internet of Things) unleash huge potential to transform these businesses.
The above are just a few things to remember when one takes the path of being consciously innovative. While history is replete with success stories coming from ‘one-off innovative sparks’, it’s unlikely now. The spate of changes and disruptions in the digital era demand agility and near real-time actions — all the time.
What the internet brought about in the last two decades could be induced by blockchain in the times to come. Blockchain — which is a technology or a philosophy depending on how you look at it — is likely to trigger a wide range of innovations in all spheres of our life. Artificial intelligence, connected devices and additive manufacturing would do the same.
Resources for the next round of innovations to kick in ride on the core pillars of big data, high quality connectivity and access to superlative computing power. With these being a given, transformative innovations could take place any time, anywhere and in any industry.
(The writer is a senior professional working in the digital domain. Views expressed are personal.)