APC's Continuing Digital Innovation Journey

Learning how to succeed at digital innovation was the highest rated topic on the fall 2020 poll I conducted for Advanced Practices Council (APC) members – all senior technology executives at Fortune 500 corporations - despite the raging pandemic that was predicted to get much worse. I suspect that APC members, all savvy practitioners, recognized that digital innovation continues to be a crucial corporate imperative for thriving in the future and they are both expected and well positioned to play a leading role.

We know by now that digital innovation is not the same as leveraging information technology to computerize business processes to gain efficiencies and reduce costs – the work IT leaders have learned to do well over the last 40+ years. Instead, digital innovation is innovating throughout the corporation by enhancing products and services, creating new products and services, and even changing the organization’s business model. Such innovation is enabled by existing and emerging technologies (e.g., artificial intelligence, machine learning, sensors) and practices (e.g., analytics on big data sets). These technologies and practices facilitate collecting, analyzing, and integrating the right information and resources to deliver better outcomes to customers. Consider Philips Corporation’s innovative rethinking of its healthcare business. Nicholas Berente of the University of Notre Dame described how Philips’ HealthSuite digital platform transformed Philips’ healthcare business from selling healthcare devices (e.g., healthwatch, COPD patch, fall detection monitor, heart failure monitor) to providing a digital platform to capture and integrate consumer and patient information. Along with its ecosystem partners, Philips has become a major player in delivering health information. According to the Philips website, it sees “healthcare as a connected whole… all supported by a seamless flow of data.”

APC members and their organizations have years of invaluable experiences and capabilities to apply to digital innovation. They are familiar with existing technologies and practices – and know the right questions to ask to identify the most promising emerging ones. They have demonstrated success at agile approaches to developing and executing applications while maintaining and upgrading state-of-the-art infrastructure. They have launched pilots and applied the learning to subsequent pilots. In short, they have built credibility that they can deliver securely and proactively.

Just as important if not more so, APC members have built relationships across their organizations’ business units and functions, positioning them to participate actively in digital innovation conversations. But future conversations to uncover digital innovation opportunities must be across all levels, not just CIOs’ counterparts and possibly those of their business relationship managers. Those in business units closest to current products and services valued by customers might be best positioned to surface new ideas and ask questions that lead to innovation for many reasons, including their understanding of customer needs and opportunities as well as being less entrenched in the “way things have always been done.” Moreover, many younger employees have grown up with technology and naturally think about additional ways it can help them and their customers.

APC members have been learning from state-of-the-art research what it takes to create the organizational conditions in which staff at all levels are positioned to innovate by leveraging existing and emerging technologies. Drs. Michael Wade of IMD in Switzerland and George Westerman of MIT described three of those conditions: nimbleness, autonomy and openness.

Nimbleness

Given current market volatility and uncertainty, speed and agility are essential conditions for digital innovation. Moving fast, even with imperfect offerings, is required to identify market opportunities and test new products, services, and business models. Speed identification of potential ecosystem partners ahead of competitors could lead to future competitive advantage.

Autonomy

Within reasonable limits, employees at all organizational levels should have discretion to experiment with new approaches to meeting and anticipating customer requirements, rather than having to rely on formally structured coordination and policies. It’s not clear who at Hilti, a tool manufacturer, initiated the idea to servitize its products by delivering and lending the right set of tools to construction sites on a monthly fixed fee based on the specs of the construction. We can speculate that a front-line worker close to construction customers had a part in its inception.

Openness

Innovation often results when organization leaders solicit diverse sources of information and insight from both within the corporation and well beyond, and share advice and information openly rather than keeping knowledge to a closed set of people. An environment that is open to new ideas, even those that lead to products and services that don’t work, encourages innovation. Learning from a bad idea often leads to a better one. Such an environment surely existed when Littler’s employment and labor lawyers envisioned a reengineered approach to delivering legal services by offering CaseSmart, a dashboard that provides data-driven insights to proactively address business risks at affordable prices to its clients.

Creating these conditions within the IT organization has been challenging. Creating them across the corporation brings additional dimensions of challenge. Beyond the obvious actions of building credibility through stable, up-to-date, effective, and responsive systems and services, APC members are learning from researchers and each other several actions that foster such conditions.

Model desired conditions in the IT organization

As mentioned earlier, IT organizations have been building track records of nimbleness (e.g., through agile practices) and openness (e.g., to new technology and approaches). Some have experimented with enhanced autonomy with success. Modeling these conditions demonstrates their value towards an innovative climate and serves as a powerful motivator to other organizational leaders who benefit from IT’s nimbleness, autonomy, and openness.

Provide the right tools

Digital capabilities were one of Vijay Gurbaxani’s necessary six dimensions of digital transformation success. Elements of this dimension are the availability of digital expertise to define the right digital strategy and then implement applications. That digital expertise includes data mining and analytics, big data, AI, ML, mobile, cloud, wireless communications. In addition to offering expertise, the IT organization should offer easy-to-use digital tools to non-IT staff.

Hold the right conversations

IT leaders have discovered many successful methods for educating their non-IT colleagues on possible digital innovation pilots, including innovation forums; visits to innovation sites; crowdsourcing events; workshops; visits to customers, potential customers, and potential ecosystem partners; and stories of success in the same and other industries as well as cases where industries have been cannibalized. And savvy IT leaders know how to ask the right questions (e.g., what if we ….), thereby encouraging their non-IT colleagues to “own” innovation ideas.

Be selective (GW, NB)

Both Nicholas Berente and George Westerman stressed the importance of selecting carefully which opportunities are explored and exploited. Given limited resources, IT leaders can propose criteria for selection which their governance bodies can apply.

References

“Digital Transformation and Covid-19”

“Digital Transformation and Platform Inversion,” Nicholas Berente

“Gearing Up for Successful Digital Transformation,” Vijay Gurbaxani and Debora Dunkle

“How to Build a Digital-Ready Culture in Traditional Organizations,” George Westerman

“Monetizing API Infrastructure: Executive Insights and Implications,” Nigel Melville and Rajiv Kohli

“Work Crafting with Automation by Thinking in 5T,” Terri Griffith