Digital innovation has become one of the bywords of the modern age.The seemingly relentless advance of new digital technologies is helping drive both economic and behavioural changes, while overhauling strategy and business models across industries. So how can businesses bridge the gap between innovation and execution? Professor Feng Li, PhD, FBAM, Head of Technology and Innovation Management at Cass Business School, explains.
Within this context, innovation is on every organisation’s agenda; how can companies continually adapt to new technologies and embrace new ideas at the pace they need to? The unpredictability and speed of change in today’s competitive world means being able to achieve this is now paramount. Timing is now perhaps the most important factor in creating a successful strategy for innovation: being too quick or too slow can have dramatic consequences on the successful execution of an idea.
That’s why I recently authored a report with VMware looking at digital disruption, which outlines ways for organisations to master the art of timing and take the lead in digital innovation.
Be quick, but more importantly, be flexible
In a world characterised by exponential growth, blurring sector boundaries, and expanding ecosystems, the survival of many businesses depends on their ability to understand change and respond to it quickly. Sometimes this will mean innovating as they go, without having all the answers in place. This may contrast with business instincts initially, but speed is critically important to making innovation timely.
Companies therefore need to be able to identify and green light ideas quickly, adjusting their strategy as new intelligence emerges. This requires a flexible approach to decision-making. Many decisions are reversible, so to pursue a new idea, a quick and clear decision making process is usually sufficient. In any case, most decisions should be made once a business is in possession of around 70% of the information – waiting for 90% will slow the process down and often make it too late to deliver genuine innovation.
To increase their flexibility, firms also need to ensure their strategies for innovation and execution are iteratively linked, based on continuous monitoring, regular redefinition of path and destination, and frequent course correction. Failure to do this can mean that ideas become obsolete before they are implemented. Being flexible also requires the ability to quickly recognise and correct bad decisions. If you’re good at course-correcting, being wrong may be less costly than you think – but being slow will always be costly. To speed up decision making, executives often need to agree to disagree and commit to one course of action instead of waiting for everyone to get on board. Even if you end up going down the wrong route, with an adequate course correction strategy in place few decisions will end up being a bad one, and you will save invaluable time. This will make the difference between you and your competitors when it comes to executing new ideas.
Review plans and processes constantly to boost flexibility
The non-linear relationship between innovation and execution should not permit business leaders to undertake reckless action without prior planning. The exponential economy gives rise to an urgency imperative, but it does not make panicked or knee-jerk responses necessary. Reacting rapidly to competitive innovations – sometimes known as a ‘fast follower’ strategy – can potentially be successful, but requires constant planning and an agile culture behind the scenes to ensure good decisions can be made quickly.
Being agile is critical, but it’s often forgotten that innovations don’t always have to be ‘new’. Many organisations invest huge time and effort unearthing ‘new’ innovative business models to allow digital technologies to better underpin strategic change and innovation. But new business models are rarely based on unprecedented ideas. Rather, digital technologies allow companies to deploy a broader range of business models than before. These can be adapted from one domain for another, or organisations can adopt a portfolio of business models to ‘hedge bets’ across different opportunities to enhance overall financial sustainability and resilience. As VMware’s EMEA CTO, Joe Baguley, says: “we must have a solid framework that allows agility, founded in the culture, the methodology and technology of an organisation. But we must also be brave enough not to discard everything we’ve learnt so far”.
Ultimately it’s a balancing act – between moving forward quickly and taking on key learnings from existing strategies. Being innovative means building and maintaining the capabilities to pursue ideas, at the right time, while regularly revisiting and updating strategic plans in response to the latest information available.