Defining Digital Innovation


by Cooper Obenreder

Digital transformation and digital innovation aren’t just buzzwords or concepts to ‘keep an eye on in the next decade’; they are here. Sure, tech like virtual reality received a lot of hype in 2018 and hasn’t really panned out the way we would have expected (yet), but digital transformation (DX) is happening across almost every industry and the time to start thinking about it is now. IDG’s 2018 Digital Business Survey reports that 89% of companies plan to adopt a digital-first business strategy, but only 44% have fully adopted this approach.

Companies founded with a digital mentality (i.e. Warby Parker or Netflix) aren’t really the focus here as they don’t need to ‘transform’, but they are still great examples of the power in digital innovation. Rather, organizations should take note from the likes of The New York Times and Philips which prove that pivoting to digital (in otherwise very analog industries) can help you not only survive, but thrive in today’s landscape. On the other hand, fail to innovate or lean into digital technology and you risk following in the footsteps of Geoffrey the Giraffe or Kodak. With all of that said, what does digital transformation or digital innovation really mean?

Wikipedia states (sorry 8th grade English teacher) that digital transformation isn’t about the technology itself, but rather about people’s ability to utilize digital technology to solve traditional problems. It is the process of leveraging advancements or innovating with technology to reimagine how business is done.

Digital disruption on the other hand is the sometimes lethal effect on businesses that fail to transform and improve experiences or create efficiencies and lower costs. Advancements like machine learning, internet of things (IoT), artificial intelligence (AI), and omni-channel experiences continue to evolve, and each of these technologies have the power to drive serious growth for companies while automating tasks otherwise reserved for humans. This may sound like a problem (or opportunity) reserved for software companies or, at the very least, reserved for the IT department, but every organization can stand to benefit from leveraging digital technology. The key is finding out the best application (pun intended) for your business.

Define, De-Risk, Deliver

To start, it helps to think about the current state of your business and map out where your challenges or opportunities lie. Could your operations team stand to gain from creating efficiencies in your business by providing access to information for improved decision making? Is there a way to improve the employee or customer experience when interacting with your firm? Possibly the opportunities lie externally and involve customers, vendors, or competitors. Or is it an internal problem focused on employees and current systems? We created this simple diagram with examples of work we’ve done to help you understand how and where your business might stand to gain from innovation (Check out our Case Studies for a more information).

Put simply, digital innovation is not easy. Once you’ve defined the opportunity and objectives for your digital strategy, the work of innovating (ie. identifying and testing different solutions) begins.

It is important to keep in mind that this likely will be and should be an iterative process. At Differential, we’ve built an exercise known as a Design Sprint to help rapidly define and de-risk your initiative. We help compress the front-end work that could potentially take months of discussion, testing, and failure into a few days so that you can walk away with a clear vision and a prototype for your digital product that has been tested with real users.

Finally your team must actually execute on the vision and deliver a solution. Any project manager can attest to the issues with large initiatives, but software projects pose their own set of challenges that require unique expertise and experience. In fact, Digital Journal lists a ‘lack of skilled workers’ as one of their Top 5 Reasons that digital transformation fails. Technology like AI and AR sound cool (and they definitely are), but brainstorming ways to use this technology and actually building the tools and systems to do so are very different tasks.

Where do you want your company to be 2, 5, or 10 years from now? Is digital innovation a part of that growth strategy? It should be. As the proverb goes, “The best time to plant a tree was 20 years ago. The second best time is now.”

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